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Victory Johnson
Asked: 2026-04-25T19:40:47+00:00 In:

How Do Equity Funds Work in Nigeria and Why Does the Yield Change Over Time?

I invested in equity fund on cowryrise, at first the yield per year was 34% after a month seeing I got some interest I added to the capital, now the yield per year is 41%
Pleas I’m a beginner help me understand, is the interest rate increasing due to added capital, or due to the stock bought by the fund manager
Is it advisible I keep adding to this equity or buy others
Thank you

equity fund nigeriamutual funds nigeria

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2 Answers

  2. Ochoyoda
    Educator

    You’re asking the right question—because what you’re seeing can easily be misunderstood. Let’s clear it properly. 🔍 First: That “34% → 41%” is NOT a fixed interest rate On platforms like Cowrywise, an equity fund does NOT have a fixed interest rate like a bank or money market fund. 👉 What you’re seeRead more

    You’re asking the right question—because what you’re seeing can easily be misunderstood.
    Let’s clear it properly.
    🔍 First: That “34% → 41%” is NOT a fixed interest rate
    On platforms like Cowrywise, an equity fund does NOT have a fixed interest rate like a bank or money market fund.
    👉 What you’re seeing is:
    Estimated annual yield (based on recent performance)
    So it can:
    Go up (like 34% → 41%)
    Go down (even to negative)
    ⚙️ Why did your yield increase?
    There are 2 possible reasons, but one is more important:
    ✅ 1. Market performance (MAIN reason)
    The fund manager invests in stocks.
    If:
    The stock prices go up
    Or dividends are strong
    👉 The fund’s performance increases → yield estimate rises
    ⚠️ 2. Adding more money (NOT the real cause)
    Adding more capital:
    Does NOT increase the percentage yield
    It only increases:
    Your total returns (₦)
    Not the rate (%)
    👉 So be clear:
    Your extra money did NOT cause 41%
    The market performance did
    🧠 How equity funds actually work (simple)
    An equity fund:
    Pools money from many investors
    Fund manager buys stocks like:
    Banks
    FMCGs
    Telecom companies
    If those stocks:
    Rise in price → your investment grows
    Fall → your investment drops
    📊 Important reality beginners miss
    That 41% is not guaranteed
    Next month it can become:
    25%
    10%
    Even -5% (loss)
    👉 Equity funds are volatile
    ⚠️ Very important warning
    Don’t make this mistake:
    “It increased, so let me keep adding aggressively”
    That is how beginners get caught when the market drops.
    ✅ So what should YOU do now?
    Option 1: Continue adding (but wisely)
    ✔ Good if:
    You are investing long-term (3–5 years+)
    You understand risk
    👉 Use small, consistent additions (not emotional deposits)
    Option 2: Balance your investment (BEST for beginners)
    Don’t put everything in equity.
    Instead:
    60–70% → Money Market Fund (safe)
    30–40% → Equity Fund (growth)
    👉 This protects you when market drops
    🎯 Practical strategy for you
    Since you already started:
    Keep your equity fund ✅
    But don’t rely on it alone
    Add:
    A money market fund (for stability)
    Then continue equity gradually
    🧠 Final clarity (very important)
    Yield increase = market performance
    Not because you added money
    Equity fund = no fixed return
    Good for long-term wealth, not short-term profit

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