NSE emerges second largest ETF market in Africa with N6.9bn market capitalisation

The logo of the Nigerian Stock Exchange is pictured in Lagos, Nigeria November 9, 2016. REUTERS/Afolabi Sotunde
The logo of the Nigerian Stock Exchange is pictured in Lagos, Nigeria November 9, 2016. REUTERS/Afolabi Sotunde

The Nigerian Stock Exchange (NSE) has emerged the second largest Exchange Traded Fund (ETF) market in Africa with current market capitalisation of N6.9 billion.

NSE Chief Executive Officer, Oscar Onyema, stated this on Friday at the Smart Investment Workshop themed, “Using Exchange Traded Funds (ETFs) as a Proxy for Investing in Nigerian Equities” in Lagos.

ETFs are securities that closely resemble index funds, but can be bought and sold during the day just like common stocks.

These investment vehicles allow investors a convenient way to purchase a broad basket of securities in a single transaction.

Mr Onyema said from a single ETF tracking the price of Gold in 2011, the market has deepened with 10 ETFs currently offering exposure to equities, fixed income, commodities and thematic and smart investment solutions.

He noted that the ETFs market segment was radically reshaping the asset-management industry.

“With the market witnessing low yields, we have seen an increasing appetite for equities, and ETFs present investors with an alternative channel to maximise investment and minimise the risk that comes with investing in equities.

“Consequently, NSE is resolute in its goal to collaborate with market stakeholders to not only increase listed ETFs, but also provide the necessary sensitisation and capacity building that will boost activity in the market,” Mr Onyema said.

He stated that the exchange has identified the ETFs segment as a viable investment option for investors with the growing demand for cost-effective, low-risk, diversified and income generating investment instruments.

Mr Onyema said the workshop was in line with the exchange’s commitments to deepen capital market activity through innovative and value-driven products and services, as well as provide opportunities for in-depth investor education.

He added that the workshop was hosted in partnership with Meristem Wealth Management Limited.

In his presentation at the workshop, Head, Asset Management, Meristem Wealth Management, Taiwo Yusuf, noted that ETFs were inherently designed to give investors access to a wide range of viable assets.

“By investing in ETFs, investors are free from the rigors that come with trading in equities including: stock valuation, screening, selection and liquidity risk,” Yusuf said.

This, according to him, makes ETFs more cost-effective investment solution.

“ETFs serve as a bespoke product for investors who want to add a tinge of innovation to their investment portfolios,” he added.


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