Stanbic IBTC through its Dollar Fund is promising investors a currency diversified portfolio with stable income.
Dollar Funds have now become a staple portfolio option offered by many hedge funds and asset managers in Nigeria due to the demands of customers to invest in foreign currencies against the recent depreciation of the naira.
With the Dollar Fund, Stanbic IBTC hopes to attract working class millennials looking to invest towards generating passive income in USD.
The fund invests about 70% of the portfolio in high-quality eurobonds, about 20% in USD savings accounts, and the remainder in foreign equities that are recognized by the SEC.
In this review article, we’ll take a look at the features of the Stanbic IBTC Dollar Fund to determine if it’s the right fit for us to invest.
Features of Stanbic IBTC Dollar Fund
The Stanbic IBTC Dollar Fund was launched in 2017 with a plan to offer an alternative investment option for investors who are inclined to currency diversification.
The Fund is quite stable, as 30% of it goes into short-term USD deposits and regulated equities dominated in USD.
This makes it the perfect investment vehicle for investors who want to tuck money away in return for stable passive income in dollars.
Benefits of Stanbic IBTC Dollar Fund
The Stanbic IBTC Dollar Fund is quite similar to that of other financial institutions in Nigeria, especially that of the FBN Dollar Fund.
However, there are few benefits of the fund that may just swing investors’ decisions to stick with Stanbic IBTC Dollar Fund.
The first benefit is that the fund is highly diversified, which makes it a pretty safe dollar investment vehicle for Nigerian investors who are looking for stable USD passive income.
The Stanbic IBTC Dollar Fund is allocated across a wide range of foreign currency assets in a way that lowers concentration risk.
Secondly, the Stanbic IBTC Dollar Fund is designed like a collateralized asset that can be used to secure a loan with Stanbic IBTC bank.
So, investors now have a choice of either liquidating or activating the collateral features of their paper asset.
Lastly, one of the best features of the Stanbic IBTC Dollar Fund that makes it the right fit for millennials is that it can be accessed fully online.
So, potential investors do not even need to go through the hassles of visiting any Stanbic IBTC bank branch.
They could sit at home and start investing just by the click of a button.
How to Invest in Stanbic IBTC Dollar Fund
You can start investing in the Stanbic IBTC Dollar Fund by visiting their asset management portal and filling your personal details.
You will need a passport photograph, a government-issued identity card and proof of address document.
Alternatively, you can visit any Stanbic IBTC bank branch to fill the Dollar Fund subscription form to get started.
The minimum investment amount is $1000 while the minimum investment tenure is 180 days, which equals about 6 months.
A penalty of 20% on the accrued income applies when you make withdrawals within the holding period.
The Stanbic IBTC Dollar Fund is an open-ended fund, so you can make subsequent investment deposits of minimum $500.
How Much Interest Does Stanbic IBTC Dollar Fund Offer?
The Stanbic IBTC Dollar Fund does not offer any guaranteed interest. So, what you earn from the fund could vary.
You could however use the recent performance of the fund to make more informed decisions on your investment.
Performance of the Stanbic IBTC Dollar Fund
- 30-day ROI – 0.55%
- 1-Year ROI – 5.64%
- 5-Year ROI – 28.83%
In my opinion, the above return is quite decent even though I expected more for a fund that claims to have an “aggressive” risk profile.
What I Like About Stanbic IBTC Dollar Fund
Personally, I think the features of this fund are quite impressive.
The fact that it helps me to invest in a stable foreign currency portfolio is the most impressive highlight for me.
However, with the way this fund is designed, it is more suited for long-term investors who are not too concerned about keeping their investment liquid.
What I Dislike About Stanbic IBTC Dollar Fund
Personally, I’m not too impressed with the ROI of this fund.
For a fund that claims to have an aggressive risk profile, I expected more returns for the assumed level of risk exposure.
However, if you look at the returns realistically, you’d see that at about 5.7% it is still competitive when compared with returns obtainable industry-wide.
Can You Lose Money With Stanbic IBTC Dollar Fund?
Despite this fund being well diversified and quite stable, it is still exposed to some considerable risk as most funds with an aggressive risk profile.
So, even though the performance of the fund shows a positive return over the past few years, investors should expect periodic losses to occur even if there is a chance of recovery.
Should You Invest in Stanbic IBTC Dollar Fund?
It’s a very good investment option.
If you’re a millennial looking for where to tuck away some part of your dollar earnings, then this could be it.
Personally, I see the Stanbic IBTC Dollar Fund as a form of savings investment account where you can throw in money not needed in the near future while sti earning a competitive interest above what is obtainable in most Nigerian domiciliary accounts.
If you have a huge balance on your domiciliary account in Nigeria, then you’re probably sitting on some free dollar income.
Thankfully, the Stanbic IBTC Dollar Fund account does not accept cash deposits but transfers.
So, you could open a Stanbic IBTC Dollar Fund account in 24 hours and start making some dollar moves while chilling on your bed.