Investment

The Nigerian Exchange-Traded Fund (ETF) market maintained strong momentum in 2025, extending the growth recorded in 2024 and reinforcing ETFs as a viable investment option for both new and experienced investors.

According to valuation reports from the Securities and Exchange Commission dated January 3 and December 24, 2025, the total Net Asset Value (NAV) of all listed ETFs rose from N12.77 billion in 2024 across 11 funds to N18.08 billion in 2025 with 12 ETFs. This represents a 41.7% increase in total market value year-on-year.

Although the average year-to-date yield moderated slightly, easing from 53% in 2024 to 48% in 2025, the sharp expansion in assets under management points to rising investor confidence and deeper participation in the ETF segment of the Nigerian Exchange.

ETFs that stood out in 2025

Among the 12 ETFs listed on the NGX in 2025, several funds distinguished themselves by size, yield, or consistency:

• VG 30 ETF, managed by Vetiva Fund Managers, accounted for about 43% of total ETF NAV, making it the largest fund in the market. It also delivered a solid two-year average yield of 45.12%.

• Lotus Halal ETF, managed by Lotus Capital Limited, posted one of the strongest performances, with a two-year average yield of 64% and a robust NAV of about N2 trillion, representing over 11% of combined ETF NAV.

• New Gold ETF, managed by New Gold Managers, continued its impressive run. After averaging 88% yield across 2024 and 2025, it still delivered about 60% yield in 2025, benefiting from strong gold price dynamics.

• VCG ETF, also managed by Vetiva, recorded the highest yield among smaller funds, with a two-year average of 83.20% and a standout 118.02% return in 2025.

• Stanbic IBTC ETF 30 Fund, managed by Stanbic IBTC Asset Management, delivered stable performance, posting a two-year average yield of 41.49%, appealing to investors seeking consistency.

While performance was generally strong, investors are reminded that past returns do not guarantee future results, making it important to understand how ETFs work before investing.

What is an ETF?

An ETF can be thought of as a basket of assets—such as stocks, bonds, or commodities—packaged into a single investment product. Instead of buying shares of one company, investors gain exposure to multiple assets at once, helping to spread risk.

This diversification means weaker performance in one asset can be offset by stronger performance in others, making ETFs a cost-effective way to build a balanced portfolio.

How ETFs work on the NGX

ETFs are listed and traded on the Nigerian Exchange just like ordinary shares. Investors can buy or sell ETF units through licensed stockbrokers or, in some cases, directly via the fund manager.

Minimum investment requirements vary by fund. Some ETFs allow entry with as little as one unit, while others require larger minimums. For example, the Stanbic IBTC ETF 30 requires a minimum investment of 1,000 units.

Which ETFs should you consider for 2026?

Your choice of ETF should depend on your financial goals and risk appetite:

• For high growth potential: The New Gold ETF remains attractive, with its NAV rising from N1.3 billion in 2024 to N2.01 billion in 2025, supported by strong commodity performance.

• For size and stability: The VG 30 ETF, which contributed over 43% of total ETF NAV in 2025, offers exposure to Nigeria’s largest and most liquid companies, making it suitable for investors seeking broad market exposure.

Key factors to consider before investing

Before selecting an ETF for 2026, investors should carefully review the fund’s factsheet, paying attention to:

• Investment strategy: Whether the fund tracks equities, bonds, commodities, or a mix

• Minimum investment requirement: The number of units needed to get started

• Risk profile: Aggressive versus conservative positioning

• Expense ratio and management fees: Lower costs can significantly improve long-term returns

• Replication method: Whether the ETF fully tracks its benchmark or uses sampling

Bottom line

ETFs remain one of the most flexible and accessible ways to diversify an investment portfolio on the NGX. By understanding how each fund works and aligning choices with personal financial goals, investors can position themselves more effectively for long-term growth in 2026 and beyond.

With interest rates still elevated in late 2025, Nigerian investors looking for short-term, high-yield opportunities are increasingly turning to commercial paper (CP)—a corporate-issued, fixed-income instrument that has outperformed most Treasury Bills (NTBs) and money-market alternatives this year. As inflation gradually cools and monetary conditions begin shifting, CPs have emerged as one of the few investment options still offering positive real returns, making them especially appealing to risk-conscious investors seeking strong yields without sacrificing liquidity.

