Fund Structure & Regulation

A fund with a relatively fixed number of units that investors usually trade with one another.

Example: After launch, an investorA person or organisation that commits capital with the expectation of a financial return. buys units from another holder on an exchange instead of subscribing directly to the fund.

A closed-ended fund normally has a fixed or relatively stable number of units after raising its initial capital. Investors usually buy and sell those units with one another rather than asking the fund to create or redeem them daily.

A fund may have NAV of ₦100 per unit while exchange buyers offer only ₦90. An investor who needs to sell receives the available market price, not automatically NAV. The ₦10 difference is a discount.

Because the portfolioThe complete collection of investments owned by an investor or managed under one mandate. does not have to meet daily redemptions, it can hold less-liquid assets, but investors themselves may face limited trading. Check the market price, NAV, discount or premium, trading volumeThe number or value of securities traded during a period., fees and whether the fund can issue or repurchase units under specified conditions.

A regulated arrangement that pools investors' money for investmentAn asset or commitment of money made with the expectation of future income, growth, or both. according to a common objective.

Example: A mutual fundA pooled investment vehicle that combines money from many investors into one professionally managed portfolio. combines many subscriptions and issues units representing each investor's share.

A collective investment scheme pools money from many investors and invests it for a shared objective. Each investor owns an interest in the pool rather than choosing every underlying investment personally.

A mutual fund is a common example: many subscriptions enter one portfolio, and units show each investor's share. Other legal forms can also qualify as collective schemes, depending on the jurisdiction and regulation.

Read the scheme's legal and offer documents to learn what it may own, how interests are priced, the fees, withdrawal rules and the roles of the manager, trustee or custodianA licensed institution that safeguards a fund's cash and securities separately from the manager's own assets.. Regulatory registration provides rules and oversight but does not guaranteeA contractual promise by another party to meet an obligation if the primary debtor does not. safety or returns. Verify the scheme and operator on the regulator's current register.

A service provider that performs fund accounting, valuation, reporting, and operational support.

Example: The administrator calculates NAV and prepares investor statements.

A fund administrator performs accounting and operational work for a fund. Typical duties include recording transactions, valuing portfolio positions, calculating NAV, preparing reports and supporting investor statements.

After the manager buys and sells investments, the administrator records those trades and uses prices, expenses and unit counts to calculate NAV. It may also reconcile its records with the custodian's records and flag differences.

The administrator normally does not choose investments or safeguard the assets simply because it calculates their value. Check the provider named in the prospectusThe formal document explaining a fund's objective, strategy, risks, fees, governance, and dealing rules., its exact responsibilities and who independently reviews valuations. Errors can affect unit prices, so correction and compensation policies matter.

The jurisdiction in which a fund is legally established and regulated.

Example: A fund sold locally may be legally domiciled in another country.

Fund domicile is the country or jurisdiction where a fund is legally established. That jurisdiction's laws govern the fund's structure, regulation, reporting and many investor protections.

A fund sold to a Nigerian investor may be domiciled in Ireland while investing mainly in US shares. Ireland is its domicile, the United States is its main investment market, and Nigeria is the investor's residence; these are three different facts.

Domicile can affect fund-level tax, withholding, eligible investors, legal remedies and distributionIncome or realised gains paid by a fund to its unitholders. rules. Check the regulator, legal form and governing documents, and then consider how the investor's own tax residence interacts with them. A familiar sales platform does not turn a foreign-domiciled fund into a local one.

A concise periodic summary of a fund's objective, holdings, performance, risk, and fees.

Example: A monthly factsheet shows the top holdings, asset allocationThe percentage of a portfolio invested across asset classes such as cash, bonds, shares, and property., unit price, benchmarkA reference index or rate used to evaluate a fund's performance., and historical return.

A fund fact sheet is a short, regularly updated summary of a fund. It helps investors see current information without reading the full legal documents each month.

A monthly fact sheet may show the objective, unit price, asset allocation, largest holdings, benchmark, recent returns, risk measures and fees. The date matters because holdings, yields and performance can change after publication.

Use the fact sheet to monitor what the fund currently does and compare it with peers. Check whether returns are net of fees and whether distributions are included. The prospectus and trust deed remain the authoritative source for what the fund is allowed to do; a fact sheet is informative, not the legal contract.

