Return on Afrinvest Equity Fund Spikes to 48.5% - Fact Sheet

Afrinvest equity fund year-to-date returns neared 49% in October 2023, a fact sheet released by the investment banking firm showed. This came after it gained 5.8% above the September record.

Weighing side by side with the local exchange return, the Afrinvest equity fund outperformed the local bourse which is currently behind 40%. The fund’s performance provides solid coverage against negative inflation conditions, preserving investors’ wealth via multi-asset allocation of funds to three major asset classes: Money market, bonds and cash.

In October 2023, the headline inflation rate increased to 27.33% relative to September’s reading of 26.72%.  The fund allocated 81.5% to investment in bonds, and 18.1% went to the money market with 0.4% in cash.  The fund’s recent return was an improvement from the September rate of 42.7% and 40.5% in the previous month

According to the investment firm, the Nigeria International Debt Fund (NIDF) also surpassed its previous month’s performance to deliver 13.68%. Fund managers noted that the recent ₦2.18 trillion supplementary budget further worsens the country’s fiscal sustainability condition.

Afrinvest said NIDF is ready to strategically realign positions in response to dynamic market movements. According to Afrinvest, the domestic bond market was largely bearish, with the average yield rising by 95 basis points to 15.1% in October.

Asset managers recalled that the bond market opened the month on a relatively quiet note; however, offers increased significantly mid-month, all through to the end of the month, as bondholders looked to exit positions in anticipation of higher yields.

“Investors took a cue from the significant move at the OMO auction and NTB auctions to reprice bonds across the curve”, according to the fact sheet released. Fund managers noted that market participants sought to take advantage of record-high yield levels, resulting in major activity on 2028s, 2029s, and 2053s FGN bonds.

In the primary market, the Debt Management Office conducted a bond auction offering a total of ₦360bn across the 2029, 2033, 2038, and 2053 maturities.

FGN Bond maturing in 2029, 2033, and 2038 were each undersubscribed by ₦48.62 billion, ₦65.53 billion, and ₦23.59 billion, respectively, while the 2053 maturity was oversubscribed by ₦160.84 billion, Afrinvest revealed in the fact sheet.

The DMO oversold and allotted a total volume of N383.11 billion across the maturities on offer. Stop rates on the 29s, 33s, 38s, and 53s increased significantly by 105bps, 75bps, 60bps, and 75bps to 14.90%, 15.75%, 15.80%, and 16.60%, respectively.

“In November, we expect bearish sentiment in the domestic bond market to dominate as investors reprice fixed income securities on the back of deteriorating macroeconomic conditions, ranging from elevated fiscal deficit to rising inflation”, Afrinvest told investors.

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