Good morning distinguished ladies and gentlemen:
On behalf of the council and management of The Nigerian Stock Exchange (NSE), it gives me great pleasure to welcome you to our annual Exchange Traded Funds (ETFs) Workshop. We are indeed pleased to host this event and believe that your participation is an indication of your interest and commitment towards the growth of ETFs in Nigeria.
The history of ETFs dates back to 1990, when the Toronto Index Participation Fund (TIP 35) was launched in Canada. Since then, ETFs have gained widespread acceptance in most developed markets with demand from global retail and institutional investors leading to a variety of offerings by ETF sponsors. ETFs have become a huge success story, as Global ETF Assets Under Management (AUM) have grown from US$1.4 trillion in December 2010 to about $3trillion as at April, 2016 representing over 102% cumulative growth over the last five years. Experts have predicted the continued growth of the ETF industry estimating that global AUM will reach at least US$7 trillion by 2021.
In the NSE, ETFs were introduced in December 2011 with cross listing of Newgold ETF with AUM of N287.5m to provide investors’ with new opportunities to diversify their portfolios and access the market. As at today, we’ve recorded about 1,900% growth in our ETF market with total AUM of about N4.24bn as at September 2016 on eight ETFs currently listed and traded on the Exchange – Newgold ETF, Vetiva Griffin 30 ETF, StanbicIBTC ETF 30, Lotus Halal Equity ETF, Vetiva Sector Series ETFs- Banking, Consumer Goods and Industrial, and Vetiva S&P Nigerian Sovereign Bond ETF (6 equity backed, 1 commodity ETF and 1 bond ETF). Investors now have the ability to quantify and evaluate the trade-offs in our markets, and are able to select the instrument that allows for the most efficient implementation of their desired strategy. There are currently about 506 investors holding ETFs but we are optimistic that the growth of ETFs in Nigeria have only just begun with support of market intermediaries, stakeholders and our regulator. Please visit our website or contact our market data department for more statistics on ETFs.
The existence of ETFs in our market is beneficial to retail and institutional investors, as ETFs offer a direct and inexpensive way to attain diversified exposure to an index, commodity, sector, or region. Asides diversification and tradability, ETFs also offer additional benefits of low expense ratio as compared to mutual funds, increased liquidity and can be used to execute different investment strategies.
As part of The Exchange’s efforts to develop the ETF market, this workshop has been organised to create awareness of the product, address its challenges and promote its opportunities in Nigeria and Africa. Through the course of today’s proceedings, our keynote speakers and distinguished team of panellists will discuss ETF products in detail - how they are constructed and traded, why they may be attractive to investors and how they may be helpful in investment strategy. They will also provide you with insight into indexing and the future of the ETF marketplace in Nigeria and Africa as a whole.
By participating in this workshop, you will gain in-depth understanding of ETFs and Indices and learn how it can potentially benefit issuers and investors. I urge intermediaries in the Nigerian market to take from here lessons on how to replicate the global ETF industry success in Nigeria through product innovation and enhanced service delivery to investors. Every opportunity to improve knowledge and strengthen the market such as this workshop should be fully put to good use.
Let me conclude by expressing our gratitude to all the co-sponsors of this initiative for their unwavering support and commitment towards the growth of the ETF segment of our market – Lotus Capital Ltd, Stanbic IBTC and Vetiva Fund Managers Ltd. I would also like to recognise the presence of representatives from– The Securities and Exchange Commission (SEC), Central Securities Clearing System (CSCS), Nigerian Sovereign Investment Authority (NSIA), Asset Management Corporation of Nigeria (AMCON), and the National Pension Commission (PENCOM). I also want to thank all Market Operators, Retail and Institutional Investors, Professional Bodies, and the Media, for your unflinching support at all times. The Exchange remains committed to partnering with all market stakeholders, to continue to build and develop the Nigerian capital market while offering a wide range of investment vehicles for all investors. I wish you all fruitful deliberations.
Thank you.
Oscar N. Onyema, OON
