Pension Funds Performance

As Nigeria’s ultra conservative pension funds, the Retiree pension funds, continue their slow but steady performance, it has been discovered that ARM Retiree Pension fund lead the rest of the funds in this category with a 3.95% return for the fiscal year ending June 30th, 2018.

This performance which translates to an annualized return of 7.9% seems to be a good performance in a period where the average return for that sub sector of pension funds stood at 2.65% for the fiscal year. Coming as the second top performer is OAK Retiree Pension with 3.42% followed by Stanbic IBTC Retiree Fund’s 3.37%. The rest of the funds were sandwiched in returns ranging from .86% to 3.36%.

Compared to corresponding period performance in 2017, this year’s performance isn’t too different except for outliers like APT and Crusader Retire funds that returned 7.25% and 6.44% respectively. Though the Retiree funds are mostly invested in fixed income securities like FGN securities and Treasury Bills, they seem to have been affected negatively by their global uncertainties that unsettled the equity market during the last two quarters. Unfortunately falling yields on treasury and money market instruments was not enough to provide some cushion for the zig zagging equity market. It is hoped that with the yield curve trending upwards these days, the next two quarters may be better.

However, all the RSA and Retiree funds beat the NSE Pension index which generated a negative return of -5.56% for the fiscal year ending June 30. We have our doubts as to the suitability of the NSE pension index as a bench mark to pension funds, especially the Retiree pension funds. Our doubt is predicated in the fact that the NSE pensions index is purely an all equity index whereas pension funds are predominately invested in fixed income securities.

Using the NSE pension index to measure or gauge the performance of pension funds looks very much like comparing apples and oranges, in our opinion. It may be time for the Nigeria Stock Exchange, the Security, Exchange Commission and the National pension Commission to come up with another bench market that will embody the same asset allocation profile of pension funds because a good bench mark should not only be measurable, it should also be appropriate.

Uchenna Ndimele is the President of Quantitative Financial Analytics Ltd. MutualfundsAfrica.com and mutualfundsnigeria.com (both Quantitative Financial Analytics company website) is a leader in supplying mutual fund information, analysis, and commentary on African mutual funds. We provide reliable fund data; and ratings information that will add value to fund managers, the media, individual investors and investment clubs.

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