The Nigerian Stock Exchange has said the assets under management of the eight listed Exchange Traded Fund (ETF) stood at N4.26 billion as at September, 2016.
Also, the Nigerian ETF issuers called on the brokerage community to embrace Exchange Traded Funds (ETFs) rather than see it as a rival for equities, while calling for market makers for the fund in ensuring liquidity for the products.
These were discussed at the ETF 2016 workshop organised by the bourse in partnership with Stanbic IBTC Asset Management, Lotus Capital and Vetiva Fund Managers, yesterday, in Lagos.
An ETF is an investment vehicle that tracks an index, a basket of assets, or a commodity, but trades like regular shares on a stock exchange. These investment vehicles allow investors a convenient way to purchase a broad basket of securities in a single transaction.
The chief executive officer of NSE, Mr. Oscar Onyema, said, “As at today, we have recorded about 1,900 per cent growth in our ETF market with total AUM of about N4.24 billion as at September 2016 on eight ETFs currently listed and traded on the Exchange.”
He said that ETFs were introduced on the NSE in December 2011 with cross listing of Newgold ETF with AUM of N287.5 million to provide investors with new opportunities to diversify their portfolios and access the market.
He explained that the Exchange had six equity backed ETF, one commodity ETF, and one bond ETF.
He said, “Experts have predicted the continued growth of the ETF industry, expressing optimism that “the growth of ETFs in Nigeria has only just begun with the support of market intermediaries, stakeholders and our regulator.”
Onyema said that the existence of ETFs in the Nigeria market was beneficial to retail and institutional investors, as ETFs offer a direct and inexpensive way to attain diversified exposure to an index, commodity, sector or region.
Also, ETF Strategist and Advisor from South Africa, Ms. Nerina Visser said that market regulators needed to know the type of ETFs to develop to ensure investors patronage, saying that market makers were needed to act as liquidity boosters for ETF to thrive in any market.
She said that South Africa had the highest market for the product with 74 Exchange Traded Products across all asset classes.
Visser added that market should come out with specific investors’ needs in the establishment of ETF, noting that regulators should consider reducing trading fees for ETF to increase patronage.