How Much N5 Million Currently Earns in Commercial Paper

Using the November 2025 CP programmes issued by Dangote Cement and Daraju Industries, a N5 million placement would generate the following returns:

181 days @ 16.10% (Dangote Cement)

• Gross interest: N399,191.78

• Net interest after 10% withholding tax: N359,272.60

265 days @ 16.70% (Dangote Cement)

• Gross interest: N606,232.88

• Net interest: N545,609.59

364 days @ 18.38% (Daraju Industries)

• Gross interest: N916,482.19

• Net interest: N824,833.97

These returns are significantly higher than the yields available on many competing instruments. Corporates continue to issue CPs at elevated discount rates due to Nigeria’s tight monetary environment, where borrowing costs remain high. With analysts expecting the Central Bank of Nigeria (CBN) to begin monetary easing in 2026, locking in a CP now—especially with tenors between 270 and 364 days—allows investors to secure today’s high yields before rates potentially decline.

Comparing CP Returns with Treasury Bills

Treasury Bills remain a staple for conservative investors, but their yields currently lag behind top CP offerings. Using the latest NTB auction rates:

182 days @ 15.50%

• Gross interest: N387,500.00

• Net interest after 10% WHT: N348,750.00
  (CPs outperform by about N11,691)

364 days @ 17.50%

• Gross interest: N875,000.00

• Net interest: N787,500.00
  (CPs outperform by roughly N41,482)

Importantly, NTBs—previously exempt from withholding tax—are now subject to a 10% WHT on interest, following a Federal Inland Revenue Service (FIRS) directive issued in October 2025. This reduces their competitive advantage and reinforces why investors must now compare net-of-tax returns, not gross yields.

How Returns Compare with Stocks

If an investor had placed N5 million in a stable, high-performing equity—such as Zenith Bank—six months ago and the stock appreciated by 16.10%, the gain would be N805,000, about double the 181-day CP return.

However, equities carry price volatility. A 16% gain can just as easily become a 16% loss. CPs, though unsecured, are more predictable as long as the issuer maintains strong credit quality.

For investors prioritizing stability, predictable cash flows, and short tenors, CPs offer a balanced blend of yield and risk control.

Recent CP Issuances Offering Attractive Rates in 2025

The Nigerian debt capital market witnessed several notable CP issuances in November–December 2025:

• HillCrest Agro-Allied (closes 16 Dec)

  • 182-day: 19.42% (discount), 21.50% yield

  • 364-day: 19.69% (discount), 24.50% yield

• Mecure Industries (closes 12 Dec)

  • 269-day: 18.18% (discount), 21% yield

• GLNG Funding SPV (closed 5 Dec)

  • 179-day: 18.21% (discount), 20% yield

  • 270-day: 18.92% (discount), 22% yield

• Daraju Industries (closed 26 Nov)

  • 270-day: 18.55% (discount), 21.50% yield

  • 364-day: 18.38% (discount), 22.50% yield

• Dangote Cement (closed 19 Nov)

  • 181-day: 16.10% (discount), 17.50% yield

  • 265-day: 16.70% (discount), 19.05% yield

A N5 million investment meets the minimum subscription for many CPs and grants access to attractive yields across multiple sectors.

Why CPs Are Attractive Right Now

• High interest rate environment: Yields remain well above traditional bank deposits.

• Short maturities: Tenors of 90–364 days allow fast reinvestment cycles.

• Lower entry thresholds via fintech platforms: Retail investors can participate with as little as N100,000.

• Strong issuer participation: Corporates across FMCG, manufacturing, agriculture, and energy continue to issue CPs aggressively.

Key Considerations Before Investing in CPs

• Ensure the CP programme is SEC-registered and listed on FMDQ.

• Review independent credit ratings from Agusto, GCR, or DataPro.

• Be aware that many CPs lack secondary-market liquidity.

• Assess the issuer’s financial health—CPs are unsecured obligations.

