By Chinwendu Obienyi
Transactions in Exchange Traded Fund (ETF) on the floor of the Nigerian Stock Exchange (NSE) experienced its best year ever in 2020 as its market capitalisation increased by 272.30 per cent to hit N24.51 billion from N6.58 billion recorded the prior year.
In the same vein, trade volumes as regards ETF increased by 218.23 per cent from 4.15 million units in 2019 to 13.20 million units in 2020 while turnover volumes skyrocketed by 51,830.59 per cent.
According to Investopedia, the ETF is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies. Unlike mutual funds, ETF trades like a stock on the exchange, with a relatively higher daily liquidity and lower fees.
Speaking during the recently concluded webinar organised by the NSE in Lagos, which was themed; ‘’NSE 2020 Market Recap and 2021 outlook,’’ its CEO, Oscar Onyema, stated that the performance of the ETF market was down to the growing adoption of the asset class by investors and asset managers on the back of strong year-on- year growth.
He said: “These achievements can be attributed to several factors which include the launch of two new ETFs – Meristem Growth ETF and Meristem Value ETF by Meristem Wealth Management Limited which track the NSE Meristem Growth Index and NSE Meristem Value Index respectively and unattractive yields in the fixed income market which led investors to seek alternative asset classes as also experienced in the equity market.
Onyema added that the NEWGOLD ETF, which tracks the price of gold and offers investors the opportunity to invest in a listed instrument that is backed by a gold bullion and serves as a good currency hedge, was the best performing ETF for the second year running as it returned 66.03 per cent in 2020.