Stanbic IBTC asset management lists dollar fund

Stambic IBTC Asset Management has set up its dollar fund to assist clients in coping with the loss of wealth stemming from the volatility in Nigeria's foreign exchange market. Today, the company listed the Stambic IBTC Dollar Fund on the Nigerian Stock Exchange. Shuaib Audu, Executive Director of Investments at Stambic IBTC Asset Management, joined CNBC Africa to shed light on the fund and the current economic climate. The dollar fund's listing indicates a response to the growing interest among investors to diversify their portfolios in a volatile exchange rate environment. While there has been a recent period of stability, the fund continues to provide a relevant avenue for diversification. Since its inception, the fund has witnessed significant growth, expanding by approximately 300% to over $50 million. Although still relatively small, it is expected to see continued growth in the years ahead. The fund allows investors to move away from narrow securities and diversify their holdings in response to exchange rate fluctuations. Audu highlighted the historical depreciation of the Naira against the dollar, emphasizing the necessity for diversification beyond local denominators. With an uptick in interest among investors for local currency-denominated securities due to declining inflation rates and high interest rates, the dollar fund offers an alternative for diversification. The recent performance of the stock market has been encouraging, with a noticeable recovery. The resolution of foreign exchange stability concerns has led to increased liquidity and inflows of foreign investments. Audu pointed out the positive trend in the market, with a 20% gain in the second quarter of 2017 and ongoing momentum. As inflation decreases and the Nigerian economy emerges from a recession, the market presents attractive opportunities for both local and foreign investors. The valuation of equities is currently appealing, creating an optimal entry point for potential investors. In response to the market rally, local investors have shown a heightened interest in equity securities, prompting asset managers like Stambic IBTC Asset Management to increase their exposure to stocks. While historically more inclined towards fixed income securities, there has been a notable shift towards equities in recent times. The appetite for collective investment schemes, including mutual funds and listed funds, is on the rise. Despite the growth in interest, there remains significant room for expansion, given that the collective investment scheme sector in Nigeria represents less than 0.5% of the GDP. In comparison to more developed markets like South Africa and the US, where the sector contributes significantly to the GDP, Nigeria still has untapped potential. Stakeholders, including private issuers and regulators, are working together to raise awareness and increase participation in collective investment schemes. The efforts aim to educate investors and enhance the understanding of these schemes in order to foster a more robust investment environment. Overall, Stambic IBTC Asset Management's listing of the dollar fund marks a significant step in providing investors with opportunities for diversification and growth in the challenging economic landscape.