A mutual fund is an investment security type that enables investors to pool their money together into one professionally managed investment. Mutual funds can invest in stocks, bonds, cash or other assets. These underlying security types, called holdings, combine to form one mutual fund, also called a portfolio.

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 This is a Beginner's guide on how to get started in mutual funds, hence after reading this post you should learn:
  • Get answers about what really is mutual funds all about
  • How does mutual funds work?
  • How to invest in mutual funds in Nigeria in 2020 with your bank
  • Types of mutual funds
  • Best mutual funds in Nigeria and where to find them
  • and the duration or period in which you can get your profit or invested money back.

It is an investment vehicle made up of a pool of funds collected from numerous investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual Funds are operated by professional fund managers, who invest the fund's capital and attempt to produce capital gains and income for the investors.

Mutual funds provide you with access to investment markets by pooling your money with the money of several other individuals with similar investment goals. By diversifying your investments, mutual funds assist with minimizing the potential risks typically associated with investing. Mutual funds differ from stocks as they are not traded on an exchange and investors can buy and sell through a Fund manager at any time. Units are created and sold to new investors on a continuous basis, so you can either invest a lump sum or save on a regular basis.

Mutual funds are an ideal investment vehicle for regular investors who do not know much about investing. But what are mutual funds and how to invest in them?

Types of Mutual Funds

Mutual funds are divided into many types, representing the sorts of securities they need to be targeted for their portfolios and also the form of returns they ask for. There is a fund for nearly every form of capitalist or investment approach. alternative common sorts of mutual funds embrace securities industry funds, sector funds, various funds, smart-beta funds, target-date funds, and even funds-of-funds, or mutual funds that get shares of alternative mutual funds.

The followings are some types of Mutual Funds

1. Equity Funds: Equity funds are designed to be invested in stocks and it is regarded as the largest form of mutual funds available.

2. Fixed Income Funds: Fixed Income funds as its name implies are the types of mutual funds that are set to pay returns at a certain date or set date. They can include bonds of governments, bonds of companies or other several debt instruments. In fixed-income funds, they are undervalued and sold at a higher price for profits.

3. Index Funds: Index funds are a kind of mutual funds that sees the fund manager buying stocks that align with a major market index in the country.

4. Money Market Funds: Money market funds seem to be the most popular type of mutual funds especially on social media and among millennials. This type of mutual funds involves the purchase of short term debt instruments which are mostly treasury bills. In money market funds, you won’t likely lose your money in many scenarios and you would also not get a huge return on your money but your money is sure to get back to you.

List Of Best Performing Mutual Funds To Invest In Nigeria

Before you choose a mutual fund to invest in, it is important to spend a little time learning about the major mutual funds available in the market and how those funds have performed over time.

They are somehow complex investment products and for a first-time investor, becoming anxious is very common. However, you can easily start your investment journey by having a basic understanding of what mutual funds are, how mutual funds work and which mutual fund is best to invest in base on your risk appetite.

One of the major advantages of Mutual Funds is they give small investors access to professionally managed, diversified portfolios of equities, bonds, and other securities. Each investor, therefore, participates proportionally in the gain or loss of the fund.

1. Stanbic IBTC Nigerian Equity Fund

The Stanbic IBTC Nigerian Equity Fund (SINEF) is the largest open-ended equity bias mutual fund in Nigeria with a net asset value in several billions of Naira under management. The fund invests a minimum of 60% of its assets in equities of blue-chip companies listed on The Nigerian Stock Exchange (NSE) while retaining a maximum of 40% of its total assets in Fixed Income Securities (i.e. money market securities and bonds).

The fund was launched on 28 February 1997 at a par value of N1,000.00 per unit. The primary objective of the Fund is to achieve long-term capital appreciation of its assets by investing in a carefully selected portfolio of high-quality equity securities quoted on the Nigerian Stock Exchange and in other securities approved by the Securities & Exchange Commission.

2. FBN Money Market Fund

As an open-ended mutual fund, the FBN Money Market Fund invests in a broadly diversified portfolio of short-term, high-quality money market securities such as Treasury Bills, Commercial Papers, Bankers Acceptances and Certificate of Deposits issued by rated banks in Nigeria.

If you are regular saver with Short to Medium-Term financial goals and would like to maximize your income, the FBN Money Market Fund is an ideal choice. Some of the benefits of this fund include a high level of security, low risk, competitive returns and you can start with as little as N5,000.

3. Zenith Equity Funds

The Zenith Equity Fund is an open-ended unit trust scheme that invests predominantly in equities in Nigeria as well as in investment grade fixed- income securities.

The Fund, Zenith Equity Fund, is designed for investors seeking to optimize their returns at minimal risk. It provides a relatively cheap opportunity for investors to build wealth at a considerably lower risk than direct stock investments and higher potential returns than fixed income instruments.

4. United Capital Balanced Fund

United Capital Balanced Fund is an open-ended mutual fund that offers investors the benefit of a diversified portfolio of securities that cuts across the different asset classes It invests in equities and fixed income instruments.

United Capital also have other mutual funds investment products which comprise of United Capital Bond Fund, United Capital Equity Fund, and United Capital Money Market Fund. With as little as N10,000 you can invest in this fund.

5. ARM Aggressive Growth Fund

Meet long-term objectives such as education funding, property acquisition and the likes with the high capital growth obtainable in the Aggressive Growth Fund. You can start investing in this fund with as little as N50,000.

This Aggressive Growth Fund is suitable for Investors who want high capital growth over the long term to meet objectives such as education funding, property acquisition or leaving a legacy for loved ones. Their other products include ARM Discovery Fund, ARM Ethical Fund, and ARM Market Fund.

Advantages/Benefits of Investing in Mutual Fund​​s


​Diversification: Mutual Funds spread their holdings across various investment vehicles, reducing the effect any single security or class of securities has on the overall portfolio. Because mutual funds contain hundreds or thousands of securities, investors are less affected if one security under performs.

Professional Management: Mutual Fund accounts are managed by qualified professionals. These professionals invest only after careful analysis of the performance and prospects of different securities. It is a continuous process that takes time and expertise which will add value to your investment.

Regulations: Mutual Funds are required to be registered with the Securities and Exchange Commission. They are obliged to follow strict regulations designed to protect investors.

Affordability: As a small investor, you may find that it is not possible to buy shares of larger corporations. With Mutual Funds ​small investors can get started because of the minimal investment requirements.

Liquidity: With open-end funds, you can re​deem all or part of your investment any time you wish and receive the current value of the shares. Moreover, the process is standardized, making it swift and efficient.

Transparency: As a unit holder, you are provided with regular updates. For example daily activities, bid and offer prices as well as information on the fund's holdings and the fund manager's strategy.