Equity income funds are a type of mutual fund that focus on dividend-paying stocks. In simple terms, these funds invest in established companies that regularly pay dividends, aiming to deliver both income (from dividends) and capital growth. investopedia Equity Funds.
This โequity incomeโ strategy appeals to investors who want steady payouts plus some upside. For example, the Guaranty Trust Equity Income Fund (Nigeria) invests in top-quality dividendโpaying stocks (soโcalled โdividend knightsโ) listed on the Nigerian Exchange. Assest Manager. These funds may also hold some fixedโincome securities to reduce risk.
High returns (like 40% in a year) are unusual and usually reflect a strong stock market rally. No mutual fund guarantees 40% returns; past performance varies year to year. In Nigeriaโs recent boom market, many equity and balanced funds delivered 30โ90% gains in 2025businessday.ngbusinessday.ng. In the United States, broad market funds typically returned 20โ30% in good years schwab.com, but reaching 40% is rare. Below we compare top examples in Nigeria and in the US, and explain what factors influence such high returns.

Top High-Return Equity Funds in Nigeria
Nigeriaโs stock market surged in 2024โ2025, lifting many mutual funds. According to BusinessDay and Nigerian SEC data, the top 10 mutual funds in Nigeria all returned over 30% in the first half of 2025businessday.ng. This made them attractive (they even outpaced inflation, which was ~23% in midโ2025businessday.ng). In fact, Halo Equity Fund (Halo Asset Management) led with ~90% YTD in H1 2025businessday.ng, thanks to heavy equity exposure. Other top performers included balanced funds with big equity stakes (e.g. Alpha Morgan Balanced ~67.8%, Coral Balanced ~67.7%)businessday.ng.
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Several equity-focused funds hit or exceeded 40% returns. For example:
- Guaranty Trust Equity Income Fund โ +56.21% in H1 2025businessday.ng. This fund (by GT Fund Managers) invests in high-quality dividend stocks on the NGXgtfundmanagers.comgtcoplc.com.
- Zrosk Magna Equity Fund โ +42.34% in H1 2025businessday.ng. A high-conviction equity fund managed by Zrosk Investment.
- Paramount Equity Fund (Chapel Hill Denham) โ +40.66% in H1 2025businessday.ng. Nigeriaโs oldest mutual fund, with a broad mix of quality stocks and fixed income.
- Stanbic IBTC Imaan Fund โ +40.49% in H1 2025businessday.ng. A Shariah-compliant equity fund (minimum 70% equities) that focuses on growth stocks.
Other notable gains: Halo Equity (90%)businessday.ng, Alpha Morgan Balanced (67.84%)businessday.ng, and Coral Balanced (67.70%)businessday.ng. Even mixed funds like Stanbic IBTC Nigerian Equity Fund and ARM Aggressive Growth Fund returned ~30%nairacompare.ngbusinessday.ng. These figures are drawn from SECโreported NAV databusinessday.ngbusinessday.ng.
Example: The GT Equity Income Fund specifically โprovides regular income and long-term capital appreciationโ by investing in dividend-paying stocks on the Nigerian Exchangegtfundmanagers.com. Its returns have swung greatly: it lost โ8.2% in 2020 but then gained +29.64% in 2021, and was up +38.75% year-to-date in 2023gtcoplc.com. This shows past performance can vary.

To compare these, here’s a table of top funds and their recent returns:
Fund Name | Manager | Return (H1 2025) | Type | Minimum Investment |
---|---|---|---|---|
Halo Equity Fund | Halo FI | 90% | Equity | N/A |
Alpha Morgan Balanced Fund | Alpha Morgan Capital | 67.84% | Balanced | N5,000 |
Coral Balanced Fund | FSDH Asset Management | 64.48% | Balanced | N5,000 |
FSDH Balanced Fund | FSDH Asset Management | 64.18% | Balanced | N5,000 |
Cordros Milestone Fund | Cordros Asset Management | 60.42% | Balanced | N10,000 |
Paramount Equity Fund | Chapel Hill Denham | 40.66% | Equity | N10,000 |
Guaranty Trust Equity Income Fund | Guaranty Trust Fund Managers | ~105% (2024 full year) | Equity Income | N5,000 |
While these hot returns are exciting, they depended on a strong market. Nigeriaโs All-Share Index (NGX) rose ~16.6% in H1 2025businessday.ng, and analysts expected >30% for the full year on renewed investor confidencebusinessday.ng. So the fundsโ gains came partly from stock price increases. For beginners, itโs important to note that such high year-to-date yields do not mean 40% is permanent or guaranteed. They occurred in a specific context of market rally and may not repeat every year.
High-Return Mutual Funds in the US
In the United States, equity markets also had strong years recently, but mutual fund returns differ. For context, U.S. stock indexes have delivered roughly 20โ30% gains in a good year. For example, Charles Schwab reports that โthe S&P 500 was up more than 23% in 2024, bested by both the Nasdaq (up nearly 29%) and the Nasdaq 100 (up nearly 25%)โschwab.com. Tech stocks (the โMagnificent 7โ) led with ~67% gains. These index returns include price growth and dividends, and they help gauge what equity funds might do.
However, few diversified mutual funds will consistently hit 40% in the US. Broad U.S. equity funds (e.g. S&P 500 index funds) roughly mirror the index: if the market is +25%, the fund will be around that (minus fees). Sector-specific or small-cap funds can beat the market, but 40% is exceptional.
For example, in 2024 a large-cap tech fund or aggressive growth fund might have reached high double digits, but thatโs still below 40%. Even thematic funds (like certain biotech or clean energy funds) occasionally spike, but usually not reliably every year.
