Posted by By Udeme Ekwere on
A capital market analyst, Mr David Adonri, said that with the proposed recapitalisation of the market, there would be a redirection of small savers to the unit trust funds.
A capital market analyst, Mr David Adonri, said that with the proposed recapitalisation of the market, there would be a redirection of small savers to the unit trust funds.
Mutual funds, also called the unit trusts, are the aggregation of funds given to a manager to invest on the contributors' behalf, with a view to earnrng good returns.
Adonri, who is also the General Manager, Lambert Trust Investment Limited, said, 'As the structure of the Nigerian capital market changes into the future, as we move in line with the country's vision of becoming one of the top 20 economies in the world by the year 2020, the function of the stock market will change, and the small investors in the market, will gradually be marginalised from being serviced by the large market operators.
'Therefore, the avenue open to them to access the market, will be through the mutual funds. These small savers will now be redirected to accessing the market through the unit trust funds or the mutual funds."
He explained that in the future, the capital market might get to a point where it would be sophisticated enough and provide world-class facilities that would enable the foreign market operators to operate comfortably.
He added that the sophistication would also enable local market operators to acquire the capability and competence to be able to operate in the international market.
According to him, 'Since markets differ globally in terms of culture and structure, we will be looking at that idea that it is capable of increasing the sophistication of the market, especially the stock exchanges.
'By the time we move towards a market that is so restructured, then the big players in the market, the well-capitalised stockbroking firms, will not be concerned with little transactions.
'The effort will then be made by the market to redirect all these small savers to access the market through the unit trust funds or the mutual funds. And so, into the future, these unit trust funds are going to be very active."
Adonri noted that the capital market would transform from a mixed economy to a free market economy with a tendency to be de-mutualised.
He said this way, the stock exchange would be a profit making entity like a company that could be quoted and earn income from diversified sources.
'That will have some obvious implications for the structure of the entire market as it will take the market to another horizon," he said.