A person or firm that provides investment advice or manages assets under an advisory mandate.

Example: The adviser recommends a strategic asset allocationA long-term target mix of asset classes based on an investor's objectives and constraints. for a pension scheme.

An investment adviser gives investment recommendations or manages assets under an agreed mandate. The client may be an individual, company, pension scheme or fund.

An adviser might recommend that a pension scheme hold 60% in bonds, 25% in shares and 15% in alternatives, then monitor and rebalance that allocation. The written mandate sets what the adviser may decide and what still requires client approval.

Verify the adviser's registration and the legal entity providing the service. Read the scope, fee, conflicts, custody arrangements and authority to trade. Ask how recommendations are selected and whether commissions or product payments influence them. Advice can improve decisions but cannot remove investment risk or guarantee a result.

An approved disclosureThe provision of material information needed for informed decisions. document provided when an investment product is offered to investors.

Example: The document states the investment objectiveThe specific result an investor or fund seeks, such as income, capital growth, or preservation., parties, risks, fees, minimum subscriptionThe process of buying new units in a fund by submitting money and a valid instruction., and use of proceeds.

An offer document gives prospective investors the formal information required for a securities or investment-product offer. Its exact name may be prospectus, offering memorandum, information memorandum or another term set by law.

The document should explain what is being offered, how proceeds will be used, the issuer or fund's objective, material risks, fees, key parties, minimum subscription and investor rights. Financial information and conflicts may also be included.

Read the current final document, not only an advertisement or summary. Check eligibility, dates, pricing, cancellation or refund terms and risk factors that affect the specific offer. Regulatory review or approval of a document does not mean the regulator recommends the investment or guarantees its claims.

A fund that can create or cancel units as investors subscribe and redeem.

Example: A new ₦500,000 subscription causes the fund to issue units at the applicable dealing priceThe price applied to a subscription, redemption, or switch in a fund..

An open-ended fund can create new units when investors subscribe and cancel units when they redeem. The total number of units therefore expands and contracts with investor activity.

If a new investor subscribes ₦500,000 at an applicable price of ₦2 per unit, the fund issues 250,000 units before charges. The money enters the portfolio; the investor does not need an existing holder to sell those units.

Subscriptions and redemptions follow the fund's valuation time, cut-off, charges and settlement rules. The dealing price is based on NAV under the stated method, but the final amount may not be known when an instruction is submitted. Open-ended access does not prevent a fund from delaying or suspending dealing in exceptional conditions allowed by its rules.

The service provider that maintains ownership records and processes specified investor entitlements.

Example: A registrar updates the register after a valid transfer and supports distribution or corporate-action processing.

A registrar maintains ownership records for an issuer or fund and helps process investor entitlements. Its work can include updating details, handling transfers, supporting dividendA payment made from a company's profits to eligible shareholders. payments and managing corporate-action records.

When a company declares a dividend, the registrar uses the relevant register and payment instructions to help identify eligible shareholders and process payment. In dematerialised markets, a depository or broker may maintain account-level positions while the registrar supports the issuer's official records.

Keep names, identification, bank mandates and contact details consistent across official accounts. Use contact information published by the issuer or regulator when correcting a record. A registrar records and administers ownership matters; it does not choose investments or guarantee the value of the securities.

A public authority responsible for regulating a securities market.

Example: The regulator licenses market operators, reviews public offers, makes rules, and takes enforcement action.

A securities regulator is a public authority that makes and enforces rules for securities markets. Its work can include registering market operators, reviewing public offers, supervising trading and investigating misconduct.

In Nigeria, the Securities and Exchange Commission regulates the capital market. An investor can use its official register to check whether a fund managerThe licensed firm responsible for investment decisions and day-to-day management of a fund. or other operator is currently registered rather than relying on a logo, certificate image or sales claim.

Registration is not an endorsement of every product and does not guarantee that an investment will make money. Check the exact legal entity, approved activity and current status. Complaints and enforcement processes also have limits, so investors should keep documents and perform their own product-level due diligenceThe investigation performed before investing to verify facts, risks, ownership, finances, and legal claims..

An investment manager appointed by the primary adviser or fund to manage part of a portfolio.

Example: A global specialist manages the fund's foreign-equity allocation as sub-adviser.