In practice, equity income funds in the US tend to yield much lower figures. These funds focus on dividend-paying stocks (often large, stable companies). By design they prioritize income over explosive growth. For instance, the Vanguard Equity Income Fund (VEIPX), a well-known US equity income mutual fund, had a dividend SEC yield around 2.66% as of April 2023investopedia.com. Its total return (including stock gains) might be 10โ15% in a good year, not 40%. Thatโs partly because dividend payers are usually mature, slower-growing firms.
That said, U.S. investors do see double-digit returns in strong markets. As Schwab notes, Nasdaqโs nearly +29% and S&Pโs +23% in 2024 meant even conservative funds did wellschwab.com. Some actively managed funds did even better by picking the biggest winners.
For example, a largeโcap fund that heavily held big tech could outpace the S&P average. But itโs key for both beginners and experienced investors to understand that historical gains arenโt guaranteed. Aย 40% annual return is very rare in U.S. funds. Most U.S. mutual funds in recent years have returned in the mid-teens on average, with a few standouts approaching or exceeding 20โ30% in best cases.
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Risks, Considerations and Tips
Chasing a headline โ40% returnโ can be dangerous.ย Past performance is not a guarantee of future results.ย High returns usually come with high riskinvestopedia.comgtcoplc.com. In Nigeria, the marketโs upswing in 2024โ25 was unusual; it followed years of inflation and currency changes.
If market sentiment shifts, or if major stocks drop, those mutual fund returns could quickly shrink or turn negative (as seen in 2020 for some funds)gtcoplc.com. In the U.S., stock markets can be volatile too โ after big run-ups one can see corrections.
For beginners, here are some points to consider:
- Fund Objectives: Read the fundโs goal. Equity income funds aim for income plus growth, but their strategies vary. GTโs Equity Income Fund says it invests in โinvestment-gradeโ dividend stocksgtfundmanagers.com, while a fund like Stanbic IBTC Imaan follows Shariah guidelinesbusinessday.ng. Choose a fund whose strategy you understand.
- Volatility and Risk: High-return funds often invest in riskier assets. Only invest what you can afford to lose. Diversification helps โ mixing equity with bonds/money-market funds can smooth returns. The BusinessDay report noted balanced and Islamic funds alongside pure equity funds in the top 10 performersbusinessday.ng, showing risk-managed versions also did well.
- Fund Fees: High fees can eat into gains. If a fund charges 1โ2% annually, a 40% return before fees might become 38% or 39% after fees. Check the expense ratio and any load charges. Lower-fee index funds often outperform high-fee active funds in the long run.
- Investment Horizon: Equity funds are usually for the long term (5+ years). Shortโterm spikes happen, but itโs safer to think in years. GTโs fund description notes itโs good for long-term goalsgtfundmanagers.com. Donโt panic-sell after a slight dip if you have a long horizon.
- Regulation and Security: In Nigeria, funds are regulated by SEC Nigeria and held by custodians. For U.S. funds, SEC regulation applies. Check that your fund is licensed and has a good track record. Beginner investors should stick to well-known asset managers and avoid โtoo good to be trueโ schemes.
- Inflation: High inflation erodes real gains. Nigeriaโs recent inflation (~23%) is high, so a 30% nominal return was about 7% real returnbusinessday.ng. In the U.S., inflation is lower (e.g. ~3% in 2024), so equity returns mostly beat inflation. Always compare returns to inflation to see true growth.
- Currency Risk: Nigerian funds are in Naira. For U.S. dollar-based investors considering Nigeria, currency swings matter. In a year where Naira falls sharply, an Naira fundโs local return might overstate dollar returns. The reverse is also true. Always factor exchange rates if investing internationally.
How to Invest in These Mutual Funds
Getting started is easy. Most require a minimum of N5,000-N10,000. Visit the fund manager’s website, like gtfundmanagers.com for Guaranty Trust, or use apps like Stanbic IBTC or Cowrywise. Provide ID, bank details, and choose your fund. Track returns through monthly fact sheets or sites like moneycounsellors.com.
For global options, consider funds like Vanguard Equity Income (2.3% yield but lower growth) or Fidelity Global Dividend for steadier but less dramatic returns.
Conclusion
In summary, no fund can promise a fixed 40% return like a savings account might promise interest. Instead, some mutual funds have achieved 30โ90% returns during strong market rallies, especially in emerging markets. For example, in H1 2025 several Nigerian equity funds delivered ~40% or morebusinessday.ngbusinessday.ng. Guaranty Trustโs Equity Income Fund itself returned 56.2% in that periodbusinessday.ng and had even higher returns before, though it also had down yearsgtcoplc.com. These past returns are cited data, not guarantees.
In the United States, top equity indexes were up ~20โ30% in recent strong yearsschwab.com, so a U.S. equity fund might have returned in that range (or higher if it concentrated in winning stocks). But 40%+ in a year is exceptional in U.S. funds. U.S. equity income funds typically yield much less (often in the midโsingle digits to lowโteens) because they focus on dividend-paying blue chips.
Advice: If you seek high returns, understand the risks. Look for funds that match your risk tolerance. For beginners, diversified index or broad equity funds are safer than โall eggs in one basketโ schemes. For experienced investors, high-growth or focused funds can be part of a portfolio, but still manage exposure. Always read fund factsheets, check the managerโs history, and remember that markets fluctuate. High returns are exciting, but protecting capital and being patient often pays off more reliably in the long rungtcoplc.cominvestopedia.com.