OVERVIEW

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.

INVESTMENT OBJECTIVE

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.

FUND PERFORMANCE

The AIICO Money Market Fund closed the first month of 2024 with a net yield of 13.30%, outperforming the benchmark rate of 5.00% set by the 91-day NTB paper.

The fund’s success was attributed to prudent 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 73.25 days.

FAAC inflows at the beginning of the month bolstered ample system liquidity to approximately N 457 billion early on. Despite inflows from bonds coupons and FAAC during the month, multiple OMO auctions and intermittent CRR debits depleted liquidity, leading to a negative balance by month-end. Overall, system liquidity averaged ₦ 56.70 billion in January 2024, marking a significant decline from ₦ 201.69 billion recorded in December 2023. Nonetheless, average Open Repo Rate (OPR) and Overnight Rate (ON) stabilized at 16.46% and 17.57%, respectively, compared to the 17.25% and 17.94% observed in the preceding month.

The Treasury Bills market saw a bullish run earlier in the month, as banks aimed to invest excess cash and avoid CRR debits. The first NTB auction in January 2024 was oversubscribed by 20.16x, driving a decline in stop rates across tenors. Post-auction, the bullish trend continued driven by improved liquidity from the FGN bond coupons. However, the CBN’s mop ups via OMO auctions, amounting to approximately N 1trillion across three auctions signaled an upward trajectory for yields. Consequently, the treasury bills market closed on a bearish note, in anticipation of higher yields in the short term.

At the second NTB auction, approximately ₦231.82bn was offered and sold across various tenors. Stop rates for the 91-day, 181-day, and 364-day papers declined by an average of c.1.85% month-on-month, closing at 5.00%, 7.15%, and 11.54%, respectively.