In case your funding doesn’t ship returns above inflation, you’re successfully dropping cash.
In in the present day’s surroundings, that bar is ready excessive.
With Nigeria’s benchmark rate of interest at 27.5% and inflation hovering round 22.22%, traders face a posh panorama—the place risk-free property now supply comparatively excessive yields and even optimistic actual returns, whereas riskier property proceed to ship hovering, however extra unstable, returns
Whereas cash market and government-backed fixed-income devices stay strongholds for conservative traders, greenback funds supply foreign money hedge benefits, and equities and cryptocurrencies carry increased return potential—with increased volatility. Commodities, too, supply a buffer in inflationary cycles.
So, the place must you be placing your cash on this elevated yield surroundings?
In accordance with analysts and portfolio managers, the reply lies in constructing a diversified portfolio tailor-made to particular person circumstances.
One which doesn’t simply chase returns however seeks to maximise the Sharpe ratio, which measures how a lot return you’re incomes for every unit of threat you are taking.
In different phrases, it’s not nearly how a lot you make however how well you earn it. By mixing completely different asset lessons—like equities, mounted revenue, overseas foreign money funds, and commodities traders can handle volatility, align with their threat urge for food, and enhance long-term outcomes.
Let’s discover how completely different asset lessons are performing, their prospects, dangers, and the way they could match into your portfolio.
In 2024, the Nigerian Alternate (NGX) confirmed spectacular resilience, with the All-Share Index (ASI) posting a 37.65% year-to-date achieve, outperforming inflation.
About 35 shares recorded triple-digit YtD beneficial properties, and 70 shares delivered returns exceeding the 12 months’s inflation figures.
Coming into 2025—a 12 months formed by {economic} recalibration—the Nigerian inventory market has pulled off an unlikely feat: creating the biggest pool of billion-dollar shares.
As of July 31, 2025, no less than 17 corporations listed on the NGX now boast market capitalizations exceeding $1 billion, collectively price over $45.15 billion (N69.978 trillion), up by $11.7 billion (N18.2 trillion) in simply seven months.
Many of those shares started the 12 months deeply undervalued. Foreign money devaluation made them much more enticing to dollar-based traders, rendering them “low cost” in actual phrases. Improved company earnings additional strengthened the market’s enchantment.
Arnold A. Dublin-Inexperienced, CIO of Cordros Asset Administration, famous through the Nairametrics Drinks and Mics program: “This isn’t only a rally. It’s an enormous alternative—one of the vital compelling contrarian bets in international markets in the present day.”
Equally, Samson Esemuede, of Zrosk Capital, mentioned: “What we’re seeing within the equities market isn’t only a rally — it’s a recalibration.” He added:
This surge is happening even with out important participation from institutional traders. “Simply reallocate 5% of the N3.1 trillion in cash market funds into equities—and see the distinction,” he quipped.
Institutional participation stays skinny. Pension funds allocate simply 11.4% of their N24.10 trillion in property to home equities, whereas mutual funds commit underneath 2% to fairness and balanced funds.
Suggestion: Equities ought to make up 20% to 30% of a growth-oriented portfolio, particularly for traders with long-term horizons and tolerance for volatility.
For conservative traders, Nigerian Treasury Payments (T-Payments) and Federal Authorities Bonds stay go-to property for capital preservation and predictable revenue.
Whereas they might not match equities in capital progress, they provide stability and near-zero credit score threat.
However for retail traders, accessing these devices at enticing yields is turning into more and more troublesome—banks and enormous establishments usually crowd them out at auctions.
In accordance with CBN’s June 2025 public sale knowledge:
With the MPR held at 27.5%, analysts count on yields to remain elevated barring a significant drop in inflation. Although actual returns stay unfavourable, many consider it’s higher to remain protected.
Bismarck Rewane, CEO of {Financial} Derivatives Firm, summed it up:
“When you’re not chasing alpha, one of the best play is to earn 18%–24% with minimal threat and fall asleep.”
Suggestion: Danger-averse traders can allocate 30%–40% of their portfolio to T-Payments and Bonds for revenue and stability.
Mutual funds supply a managed route into numerous markets—cash market, fairness, fixed-income, actual property, or dollar-based funds.
Mutual funds supply a managed route into numerous markets—cash market, fairness, fixed-income, actual property, or dollar-based funds.
Cash market mutual funds dominate, with a NAV of N2.77 trillion as of April 2025. These funds protect capital whereas delivering enticing yields.
