Collective Investment Scheme Assets Hit N10trn Amid Inflation, Weak Naira

Inflation and the depreciation of the Naira have clouded the true value of Nigeria’s Collective Investment Schemes (CIS), even as total assets under management (AUM) have more than tripled to N10 trillion in the last two years.

The Securities and Exchange Commission (SEC) disclosed that the AUM of CIS in the country increased from N3.2 trillion to N10 trillion over the last two years, reflecting increased confidence in these investment vehicles, as reported by the SEC.

At an event in Lagos, the director-general of SEC, Dr Emomotimi Agama, highlighted this significant leap in AUM over the past two years, driven by extraordinary gains in market capitalisation and a surge in foreign investment.

But experts warn the headline figure may overstate real growth because inflation and currency depreciation can push up naira-denominated values without increasing what investors can actually buy.

They noted that, though the numbers are striking on the surface, for millions of ordinary Nigerians whose savings sit within these schemes, the more important question is whether this growth is real or largely a product of inflation and currency depreciation, which inflate naira-denominated figures.

Who Actually Owns These Assets?

According to analysts, the N10 trillion does not belong to banks or investment firms. It represents the pooled savings and investments of retail and institutional investors across Nigeria — pension contributors, individual savers, and corporate clients — channelled into mutual funds, Real Estate Investment Trusts (REITs), Exchange-Traded Funds (ETFs), unit trusts, and investment trusts.

Critically, these funds are not held directly by the firms that manage them. The managing director of Brook Securities Limited, Mr Charles Egbunonwo, explained that “the structure of investing in asset-managed products involves various custodians,” meaning investor funds are held through independent third-party custodians rather than the asset managers themselves.

This separation adds a meaningful layer of security — but it also complicates direct oversight, and investors should understand the distinction.

A History of Risk, and the Reforms That Followed

That structural protection matters because Nigeria’s collective investment sector has not always been safe. The vice president of Highcap Securities Limited, Mr David Adnori, acknowledged that “past mismanagement and commingling of funds by some asset managers resulted in significant risks for investors” — a reference to episodes where managers improperly mixed client funds with their own, exposing savers to serious losses.

In response, the SEC has implemented significantly tighter regulations, including stringent oversight mechanisms and severe penalties for violations. The results appear to be working: investor confidence has recovered, fund participation has grown, and AUM figures have climbed.

However, “safer than before” is not the same as “safe”, and the common practice of ranking asset managers purely by AUM size — rather than risk-adjusted returns — remains a potential pitfall for investors who mistake scale for quality.

Are Returns Actually Beating Inflation?

On paper, yes — though unevenly. Nigeria’s annual inflation rate has risen for the second consecutive month, reaching 15.69 per cent as of April 2026, making the inflation benchmark a critical test for any investment.

Against that measure, the numbers look encouraging: certain money market funds were yielding over 20 per cent as of January 2025, the equities market posted a year-to-date gain exceeding 50 per cent over five months, and the total net asset value for mutual funds rose by nearly 97 per cent over the ten months ending October 2025.

Adnori noted that inflation rates have recently stabilised around 14 to 15 per cent, and argued that “any average collective investment scheme managed by reputable asset managers should provide returns above the inflation rate, ensuring a positive real rate of return for investors.”

The MD/CEO of Globalview Capital Limited, Aruna Kebira, went further, pointing out that the capital market offers inflation-indexed instruments that can deliver returns of 100 per cent or more, significantly outpacing inflation. “This potential for higher returns not only shelters investors from the adverse effects of inflation but can also lead to genuine profit when assessed over a yearly period,” he said.

But these are averages and peaks. The sector’s own framing — that funds should beat inflation if managed by reputable managers — implicitly acknowledges that not all of them are delivering positive real returns. Investors in poorly managed or conservatively positioned schemes may still be falling behind inflation without realising it.

The Harder Question: Is the Growth Real?

Nigeria experienced severe naira devaluation and inflation exceeding 30 per cent during parts of this period. When a currency loses significant purchasing power, asset prices denominated in that currency rise automatically — not because the underlying value has increased, but because the measuring stick has shrunk.

A near-doubling of mutual fund net asset value, or a tripling of total AUM, means considerably less in real terms when the naira has lost 40 to 50 per cent of its purchasing power over a comparable period. The same dynamic applies to the broader Nigerian pension industry, which now reports assets totalling N30.94 trillion. Nigerian workers may technically hold more naira than before — but whether those naira command more goods, services, and security than previous generations of savers enjoyed is a question the headline AUM figures alone cannot answer.

None of this negates genuine progress. Regulatory reform, improved fund governance, rising foreign participation, and a more diversified product landscape are real structural improvements. Egbunonwo noted that “increasing interest from clients reflects a growing trust in the products and services offered by asset managers,” and described the overall environment as “healthy and dynamic.”

But for investors, the lesson is clear: the most meaningful number is not the AUM figure, nor even the nominal return. It is the real rate of return — what remains after inflation is subtracted. By that measure, Nigeria’s investment boom is real for some, partial for many, and potentially illusory for those in underperforming schemes who have not yet done the arithmetic.

What Investors Should Know

Collective investment schemes, as Kebira explained, work by pooling investor capital and deploying it across the broader market through professional fund managers, allowing individuals to invest passively without conducting their own market research or responding to daily volatility. Returns are distributed — distinct from traditional stock dividends.

For these vehicles to fulfil their promise, three criteria must be met, according to Adnori: profitability, liquidity, and safety. Nigeria’s investment sector is making meaningful progress on all three fronts. The N10 trillion milestone is not fiction. But investors who understand the inflation context, interrogate real returns, and scrutinise the quality — not just the size — of their fund managers will be far better positioned to determine whether their share of that N10 trillion is actually growing in value, or simply growing in name.