In this episode of Market Watch, Host Frank Fagbo is joined by Idika Aja alongside Muktar Mohammed to break down why investors continue to crowd into money market funds.
Muktar Mohammed, Founder of Finance with Muktar shared his insight on this by stating that money market funds are winning investor confidence primarily because they serve as safe havens for wealth preservation and are risk free assets.
He went further to explain that investments in market mutual funds, particularly those involving federal government bonds, are tax-free, which makes the investment interesting because the growth is not taxed.
On the other hand, Idika Aja, Senior Analyst at Nairametrics, stated that mutual funds allow individuals to hand their capital over to professionals to manage rather than trying to trade or build a portfolio on their own.
He also noted that money market funds have delivered an average return of about 17%, providing a level of stability that allows investors to keep one portion of their money safe while taking risks in other areas like equities.
In closing, Idika highlighted the dominance of the top ten largest companies on the Nigerian Exchange, which collectively represent 64% of the total market capitalization and analysed Unilever Nigeria’s impressive financial recovery.
Is the safety trade here to stay, or could improving market conditions shift capital back into riskier assets like equities? Watch to get the insights.