Firm recommends mutual fund to diversify country-specific risks

FBNQuest, the investment banking and asset management subsidiary of FBN Holdings Plc is recommending Specialised Dollar Fund to investors as a prudent move to diversify their portfolios from country-specific investment risks.

Rising inflation, negative real rates of returns, exchange rate volatility, and digitalisation, according to the firm, have increased the demand for global financial assets that provide an opportunity to diversify investors’ portfolios and earn potentially higher returns.

It noted that FBN Specialised Dollar Fund (FSDF) and other similar dollar-denominated funds serve as an investment vehicle that connects investors to these broader asset classes.

The fund, an open-ended active fund, is designed to provide competitive returns to all classes of investors.

According to the firm, it also offers an opportunity for local investors to reduce some of their country-specific risks while hedging against the potential devaluation of their local currency.

The fund would primarily invest in (USD) dollar-denominated debt instruments issued within and outside Nigeria.

It says instruments would include Eurobonds, US Treasuries, and other credible dollar-denominated money market assets.

Commenting on the value of the fund, Mr Ike Onyia, Managing Director of FBNQuest Asset Management, said, “Nigeria’s macroeconomic environment presents major challenges to institutional and individual investors.

“Considering the upward trend of inflation and the volatility in the exchange rate, investors must explore opportunities to diversify into assets denominated in foreign currency.

“Moreover, some of these foreign assets offer very attractive returns. Investing in the FBN Specialised Fund gives investors a vehicle to stay on track to realise their investment objectives, which could include planning a holiday, retirement, raising tuition for academic programmes, and other investment pursuits.”

The FBN Specialised Fund is currently at a yield of 10.6 per cent (as of October 12, 2022), and is perceived as a good investment for investors with a medium risk tolerance threshold and an investment horizon of three to five years.

“With $10,000 and multiples of $1,000, investors can gain exposure to the fund and the attractive returns its offers,” the firm stated.

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