Stanbic IBTC Dollar Fund: A Hedge against Naira Depreciation
With Stanbic IBTC dollar fund, you can easily hedge against depreciating Naira assets, simple, convenient and provides some flexibility. This is an open-ended unit trust scheme that invests in US dollar-denominated securities.
MarketForces Africa checks with the bank discovered that the minimum investment amount is $1,000 while investors could make an additional investment of $500 to increase position.
Imagine, an investor or business person, that you have locked down a sizeable naira amount in this investment window some five years ago, your naira assets would have been fully protected.
One of the benefits of these financial products is that you invest in dollars, and redeem in the same currency which is expected to come with a principal plus return.
Let me gist you, hedging bankers and big corporates game. Converting your assets in a like manner would shield you from exchange rate pressures.
Fortunately, this dollar fund opportunity is available to an individual, not corporate organisations, especially those that feel their exposures to Naira asset is impacting their net worth negatively.
By design, Stanbic IBTC dollar fund aims to provide currency diversification, income generation, and stable growth in the United States dollar or the greenback.
Stanbic IBTC Managers invests a minimum of 70% of the portfolio in high-quality Eurobonds, a maximum of 25% in short term USD deposits, and a maximum of 10% in USD equities approved and registered by the Securities and Exchange Commission of Nigeria.
This professional service helps close the access gap as sometimes, even with your buckets of Naira deposits, you may not be able to invest in dollar instruments individually.
Read Also: Naira Trades Flat Across FX Markets amidst Uncertainties
How Would Asset Manager Handle your Money?
Stanbic IBTC Asset Management explained that the financial product is quite convenient because investors can transact from anywhere with Stanbic online platforms (Mobile App and Web Portal).
It offers diversification advantages as mutual funds mitigate investment risks by investing across a diverse range of assets thus avoiding concentration risk.
This appears flexible for investors as the firm’s array of investment products are designed to suit investors various needs.
Stanbic IBTC Dollar Fund (SIDF) was launched in January 2017.
The Fund invests a minimum of 70% of its portfolio in high quality Eurobonds, a maximum of 25% in short term USD deposits and a maximum of 10% in USD equities and for 180 days minimum holding period.
Meanwhile, the penalty for redeeming within the minimum holding period is 20% on the accrued income while the minimum investment amount is $1,000, and an additional investment of $500 can be added.
The fund risk profile is “moderately conservative and the expense ratio is 1.5% – That is how much of the fund is used for administrative expenses. This fund can be used to secure a loan with Stanbic IBTC Bank.
How to Register
Require document include a duly executed subscription form, passport photograph for each applicant, government-issued identity card and a proof of address showing your name/surname.
How to Redeem
To redeem a part or all your investments at any time, you will need to log in to your mutual fund account via the web or mobile app and initiate a redemption.
The proceeds of your redemption will be transferred to your nominated bank account within three (3) working days, the daily limit for online redemption is $5,000.00.
Stanbic IBTC Dollar Fund: A Hedge against Naira Depreciation
