AIICO Money Market fund is an open-ended collective investment vehicles that pools investment monies from various individuals, Corporate organizations and High Net-worth Clients (HNC) for the purpose of investing in money market securities, designed to produce short to medium-term growth, income or a combination of the two.
The investment objective of the Fund is to generate regular income for unit holders by investing in high-quality, liquid, and short-tenored fixed-income instruments whilst ensuring the safety of the principal.
In August, the AIICO Money Market Fund showcased its unwavering prowess, achieving a net yield of 10.82% per annum, a testament to its astute investment strategy. Despite a marginal dip from the previous month’s 11.56%, the fund outperformed the benchmark 91-day NTB rate of 5.19%, signaling its enduring strength.
This stellar performance was underpinned by judicious investments in high-yielding fixed deposits and short-term securities, such as commercial papers and Treasury bills, resulting in a weighted average tenor of approximately 62.63 days.
The financial landscape, however, was marked by a rollercoaster of liquidity. Beginning robustly at around ₦800 billion, liquidity dwindled as the Central Bank of Nigeria’s CRR debits impacted banks not meeting the 65% LDR requirement, accompanied by further debits from FGN bond auction winnings, causing negative system liquidity and soaring funding rates.
Later in the month, an influx of funds from FGN 2028 coupon inflows and FAAC credits breathed life into the system. Despite this, CBN interventions tempered liquidity, leading to a notable decline in system liquidity to ₦275.77 billion. This shift caused the Open Repo Rate (OPR) and Overnight Rate (OVN) to rise, contrasting with the favorable levels seen in July 2023.
Simultaneously, the Treasury Bills market demonstrated resilience, opening strongly despite CBN’s CRR debits. The preliminary NTB auction saw rates decline, yet a bearish tone emerged following the CBN’s first Open Market Operations (OMO) auction of the year, pushing closing rates higher, reaching 10.00%, 12.98%, and 14.49%.
Leading to the final NTB auction, tight liquidity prompted selloffs across the NTB curve. At the closing NTB auction for August, the 91-day paper’s stop rate declined, the 180-day paper held steady, and the 364-day paper surged. Post-auction, excitement ensued, particularly for the newly issued one-year paper, with investors eager to recover lost bids, fueled further by FAAC and FGN coupons.