Exchange Traded Fund (ETF) in Nigeria has grown steadily from a market capitalisation of N988 million in 2011 to N36 billion as of April 2024, the Nigerian Exchange Limited (NGX) has said.
The exchange also stated that the global ETF industry assets under management crossed the $13 trillion mark in March 2024.
ETF is a type of investment fund and exchange-traded product that tracks the performance of an index or a “basket” of securities (such as shares, bonds and commodities).
ETFs are listed on a stock exchange and trade much like stocks, they provide investors with the opportunity to diversify their investments at relatively lower costs and gain exposure to different asset classes.
At the NGX ETF Capacity Building Webinar with the theme ‘Unlocking ETF Opportunities in Nigeria: Structuring and Application process’, the Acting CEO of NGX, Jude Chiemeka said the Exchange currently offers 12 ETFs, consisting of equity-backed, commodity, and bond ETFs, providing investors with limitless opportunities to diversify their investments.
Despite this advancement in the ETF, he stressed the need to deepen the space in Nigeria to enable investors to diversify their portfolios and gain exposure to various underlying asset classes at lower costs through the ETFs listed on the Nigerian Exchange.
By unlocking the potential of ETFs, the capital market would record meaningful growth that would help boost investment opportunities, and ultimately drive economic prosperity.
He noted that over the years ETFs have gained more acceptability among institutional and retail investors worldwide due to their cost-effective approach in providing exposure to a diverse array of underlying asset classes.
According to him, the global industry now spans over 12,127 products, listed across 80 exchanges in 63 countries, offered by 741 ETF providers.
He disclosed that ETFs garnered net inflows of $144.94 billion in March 2024, underscoring the rising appeal amongst both institutional and retail investors.
“Equity ETFs reported net inflows of $94.62 billion in March, bringing YTD net inflows for Equity-Based ETFs to $235.75 billion, this is reflective of a 678 per cent YoY increase (when compared to $30.31 billion net inflows in the same period in 2023).
“YTD 2024, Fixed income ETFs have gathered net inflows of $61.85 billion, while ETFs with Commodities products as underlying have reported net inflows of $1.15 billion YTD 2024.
“Since the inception of ETFs in Nigeria in December 2011, the market has grown steadily, with a total market capitalisation of N35.76 billion as at April 2024.
Chiemeka added that investors in Nigeria also have an excellent opportunity to diversify their portfolios and gain exposure to various underlying asset classes at lower costs through the ETFs listed on the Nigerian Exchange.
