By Babajide Komolafe

Having explained the basics about mutual funds in previous editions, we now focus on how to invest.

The first step is to choose an asset management company, AMC. To choose a licensed AMC, visit the website of the Securities and Exchange Commission, SEC. On the SEC website, search for ‘Monthly Asset Value of Collective Investment Schemes.” The search will produce the page with the ‘Monthly Mutual Fund Update’.

The Monthly Mutual Fund Update is an excel file, containing the list of all mutual funds licensed by SEC grouped into the following categories: Equity Funds, Money Market Funds, Fixed Income Fund, Dollar Fund, Balanced Fund, Ethical Funds and so on.

The first column contains the name of the fund while the second column contains the name of the Fund manager as well as other details namely: Total Value Of Investment, Total Income, Unrealised Capital Gain/Loss, Total Expenses, Net Income/Loss (N), Net Asset Value, NAV (N) Previous Month, Change In NAV, Expense Ratio, Return On Equity (Roe), Net Asset Per Unit, Earnings Per Unit (EPU), Bid Price (N), Offer Price (N), Number Of Unit Holders, Opening Number Of Units and Closing Number Of Units.

A critical performance indicator provided in the document is the ‘Return of Equity’, in percentage terms. This allows existing and prospective investors objective comparison of the various mutual funds and make informed decisions.

From the list of mutual funds, choose your preference, identify the name of the Fund manager, and then proceed to contact the firm. You can contact the firm via the address, phone number or email address provided by the Fund Manager on its website. To reduce cost and save time, send email to the Fund Manager, expressing interest to open a mutual fund investment account.

he response to your email should come within 24 hours and with the name and phone contact of a relationship officer of the firm. Upon receiving the response to your email, contact the responder via phone to establish some physical contact.

Among other things, the fund manager will provide you with Account opening forms and a list of required documents, typically proof of address (utility bills), means of identification and passport photograph.

Once you complete the form and submit the required documents, the account opening process should be completed within a week, with the fund manager providing you with your account number. You are to include the account number and your name as reference when depositing money into your investment account with the fund manager.