The Nigerian stock market has seen a remarkable rally in recent weeks, and for investors with little know-how, Exchange Traded Funds (ETFs) are the easiest way to participate.
ETFs (Exchange Traded Funds) are exactly as the name implies: funds that trade on exchanges, generally tracking a specific index.
When you invest in an ETF, you get a bundle of assets you can buy and sell during market hours. Instead of buying individual stocks, bonds, or commodities, you buy one unit that tracks an index or sector.
“It’s smart, flexible, and efficient. Nigeria’s market offers more than you think. ETFs offer transparency, flexibility, and often lower costs. They’re game changers for smart investors looking to optimise their portfolios,” analysts at MoneyAfrica said in a post on X.
The market capitalisation of Nigeria’s ETF grew to N14.44 billion as of June 20, from N12.49 billion at the start of the year, based on data from the Securities and Exchange Commission (SEC).
Read also: Here’re ETFs with best returns in 2024
According to the data, all twelve listed ETFs had an average year-to-date performance of 20.39 percent in the period ending June 20. Eleven of the twelve listed ETFs recorded positive returns
These Funds are open-ended and their units are traded on the floor of the Nigerian Stock Exchange (NGX). They can be purchased on apps that offer Nigerian stocks, such as Meritrade.
Here are the ETFs making waves in the Nigerian market …
Vetiva S&P Nigeria Sovereign Bond ETF (VSPBONDETF) (+51.46%)
This fund has returned 51.46 percent since the beginning of the year, as of June 20.
The ETF seeks to track the S&P Nigerian Sovereign Bond Index, which means that the unit price of the ETF on the Exchange should track the movement of the Index.
By owning units in the ETF, an investor obtains market exposure to the most liquid and actively traded FGN Bond Securities.
Vetiva Consumer Goods ETF (VETGOODS) (+46.51%)
Vetiva Consumer Goods ETF printed a return of 46.51 percent during the period under review.
This ETF tracks the performance of the constituent companies of the NGX Consumer Goods Index and replicates the price and yield performance of the Index.
The NGX-Consumer Goods index has done 45.59 percent in the same period.
The NGX Consumer Goods Index comprises the top 15 companies in the Food/Beverages and Tobacco sector listed on the Nigerian Exchange Limited (NGX) in terms of market capitalisation and liquidity and is a price index weighted by adjusted market capitalisation.
NewGold ETF (NEWGOLD) (+30%)
The new gold returned 30 percent so far in the period of review.
NewGold Exchange Traded Fund allows institutional and retail investors the opportunity to invest in commodity markets and gold bullion. The company offers a service that tracks the gold spot price.
It was launched in 2004 and is domiciled in South Africa and listed on the Johannesburg Stock Exchange (JSE). It is also listed on stock exchanges in Botswana, Nigeria, Mauritius, Namibia, and Ghana.
During periods of stringent capital controls, investors increasingly turned to the New Gold ETF to repatriate their funds in other countries.
Lotus Halal ETF (+26.68%)
This fund has given its investors a return of 26.68 percent from the beginning of the year to June 20.
The Lotus Halal Equity Exchange Traded Fund “LHE ETF” is an open-ended fund that tracks the performance of the NSE-Lotus Islamic Index (NSELII).
It is designed to enable investors to obtain market exposure to the securities of the constituent companies of the NSE-Lotus Islamic Index and to replicate the price and yield performance of the index.
SIAML ETF 40 (+25.57%)
The Stanbic IBTC Asset Management Limited ETF has grown by 25.57 percent for its investors between the start of the year and June 20
The SIAML Pension ETF 40 replicates the total return of the Nigerian Exchange Limited (NGX) Pension Index (that is, an index which tracks the top 40 companies on the NGX in terms of market capitalization, liquidity, and Pension Funds Administration investment eligibility).
The NGX Pension index gave a return of 26.23 percent year-to-date as of June 20.
Vetiva Griffin 30 (VETGRIF30) (+17.02%)
The VG 30 performed 17.02 percent as of June 20.
The VG 30 ETF is designed to track the performance of the constituent companies of the NGX 30 Index and to replicate the price and yield performance of the Index.
In the period in review, the NGX-30 has performed 14.42 percent year-to-date.
The NGX 30 Index comprises the top 30 companies listed on the Nigerian Exchange Limited (NGX) in terms of market capitalisation and liquidity and is a price index weighted by adjusted market capitalisation.
Some of these companies include: Accesscorp, Airtelafri, Buacement, Buafoods, Dangcem, Dangsugar, Eti, FBNH, FCMB, And Others.
Read also: Understanding Bitcoin ETFs Pt 3: Diversified Portfolios
Stanbic IBTC ETF 30 (STANBICETF30) (+15.40%)
This ETF has returned 15.40 percent in the period of review, meaning investors who put N100,000 in it at the start of the year would have gotten the investor N15,400.
The fund also seeks to replicate as closely as possible, before fees and expenses, the total return of The NGX 30 Index.
Vetiva Banking ETF (VETBANK) (+14.68%)
The Vetiva ETF recorded a 14.68 percent increase in the unit price.
The Vetiva Banking ETF “VETBANK ETF” tracks the performance of the constituent companies of the NGX Banking Index and replicates the price and yield performance of the Index. The NGX banking index had a return of 16.34 percent year-to-date as of June 20.
The NGX Banking Index comprises the top 10 banks listed on the Nigerian Exchange Limited (NGX) in terms of market capitalisation and liquidity and is a price index weighted by adjusted market capitalisation.
Greenwich Asset Management Limited (+12.87%)
Greenwich ALPHA ETF in the period under review with an ROI of 12.87 percent.
Greenwich Alpha is an open-ended ETF that tracks the NSE 30 Index, which is an index comprising 30 of the most liquid and capitalised stocks trading on the Exchange.
According to the company, the fund is designed to enable investors to obtain market exposure to the securities of the constituent companies of the NSE 30 index and to reproduce the performance of the index.
Read also: Understanding Bitcoin ETFs: A beginner’s guide (Part 2)
Meristem Growth ETF (+12.87%)
As of June 20, the fund has generated a year-to-date return of 12.87 percent for its investors
The Meristem Growth ETF (MERGROWTH) is an open-ended, passively managed ETF that seeks to track the performance of the NGX MERISTEM GROWTH INDEX.
The Fund invests 100 percent of its total assets in the securities that comprise the index, in approximately the same weighting as the index.
Meristem Value ETF (+2.51%)
The fund returned 2.51 percent to investors year-to-date through June 20
This fund replicates as closely as possible the net return of the NSE-Meristem Value Index.
The fund does this by investing primarily in securities issued by companies that comprise the NSE-Meristem Value Index. Some of which include: Conoil, Cadbury, Dangote Sugar, FCMB.
