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Market Slice: News on the e-Naira and the top performing mutual funds in September 2021

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Market slice is a monthly summary of mutual funds on Cowrywise and key money news. We share this jargon-free report every month. Share lessons on Mutual Funds in September 2021 using the hashtag: #MarketSlice. Welcome to this month’s market slice and the season of white money

There is a question that has been running through my mind all week and this is it: Do you think your risk tolerance changes when you have people dependent on you?

Read to the end to see what we found out.

What is the e-Naira? 🇳🇬

Many Nigerians are already used to purchasing items online and making payments electronically via POS, ATM, and so on. Digital currency works almost the same way; the major difference is that it is only accessible in its digital format.

Currently, in America, Tesla and some other companies accept payment in digital currency (Bitcoin).

Also, there are four regions right now that have their own Central Bank Digital Currency (CBDC) fully in operation. Examples are the Caribbean, Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia, and Grenada. Fourteen other countries have entered the pilot stage of taking their CBDC mainstream within their various economies. Sand dollar (The Bahamas). e-Yuan (China). Bakong (Cambodia).

As major economies begin to explore digitized versions of their currency, this development is inevitable in other countries.

The Central Bank of Nigeria (CBN) is set to create its own digital currency – Central Bank Digital Currency (CBDC) called e-Naira, which is in partnership with Bitt Inc. 

The major aim of the e-Naira is to serve as a means of payment and a store of value.

Is the e-Naira/CBDC the same as Cryptocurrency? 🧐

They are alike because of their digital nature. However, they have a number of differences;

  • Central Bank will issue the CBDC and regulate it. In Nigeria, for example, it can pave the way for Financial Inclusion.
  • CBDC creates state-backed currencies that are less prone to volatility. Through this, they protect investors’ value, reduce fraud and track the flow of capital.

The CBN listed this as one of the benefits of a digital currency – “to include increased cross-border trade, accelerated financial inclusion, cheaper and faster remittance inflows, easier targeted social interventions, as well as improvements in monetary policy effectiveness, payment systems efficiency, and tax collection.”

The participation areas will be: 📝

  • Monetary Authority suite – CBN will issue, distribute and redeem the currency.
  • Financial Institutions suite – Licensed firms will be able to request currency or issue stable coins, manage digital currency across branches, and carry out Know Your Customer activities (KYC).
  • e-Government suite – The government will be able to process digital payments efficiently, they will be able to send and receive from citizens and businesses. This brings to mind the time of the pandemic. If the e-Naira existed then, it could have been used to disperse money to citizens as a relief fund.
  • Merchants will be able to provide low-cost payments and business management software.
  • Retail consumer suite – This entails user-centred designs for a great user experience.

When we get more information, we will share more details on how to use the e-Naira. 😉

Good news – Nigeria raises $4 billion through Eurobonds 🤓

Nigeria has raised $4 billion through the issuance of Eurobonds, the government plans to use the proceeds from foreign investors to finance a part of the 2021 budget deficit.

Eurobonds can be used by the Government to borrow from the international market.

Time for info on how Mutual Funds in September 2021 performed:

As we get closer to the end of 2021, it is important to take a look at our journey since the beginning of the year. We will be taking a look at the performance of the mutual funds listed on Cowrywise.

Top conservative funds (NGN)

mutual funds in september 2021

The interest rate from the beginning of the year stood at 3% per annum but it has increased by 70%. This is a huge turning point for a fund that was negative last year where people had to pay the government to borrow from them.

Top fixed income & balanced funds (NGN)

mutual funds in september 2021

Top fixed income & balanced funds (USD)

mutual funds in september 2021

A major advantage of investing in the dollar/Eurobond fund is the currency hedging feature.

Currency hedging is an attempt to reduce the effect of currency fluctuations by investing in securities or assets whose value increases or decreases in relation to changes in the exchange rate.

This Eurobond fund earns returns in two ways: returns from changes in the value of the Naira against the USD and returns earned on the Eurobond investment. So far, it has earned a return of 5.34% since the beginning of the year, and the exchange rate has had a 12.7% gain for the USD. Whoosh! 🚀

Top equity funds (NGN)

mutual funds in september 2021

The Equity market has been churning out great returns since the beginning of the year. It currently sits at 10% YTD. It is a good time to invest in this fund. Start here.

That’s it for the recent news on mutual funds.

📸 Data Snap of the Month

Fun fact 😎

According to a recent MIT research, men over the age of 45 and those with kids are panic sellers during a stock market dip. Could they have used their children’s school fees to invest or have family responsibilities made them more conservative? 🤔

Over 600,000 brokerage accounts were analysed in this research and they found that even older men with investment experience are more likely to freak out and dump their portfolios during a downturn. Also, investors with a portfolio of less than $20,000 tend to liquidate more often.

Alrighty… Do you have any questions on how mutual funds in September 2021 performed? Share them in the comments. 👌🏽

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