NIgeria’s Stanbic IBTC Dollar Fund –The Frills

The yearning of discerning Nigerians seeking improved returns on their dollar-denominated cash may have been met by the Stanbic IBTC Asset Management Limited (SIAML).
This is because the foremost Nigerian fund manager has introduced an innovative product scheme into the Nigerian mutual fund space. The Stanbic IBTC Dollar Fund (“SIDF” or “the Fund”) is not just like any other mutual fund as it provides opportunities for Nigerian and investors to earn superior returns on their dollar assets. The prospectus issuing the fund states, “The Fund is an open ended unit trust scheme that will invest in US dollar-denominated securities domiciled in Nigeria.”
The country’s apex capital minuet regulator, the Securities and Exchange Commission (SEC) had given approval to the fund managers, SIAML, to issue units of the fund to investors. The offer opened on September 26, 2016, and is billed to close on November 2, 2016, though the duration of the offer could be extended given that a public holiday, October 3rd, 2016 (today) has occurred within the offer period.
Industry experts are of the opinion that the advent of the fund, which gives investors access to the opportunities inherent in dollar-denominated securities, should excite Nigerians seeking optimum returns in the face of Naira devaluation.
With an average expense ratio of 2%, the fund promises investors optimum returns on their investment. “The Fund seeks to provide investors with bias for dollar-denominated securities access to such securities which ordinarily would be inaccessible to them by virtue of the minimum amount required to make such investments. It also provides portfolio managers access to diversify their income stream and portfolio whilst providing for long-term capital appreciation”, the prospectus argues.
To realize the Fund objectives of portfolio diversification and optimum returns, SIAML proposes to invest up to 75% of the fund in fixed income securities such as duly registered Nigerian sovereign and corporate Eurobonds, 25% in cash equivalents such as dollar-denominated commercial papers, and 0% to 10% in SEC-approved listed and unlisted equities.
The rationale behind the above asset allocation is not immediately known, and a fund manager with SIAML, Mr. Gbenga Saseun, to whom BusinessDay spoke on the matter, requested to obtain information from colleagues who are more knowledgeable about the matter and therefore could not provide information thereon.
The promise by SIDF of superior returns compared to a dollar-denominated deposit in any bank is a bait that investors should willingly be lured to.

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