A sub-adviser is a specialist manager hired to manage part or all of a portfolio under delegation from the primary adviser or fund manager. It follows a defined mandate while the appointing firm retains oversight responsibilities under the agreement.

A local fund manager may hire a global equity specialist to select the fund's foreign shares. The sub-adviser controls that allocation, while the primary manager coordinates the whole portfolio and reports to the fund.

Check which assets the sub-adviser manages, its fee, performance record and whether the cost is included in the fund's expenses. The documents should explain oversight, conflicts and what happens if the appointment ends. Delegation adds expertise but can also add cost and coordination risk.

A distinct portfolio within an umbrella fund, with its own objective and assets.

Example: An investor chooses the dollar bond sub-fund within a larger umbrella scheme.

A sub-fund is a distinct portfolio within an umbrella fund. It has its own investment objective, assets, liabilities, NAV and unit or share classes, but it may not be a separate legal entity from the umbrella.

An investor might choose a dollar bond sub-fund while another chooses the umbrella's naira money market sub-fund. Their returns and risks differ because the sub-funds own different assets, even though they share an overall structure.

Read the specific sub-fund supplement as well as the umbrella prospectus. Check its mandate, currency, fees, dealing timetable and whether liabilities are segregated from other sub-funds. A switch to another sub-fund changes the investment exposure and may have cost or tax consequences.

A service provider that maintains investor records and processes subscriptions, redemptions, and transfers.

Example: The transfer agent updates an investor's unit balance after a redemptionThe process of selling fund units back to the fund in exchange for cash..

A transfer agent maintains investor account records and processes changes such as subscriptions, redemptions and transfers. In some markets or products, similar work is performed by a registrar.

When an investor redeems 20,000 units, the transfer agent checks the instruction, updates the unit balance and supports payment processing under the fund's rules. It may also maintain contact, tax and distribution instructions.

The transfer agent records the transaction; it does not decide what the fund invests in or guarantee payment from its own money. Keep confirmations and promptly correct name, bank or ownership errors. Check which provider has authority over the official investor register because responsibilities differ among funds and jurisdictions.

The legal document establishing a trust-based fund and defining the powers and duties of its parties.

Example: The trust deed sets out the manager's and trustee's responsibilities.

A trust deed is the legal document that creates a trust-based fund and sets the powers, duties and limits of its parties. It is the foundation of a unit trust's legal structure.

The deed can state what the manager may invest in, the trustee's oversight duties, how units are created or redeemed, how fees are paid and what happens if a service provider is replaced. The prospectus explains many of these terms to investors, but the deed supplies the underlying legal authority.

Check the deed when a precise right or restriction matters, particularly governance, valuation, borrowing, amendments and termination. It is usually more technical than a fact sheet or prospectus. Marketing material cannot expand the manager's powers beyond the governing documents.

A legal fund structure containing multiple sub-funds under one overall arrangement.

Example: An umbrella fund houses separate equity, bond, and money market portfolios.

An umbrella fund is one legal structure containing several separate investment portfolios called sub-funds. Sharing one overall structure can reduce administration while allowing investors to choose different strategies.

An umbrella might contain an equity sub-fund, bond sub-fund and money market sub-fund. Each has its own portfolio, NAV, objective and investors even though all sit under the same umbrella documents and service providers.

Check whether assets and liabilities are legally segregated between sub-funds; rules differ by structure and jurisdiction. Also review the fees and switching rules, since moving between sub-funds may be easier but is still a redemption and subscription under stated terms. The umbrella's name does not describe the risk of each portfolio.

A pooled investment constituted under a trust deed, with units held for beneficiaries.

Example: The manager invests the portfolio while the trustee oversees the arrangement for unitholders.

A unit trust is a pooled investment created under a trust deed. Investors are beneficiaries who own units representing their share of the trust's portfolio.

The fund manager chooses investments within the deed, a trustee oversees the arrangement for unitholders, and a custodian may safeguard the assets. If an investor buys 20,000 units, the value of the holding depends on the applicable unit price.

The trust deed and prospectus explain the mandate, pricing, fees, distributions and redemption rights. “Unit trust” describes the legal structure, not the asset classA group of investments with similar economic characteristics and market behaviour.: a unit trust can hold money-market instruments, bonds, shares or other permitted assets, so its risk comes from both its portfolio and its operating structure.