NGX Goes Into Collaboration With Vetiva Capital Management Limited to Strengthen ETF Market

Nigerian Exchange Limited (NGX), in collaboration with Vetiva Capital Management Limited, organised a webinar on capacity-building to provide stakeholders with the necessary understanding of the Exchange Traded Fund (ETF) market.

The virtual event, "Unlocking ETF Opportunities in Nigeria: Structuring and Application Process," was to give participants—which will include brokers, asset managers, and other operators and intermediaries in the Nigerian Capital Market.

The webinar also attempted to provide information on how exchange-traded funds (ETFs) should be structured and on the documents needed to apply to the Securities and Exchange Commission (SEC).

In his opening remarks, Mr. Jude Chiemeka, the acting CEO of NGX, said that ETFs have grown in popularity among institutional and retail investors worldwide due to their low cost and ability to expose various underlying asset classes.

“Since the inception of ETFs in Nigeria in December 2011, the market has grown steadily, with a total market capitalization of N35.76 billion as at April 2024.

“The Exchange currently offers 12 ETF asset classes, consisting of equity-based commodity and bond ETFs, providing investors with limitless opportunities to diversify their investments. We aim to further deepen the ETF market by providing an attractive environment to support listing additional ETFs, hence providing more investible products for investors.”

According to ETFGI, as of March 2024, the global ETF industry had assets under management that surpassed $13 trillion, indicating a remarkable growth trajectory. Today, this ever-expanding industry includes more than 12,127 products offered by 741 ETF providers, listed on 80 exchanges in 63 countries. A report stated that net inflows of $144.94 billion were recorded in March 2024 for ETFs, indicating a growing popularity among institutional and individual investors.

Equity ETFs saw significant net inflows of $94.62 billion in March, bringing their year-to-date (YTD) total to $235.75 billion. Compared to the same period in 2023, when net inflows were $30.31 billion, this represents a stunning 678 percent increase. At the same time, net inflows into fixed-income ETFs have reached $61.85 billion as of the end of 2024, while those into commodity ETFs have only reached $1.15 billion over the same period.

Chiemeka highlighted that ETFs listed on the Nigerian Exchange offer investors in Nigeria a unique chance to diversify their portfolios and access a range of asset classes at lower costs. According to him, the program's objective is to educate participants in the capital markets on the Nigerian ETF framework, including its principles, organisation, modes of operation, and the rigorous procedures entailed in bringing new ETF products to market.

 “The Exchange remains highly committed to providing an efficient, liquid and transparent market for investors and businesses across Africa, fostering access to capital and wealth creation.  By unlocking the potential of ETFs, we can contribute to the development and growth of the Nigerian capital market, enhance investment opportunities, and ultimately drive economic prosperity”, Chiemeka added.

At the webinar, Mr. Abubakar Habib praised the Nigerian Exchange Group (NGX) for organizing the event and spoke on behalf of Mr. Emomotimi Agama, Director-General of the Securities Exchange Commission (SEC). He also underlined that the Commission cooperates with NGX, market players, and industry experts locally and abroad to create a strong framework for issuers and traders.

In response to the current market issues, Habib stated that he was confident in the experts' ability to provide workable solutions. To strengthen the capital market, he urged all parties involved—including the Fund Managers Association, NGX, and other institutional investors—to aggressively encourage the adoption of ETFs.