All That Glitters…

After working hard to earn our living, it’s important that our investment decisions lead to a growth in wealth. However, when searching for the right investment that meets our requirements, we need to know how to  differentiate an authentic investment option from a fraudulent one, also known as a “Scam”.

Scams are usually too attractive to ignore, offering juicy unrealistic profits over short periods. Our nuggets below can assist in making smart investment choices:

  • Confirm Registration                              Dodgy investment firms or schemes are usually unregistered and not recognized by any regulatory body. While a lot of these schemes have upped their game by claiming to be registered, a simple search on the Securities and Exchange Commission’s website would confirm if an investment firm is indeed registered or not.
  • Know the Promoters – If the promoters of the investment company are unknown, this should be a red flag. It is important to verify that the owners and directors are credible, while the fund managers should have a track record and experience necessary to operate an investment scheme, before committing your hard-earned funds.
  • Pinpoint Location and Contact Details Even though technology has upgraded the mode of investing to the click of a button via apps and websites, any company promoting an investment scheme must have a verifiable address, contact details and a reachable customer care team. Do not judge a company solely on their flashy websites or advanced app offerings.
  • Ignore Urgent Timelines – You wouldn’t buy a new phone without prior research, so why invest hastily? Most fraudulent investment schemes often come with a certain pressure to act quickly so you don’t lose the opportunity. Discussions or advertisements urge you to invest without giving a second thought – “invest before it’s too late” or “invest so you can enjoy first movers’ advantage’’. Ignore the pressure and conduct your due diligence by reviewing all product literature, asking relevant questions, and understanding the product before investing

  • Genuinely False? – At some point or the other, a number of authentic fund managers have had to deal with disclaiming certain products being falsely marketed with their brands. To ensure you’re not being fooled by this method, visit the website of the genuine firm to confirm their products and services. Also ensure you call their customer service lines directly to confirm the product being marketed to you.
  • Be Wary of Investment Platforms – The trend of online scammers opening Facebook, WhatsApp or Telegram groups with the names of genuine investment companies to defraud the public, has grown significantly. Always bear in mind that no registered fund manager will set up an investor group, as this breeches the fiduciary responsibility of confidentiality all investment firms owe their clients.
  • Deal with Authorized Representatives  In this case the product is genuine, however the representative marketing the product is not. Always ensure you are dealing with authorized personnel by asking for official identification. Also note that no authentic investment firm will request payment into an individual’s bank account, an account different from the name of the company or fund you are investing in.
  • Testimony Traps – Finally, try not to fall for the wonderful stories of investors earning astronomical profits from bogus schemes offering very high returns with little or no risk. Many have been burned by jumping on the band wagon.

Solid investments and portfolios are built steadily overtime, by managing risks and return. Always remember, not all that glitters is gold – if it sounds too good to be true, it probably is.

How Did My Investments Perform This Quarter?

The Lotus Halal Investment Fund (Halal)

If you are ready to take some risk, understand investments in equities, and seek capital appreciation,  then   this     is     the    right   fund  for   you.

H1 2021 Full Year 2020 Full Year 2019 Since Inception
2.78% 27.48% 5.99% 66.56%

The Lotus Halal Fixed Income Fund (FIF)

If you’re willing to take minimal risks, prefer capital preservation, quarterly income distribution and no exposure to the stock market, this is the right fund for you.

H1 2021 Full Year 2020 Full Year 2019 Since Inception
4.17% 11.04% 13.14% 66.08%

The Lotus Halal Investment Fund gained 4.16% in the second quarter of the year and erased the negative return of the prior quarter.

The Fund’s positive performance was due to an appreciation in equity investments and income from Sukuk and asset backed investments.

Based on the profits made in 2020, a dividend distribution of 7kobo/unit was earlier paid to all unit holders in February 2021.

In Q1’2021, 72 investors qualified for free units in the Lotus Halal Fund Loyalty Scheme, while 69 investors qualified in Q2’2021.

In the second quarter of 2021, the Fund made a gain of 2.27% which brought the half year return to 4.17%. Assuming the Fund continues its current trend of performance, its return at the end of the year will come to 8.43%.

The fund’s positive outing was due to rental income on Sukuk and profits on fixed income contracts in the reference period.

So far in 2021, the fund has made two quarterly distributions of ₦20.00/unit and ₦20.85/unit, which translates to a dividend yield of 1.72% and 1.81% Q1’2021 and Q2’2021 respectively.

Investing in Mutual Funds

HOW DO MUTUAL FUNDS OPERATE?
A mutual fund is simply an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in different instruments such as stocks, Sukuk or other assets.

Profits made from these investments are distributed to the investors according to their contribution to the pool.

Most mutual funds are “open-ended” which means that an investor can invest or exit the fund at any time they require.

WHAT KIND OF ASSETS DO MUTUAL FUNDS INVEST IN? 
The spectrum of assets depends on the type of fund. For example, equity funds invest in equities while mixed funds invest in a mix of equities and fixed income securities such as bonds or Sukuk.

HOW CAN YOU MAKE MONEY FROM A MUTUAL FUND?
You can make money when you invest in a mutual fund if the fund’s investments make profit. You can realize your profit either by receiving dividends from the Fund or by redeeming your investment from the Fund.

HOW IS YOUR INVESTMENT PROTECTED?
Mutual funds are regulated by the Securities and Exchange Commission which ensures that fund managers operate within the ambits of the law.

Safekeeping of mutual funds’ assets are also vested with a custodian bank.

In addition, mutual funds are required to conduct annual audits and publish the performance of the fund each year.

Please note that the performance of mutual funds can fluctuate and the past performance of a fund does not guarantee future performance.