Afrinvest’s Bond Fund Beats Stocks Rally Amid Low Yields

By Sahabi Abdul

Afrinvest’s Nigerian International Debt Fund outperformed the stock market index by 8 percent in the past two months despite the recent rally of shares and persistent low yields in the fixed-income securities, its captive market.

NIDF is a bond fund investing primarily in debt instruments sold by federal and state governments. As a mutual fund it’s  also bought and sold based on market perception of its performance.

October mutual funds returns. Source: Cowrywise

In the two months from 1 September to 2 November,  the value of this fund has risen from 350.22 naira a unit to 449.24 naira, a 28 percent value appreciation. During the same period, the Nigerian Stock Exchange All-Share Index,  the key measure of performance, rose 20 percent from 25,413.76 to 30,479.39 points.

After being in decline for much of the year following the 2019 elections, Nigerian stocks began to revive in August as many investors saw an opportunity to acquire valuable shares cheaply. With bond and treasury bill yields hovering at decade lows as the Central Bank of Nigeria sought to stimulate lending by depressing rates, it was an additional reason for many to turn to the stock market.

“It’s a remarkable feat at a time stocks have surged as investors fled low interests in the money market and fixed income investments,” said Mike Okonjo, an investor who bought the fund in August. “I had to pull out my low-yield money market investments in favour of NIDF.”

Founded by Afrinvest in 1997, the fund has a reputation of having paid returns every year since then.