How to Invest N5 Million in CPs

1. Open an investment account with a licensed broker or issuing house.

2. Monitor CP offerings via FMDQ, brokers, or issuers.

3. Conduct due diligence on the issuer’s creditworthiness.

4. Choose a tenor aligned with your cash-flow needs.

5. Subscribe at the discounted price and fund the investment.

6. Hold to maturity or trade on the secondary market where liquidity exists.

Deploying a ₦10 million investment in December 2025 requires a disciplined approach that goes beyond simply buying popular assets or following short-term market excitement. In a period marked by shifting macroeconomic conditions, evolving monetary policy, and strong investor interest in inflation-protection strategies, the most successful investors will work with a plan grounded in clear priorities: the trade-off between risk and return, the outlook for real inflation-adjusted performance, and the need to maintain liquidity while pursuing long-term growth.

Investment decisions vary from one investor to another—some want rapid expansion of capital, others prioritize steady income, and many prefer a balanced portfolio that offers both. However, a universal starting point applies to all investors: your chosen asset must produce returns that justify the time commitment, the risk of price volatility, and the opportunity cost of allocating your funds to one asset instead of another.

One effective way to measure whether an investment makes sense is by comparing it to risk-free instruments such as Treasury Bills, Federal Government Savings Bonds, and longer-tenor sovereign bonds. When secure assets backed by the Federal Government are delivering yields around 15%, as seen in the NTB auction of December 3, 2025, any asset that introduces additional risk must provide a return well above that benchmark to be justified.

Investors also need to pay close attention to inflation because headline gains lose their meaning when purchasing power is being eroded in real terms. With inflation recorded at 16.05% in October 2025, nominal returns below that threshold effectively represent a loss. To achieve meaningful real growth, investors should therefore target a minimum return above 27% annually, providing enough margin to outperform inflation and risk-free alternatives.

Alongside macro indicators, personal circumstances—including age, income consistency, risk appetite, and the time horizon of the investment—shape what an ideal portfolio mix looks like. However, systematic risks tied to interest rates, regulatory changes, geopolitics, FX volatility, and global commodity cycles are unavoidable influences that investors must account for when making decisions.

Notably, inflation has fallen sharply from the 24.48% peak in January 2025, creating a market environment where nominal and real returns are beginning to converge again. For disciplined investors, this environment supports a strategic, diversified approach positioned to capture upside potential while protecting against sudden shocks.

A structured allocation across equities, fixed income, and Collective Investment Schemes (CIS) offers a balanced model that provides growth, income, stability, and professional management. A practical framework divides the ₦10 million portfolio into 30% equities (₦3 million), 40% fixed income (₦4 million), and 30% CIS (₦3 million).

Equities – ₦3 Million (30%): Growth Catalyst

The Nigerian equities market remains one of the most attractive destinations for generating real returns. Despite a record drop in November caused by profit-taking and concerns over the proposed 30% Capital Gains Tax, the market ended the month with a 39.44% year-to-date gain, well above inflation.

Notably, more than 94 listed companies delivered returns above 23%, averaging 129% gains, highlighting the depth of opportunities. For December, emphasis should be placed on companies with solid fundamentals and a consistent history of dividend payments. Dividend income complements capital appreciation and provides downside cushioning in volatile periods.

A sample allocation may include:

• Agriculture (₦1 million) – Okomu Oil, Presco: strong dividends and impressive price momentum.

• Banking (₦1.5 million) – GTCO, Zenith Bank, Access Holdings: attractive yields (8–12%) and strong capital positions as recapitalization reshapes the sector.

• Oil and Gas (₦500,000) – Seplat, Aradel Holdings: strong dividend profile and medium-term upside potential.

A prudent investor can expect 30% to 40% return on this segment in 12 months.

Fixed Income – ₦4 Million (40%): Defensive Stability

Fixed income instruments provide predictable performance and smooth out volatility from equities. With yields now between 12% and 16%, many options exceed inflation for the first time in months, creating an attractive entry point.

A structured allocation may include:

• ₦2 million in 1-year Treasury Bills (15–16%)

• ₦1 million in Savings Bonds (12.8–13.8%)

• ₦1 million in Corporate Commercial Papers (22–28.5% for 180–270 days)

This blend should deliver 16%–20% return, equivalent to ₦640,000 to ₦800,000.

