AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Under SEC rules an equity fund must hold at least 70% of its assets in listed shares, while a balanced fund holds 40% to 60% in shares and the rest in fixed income and money market instruments. Choose an equity fund only for money you can leave for about five years or more; a balanced fund suits a medium horizon and a lower tolerance for falls.
Equity funds and balanced funds are the two mutual fund types most Nigerians meet once they move beyond money market funds. Both are unit trusts registered with the Securities and Exchange Commission (SEC), both are priced from their net asset value, and both can go down as well as up. The difference is in what they hold, and that decides how much the value swings and how long you should plan to stay in.
What the SEC rules say each fund must hold
The SEC's December 2019 amendments to its collective investment scheme rules set out what a fund must hold before it can use a name. These are the definitions as published then; check the SEC site for any later amendment.
| Equity fund | Balanced fund | |
|---|---|---|
| Core holding | At least 70% of assets in equities listed on an SEC-registered or recognised exchange | 40% to 60% in equities and 40% to 60% in fixed income and money market instruments |
| Floor on safer assets | None set beyond the 70% equity minimum | At least 20% in fixed income securities at all times |
| Stated objective | Capital growth and/or income | Income and/or capital growth |
| Single-company limit | Up to 15% of the fund, or 1.2 times that share's weight in the benchmark if greater (index trackers excepted) | General fund restrictions apply |
| Benchmark | A recognised index approved by the SEC, kept for at least 5 years | A composite benchmark published quarterly by the fund managers' trade association |
The rules also say a fund called 'aggressive' or 'growth' must meet the equity fund test, and a sector fund is an equity fund with at least 70% in one sector. So the name on the fund is a useful first signal of risk.
How the risk mix plays out
Shares can fall sharply in a bad year. Bonds, treasury bills and money market holdings usually move less. A balanced fund dilutes the share-price swings with that steadier half; an equity fund takes most of them in full. The example below uses invented returns to show the effect, not a forecast.
- Equity fund (example)
- ₦1,000,000 with ₦800,000 in shares and ₦200,000 in fixed income. Shares fall 30% and fixed income gains 5%: ₦560,000 + ₦210,000 = ₦770,000, a fall of 23%.
- Balanced fund (example)
- ₦1,000,000 split ₦500,000 shares and ₦500,000 fixed income. Same moves: ₦350,000 + ₦525,000 = ₦875,000, a fall of 12.5%.
Reverse the year, with shares up 30%, and the equity fund would gain more than the balanced fund. That is the bargain: a larger share of equities means larger gains in good years and larger losses in bad ones.
Getting your money out works the same way for both when they are open-ended funds. The 2019 rules say a trust deed must provide for redemption at prices calculated under the rules, with settlement no later than five working days after the transaction. The difference is the price you get: after a bad month in the stock market, an equity fund's redemption price will usually have fallen further than a balanced fund's, so being forced to sell at that moment costs more. That is why horizon matters so much.
Matching the fund to your horizon
The time you can leave the money untouched matters more than any recent return table. A common rule of thumb in personal finance, not an SEC rule, runs like this:
- Under about two years, or money you might need suddenly: neither fund is a natural fit; a money market fund or savings account is usually used for this. See where to keep an emergency fund.
- About three to five years: a balanced fund lets some growth through while the fixed income part softens falls.
- Five years or more, and you can sit through a large fall without selling: an equity fund gives the most exposure to company growth.
- Somewhere in between: some investors hold both, or move from equity to balanced as the goal gets close.
Inflation is part of the decision. Money that must outpace rising prices over a decade usually needs some exposure to shares, because fixed income returns can trail inflation. Whichever you choose, paying in regularly reduces the risk of starting at a peak; our guide to regular buying in naira shows how.
What to check before you choose
- The fund's factsheet: actual asset mix, top holdings and benchmark. A balanced fund near 60% equities behaves differently from one near 40%.
- Fees: management fee, total expense ratio and any incentive fee. The 2019 rules cap total expenses, excluding incentive fees, at 3.5% of NAV a year. Our guide to fund fees explains each.
- Performance over several years against the benchmark, not one good quarter.
- Minimum investment and any minimum holding period or early-exit charge.
- That the manager appears on the SEC's Find a Registered Operator directory.
Where Pryme fits
Pryme does not manage or sell mutual funds. Some people keep the cash they plan to invest, or their short-term money, in a Naira Savings Box and move it to a fund manager on a set date. Box rates are shown in the app.
Questions people ask
Which is riskier, equity fund or balanced fund?
An equity fund, because SEC rules require it to hold at least 70% in listed shares. A balanced fund holds 40% to 60% in shares, with the rest in fixed income and money market instruments.
Is a balanced fund good for beginners in Nigeria?
It suits someone who wants some growth but cannot stomach large falls, and who can leave the money for a few years. It can still lose value.
How long should I stay in an equity fund?
Plan on five years or more and be ready to hold through falls. Money needed sooner is usually kept in lower-risk places.
Can I switch from an equity fund to a balanced fund later?
Usually yes, by redeeming one and subscribing to the other, though some managers offer switches. Check for early-exit charges first.
Sources
- SEC Nigeria: New Rules and Amendments, collective investment schemes (23 December 2019) · accessed Oct 2026
- SEC Nigeria: New Rules on Collective Investment Schemes, circular (22 June 2020) · accessed Oct 2026
- SEC Nigeria: Find a Registered Operator · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.