ARM Sharia-Compliant Fixed Income Fund

The latest Islamic fund offering from Nigeria’s Asset & Resource Management Holding Company (ARM) targets both institutional and retail investors with an active management strategy that aims to deliver steady returns.

Entry into the open-ended ARM Sharia-Compliant Fixed Income Fund is set at NGN20 million (US$12,596) for sophisticated investors, with subsequent investments in multiples of NGN1 million (US$629.80).

Initial subscription for individuals is NGN10,000 (US$6.30) with additional increments of NGN1,000 (US$0.63) into this fund launched on the 29^th November 2024.

“While designed with Islamic principles, the fund, with a medium to high investment objective, is not restricted to the Muslim investor. Investors who are seeking transparency and sustainability are encouraged to invest into this fund,” ARM Investment Managers Executive Director Mounir Bouba told IFN Investor.

The naira-denominated mutual fund will invest within Nigeria, with a minimum 70% of its net asset value placed in Sukuk issued by the government, non-interest banks and corporates – with a minimum rating of BBB.

This main investment strategy will also focus on Mudarabah, Murabahah and similar contracts that are designated Shariah compliant by an Islamic advisory body or the fund’s internal advisors.

Other asset allocations include up to 30% in Shariah compliant fixed term instruments and income contracts, with a 5% cap on cash holdings.

With a ‘Medium to High’ risk profile, this fund uses a composite benchmark incorporating 70% of three-year Nigerian sovereign Sukuk and 30% of the three-month Nigerian inter-bank treasury bills true yields.

Apart from the typical 1.5% management fee, a “20% of excess returns” incentive fee is provided for the fund manager. Dividend payout is to be conducted twice yearly.

Instituting a 90-day minimum holding period for all investors – a 20% penalty is applied on the pro-rated rental income earned on the portion withdrawn during this period. There is no penalty for redemptions after 90 days.

*Disclaimer:  The opinions and viewpoints expressed in the Fund Profile do not constitute as a recommendation for any funds highlighted. The information presented is not investment advice and should not be treated as such.