MERGROWTH ETF

Growth investing is an approach that seeks shares in companies expanding their revenues or earnings significantly faster than the broader market. The idea is that these companies are in high-demand sectors or have strong competitive positions that allow them to keep compounding their business value — and, over time, their share price — even if their current valuation looks expensive by traditional measures.

For MERGROWTH specifically, the fund tracks the NGX Meristem Growth Index, which screens Nigerian-listed companies using growth metrics such as revenue growth rate, earnings-per-share (EPS) growth, and return on equity (ROE). The result is a basket of stocks that, at the time of selection, qualify as growth leaders within the NGX universe. This differs from MERVALUE, which screens for cheapness relative to fundamentals — growth investors are willing to pay a premium for companies expected to keep expanding.

Growth investing carries its own risks that differ from value. Because growth stocks often trade at high price-to-earnings multiples, they are more sensitive to changes in interest rates, market sentiment, or earnings disappointments. A single quarter of missed revenue guidance can trigger a sharp price decline. The approach assumes that, over time, consistent compounders will deliver superior capital appreciation — but there is no guarantee that any individual holding or the basket as a whole will meet those expectations.

Growth and value strategies tend to rotate in and out of favour depending on the economic cycle. Growth has historically outperformed during bull markets and low-interest-rate environments, while value tends to hold up better during downturns or rising-rate cycles. Nigerian equity markets have their own cycles, and the NGX growth landscape includes sectors like banking, consumer goods, and industrials where earnings growth can be tied to macroeconomic conditions such as GDP growth, population trends, and commodity prices. A time horizon of at least 3 to 5 years is generally recommended when investing in a growth ETF like MERGROWTH.