Cordros launches Nigeria’s first target-date mutual funds

Cordros Asset Management Limited (CAML) has launched Nigeria’s first set of target-date mutual funds, according to Emeka Ndu, chairman of the company.
A target dated fund (TDF), also known as a lifecycle, dynamic-risk or age-based fund, is a collective investment scheme, designed to provide a simple investment solution through a portfolio whose asset allocation mix becomes more conservative as the target date (usually retirement) approaches.

According to Ndu, the milestone funds 2023 and 2028, which opened on the 18th of June 2018 and are expected to close on July 27, will further deepen the capital market and also enhance financial inclusion.

“It is quite remarkable that the Cordros Milestone Fund 2023 and 2028 are the first set of target-date mutual funds to be launched in Nigeria. They have been designed to provide for individuals and corporations saving towards a target,” he said.

Ndu noted that the milestone funds are balanced funds and will have a mix of equities, fixed income and money market instruments.

“CAML continues to position itself as a firm of repute and was happy to be a strategic part of this success story. The Cordros Money Market Fund, our firm’s flagship product, has seen immense growth since inception in 2016 and I expect the Cordros Milestone Funds to follow in this stead and exceed our expectations. This represents a significant achievement not just for Cordros, but for the entire mutual fund industry,” Ndu said.

He noted that target date mutual funds have become increasingly popular globally, and at the end of 2017, the Investment Company Institute (ICI) estimated that a total of $1.1 trillion was invested in these funds worldwide.

“The differentiator is that the fund will typically become more conservative towards their target date to manage future income risk. The milestone funds will provide an inflation hedge, which regular savings accounts do not have. So, with the choice of the Cordros Milestone fund 2023 and Cordros Milestone Fund 2028, you have 5 and 10-year goals to achieve milestones that are important to you.

“On offer is N500 million each for both funds and I will like to encourage everyone saving towards different goals to seize this unique opportunity,” he said.
Leye Adekeye, CEO, Cordros Asset Management Limited, in his presentation said: “We are indeed excited at the prospects that the funds hold. The funds will start out seeking capital appreciation and will become more conservative by seeking capital preservation towards their target dates.

“Opportunities abound in the capital markets and these funds will ensure we are leveraging these opportunities and providing diversification for our clients. We will like to encourage individuals saving towards different goals and targets to take advantage of the professional fund management when the offer opens,” Adekeye said.

Both funds are open-ended funds authorized and registered in Nigeria as unit trust schemes under section 160 of the investment and securities act, he explained, adding that their objectives are to maximize total returns and reduce volatility as the funds approach their target dates.

“As the funds gets closer to their target dates, the asset allocation shifts to reflect shorter investment time horizons. The minimum amount required to subscribe to the fund is N2,500 and investors can make an additional investment of 10 units or more. 500 million units at N100 per unit for each milestone fund will be offered to investors for subscription at the launch of the fund,” he said.