Collective Investment Schemes – ₦3 Million (30%): Expert Diversification

CIS options—ranging from equity funds to money market funds, balanced funds, REITs, and FX-based funds—offer convenient diversification managed by professionals.

SEC valuation data from November 14, 2025 shows:

• Equity funds: 53% YTD

• Money Market Funds: 18% YTD

• Dollar/Eurobond Funds: 9% YTD

• REIT-focused funds: 18% YTD

A ₦1 million allocation across equity funds, money market funds, and dollar funds provides a diversified mix supporting growth, liquidity, and FX protection, delivering 26–30% return.

Portfolio Outcome

Across the full ₦10 million allocation:

• Expected return: 23% – 29%

• Projected gain: ₦2.32 million – ₦2.9 million

• Profile: growth from equities, safety from fixed income, diversification from CIS.

In a market still influenced by FX risk, high interest rates, and post-inflation transition, this diversified model provides access to upside potential while managing exposure. Investors who remain disciplined, monitor macro shifts, and rebalance intelligently are well-positioned to benefit from the conditions shaping the end of 2025 and the early opportunities of 2026.

Nigeria’s recent removal from the Financial Action Task Force (FATF) grey list has delivered a major boost to the country’s financial reputation and safeguarded the economy from losing more than $30 billion in potential capital inflows. This was revealed by the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, during his keynote address at the annual Bankers’ Dinner hosted by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.

Cardoso described Nigeria’s exit from the grey list as one of the most important developments of the year, noting that the achievement reflects a coordinated national effort led by the Federal Government and supported by the CBN and other key institutions. According to him, the FATF’s decision has effectively restored global confidence in Nigeria’s financial system and significantly reduced the compliance pressure previously faced by local and international banks when processing cross-border transactions.

Citing global economic research, the CBN Governor explained that countries placed on the FATF grey list typically witness a 7.6% decline in capital inflows during the first year of listing. For Nigeria, he noted, this would have translated into more than $30 billion in foregone investment, a burden the economy could ill-afford at a time of heightened foreign exchange pressures and efforts to stimulate growth. “Exiting the grey list signals a major restoration of confidence and reduces friction for correspondent banking relationships,” Cardoso stated.

The CBN Governor highlighted that Nigeria’s removal from the list did not happen by accident. Instead, it was the result of deliberate reforms designed to address deficiencies identified during FATF’s prior assessments. These reforms included tightening the supervision of financial institutions, improving the quality and consistency of reports on suspicious and cross-border transactions, and enhancing intelligence-sharing between regulatory agencies and law enforcement bodies.

Cardoso emphasized that Nigeria had also deployed modern governance and compliance technologies that strengthened monitoring and enforcement capabilities across the financial ecosystem. Among the tools mentioned were the Electronic Financial Evaluation Monitoring System (EFEMS) and the Foreign Exchange (FX) Code of Conduct, both of which introduced stricter transparency requirements and improved regulatory oversight.

Nigeria’s removal from the grey list comes after almost three years of heightened scrutiny and reputational risk. In October, the FATF formally announced the country’s exit, alongside South Africa, Burkina Faso, and Mozambique—countries that similarly implemented wide-ranging reforms to combat money laundering and terrorist financing. The decision marked a significant breakthrough for Nigeria, which had faced concerns from global watchdogs about the robustness of its financial integrity systems.

The exit has already had tangible effects on market sentiment. According to financial reports, the naira showed signs of stabilization and mild strengthening against the US dollar following the announcement, indicating renewed confidence among investors and market participants. The development also reduces the compliance burden on Nigerian banks, which previously had to meet heightened documentation and verification requirements when engaging with global financial institutions.

President Bola Tinubu welcomed the FATF decision, calling it a clear demonstration of Nigeria’s commitment to international financial transparency and anti-money laundering standards. He praised the collaborative effort of national institutions that worked to secure the country’s exit and reiterated his administration’s commitment to reforms that support sustainable economic growth.

As one of the world’s leading standard-setting bodies, the FATF is responsible for establishing global frameworks for combating money laundering, terrorism financing, and proliferation financing. Nigeria’s removal from its grey list not only restores credibility but also positions the country more favorably for future investment flows, international partnerships, and cross-border financial cooperation.