PENCOM, Pension Funds

It is no longer news that the Nigerian stock market has been struggling so far in 2018. This struggle is not unique to the Nigerian market though, as the Dow index gave up all the gains it had generated since the beginning of the year just last week. Many retirement savers in the US are now wondering what hit them after looking at their 401K account balances. 401K is a contributory retirement savings account that is popularly used to save and plan for retirement in the United States of America, just like the retirement savings accounts, RSA in Nigeria.

Comparatively, though, Nigerian retirement savings accounts are still managing to add value to pension contributors by gathering monthly positive performances, although in trickles. At the end of September 15 out of the 19 RSA funds (Fund 2) being covered by Quantitative Financial Analytics Ltd, made positive gains with only four seeing reductions in their unit values. Those four are actually more exposed to the equity market which makes them susceptible to the vagaries of the market. The story is more palatable among the Retiree funds (fund 4) where all but one out of the 19 funds under the coverage of Quantitative Financial Analytics Ltd recorded positive performances in September.

On a year to data basis, however, both RSA fund 2 and Retiree Saving Account, fund 4, are holding steady in their resolve to bless contributors with something to smile about. Every RSA is in the black with YTD performances ranging from 2.99% to 8.59%. Here are the best five performing RSA funds as at September ending:

Best Performing Fund:

Name of Fund: Premium Pensions RSA Fund 2
YTD Performance %: 8.59%
YTD Gain per unit: N0.32

Second Best Performing Fund:

Name of Fund: AXA Mansard Pension RSA Fund 2
YTD Performance %: 8.54%
YTD Gain per unit: N0.22

3rd Best Performing Fund:

Name of Fund: Veritas Glanvills Pensions RSA Fund 2
YTD Performance %: 8.3%
YTD Gain per unit: N0.21

4th Best Performing Fund:

Name of Fund: AIICO Pensions RSA Fund 2
YTD Performance %: 7.85%
YTD Gain per unit: N0.23

5th Best Performing Fund:

Name of Fund: Legacy Pensions RSA Fund 2
YTD Performance %: 7.69%
YTD Gain per unit: N0.26

The performance story is even better at the Retiree fund 4 category, whose little or no exposure to equities has helped to generate even higher returns than the Retirement Savings Account Fund 2. While the highest YTD return on the RSA side is 8.59%, it is 11.95% on the Retiree Fund side. Again, here are the best five performing Retire Funds:

Coronation Research

Best Performing Fund:

Name of Fund: Stanbic IBTC Pensions Retiree Fund 4
YTD Performance %: 11.95%
YTD Gain per unit: N0.38

Second Best Performing Fund:

Name of Fund: AXA Mansard Pension Retiree Fund 4
YTD Performance %: 11.49%
YTD Gain per unit: N0.27

3rd Best Performing Fund:

Name of Fund: ARM Pensions Retiree Fund 4
YTD Performance %: 11.28%
YTD Gain per unit: N0.32

4th Best Performing Fund:

Name of Fund: AIICO Pensions Retiree Fund 4
YTD Performance %: 10.52%
YTD Gain per unit: N0.29

5th Best Performing Fund:

Name of Fund: OAK Pensions Retiree Fund 4
YTD Performance %: 10.45%
YTD Gain per unit: N0.30

NSE Pensions Index Performance
Compared to the NSE Pensions Index, which is predominantly equity based, both RSA and Retiree funds are out performing. The YTD performance of the index as at September ending stood at minus 11.63% meaning that the best performing RSA and Retiree funds are outperforming the index by 20% and 23% respectively. Indeed, all the RSA and Retiree funds are currently outperforming the index. However, funds like APT pensions RSA which held sway in previous years with high performances when the equity market was doing amazingly good due to their elevated equity exposure are not doing so well now that the equity market is slacking. APT pensions RSA is at the bottom of the league with 2.99% and 3.28% among Retiree funds. This underscores the importance of active fund management which calls for the fund managers to re evaluate their strategy and engage in some sort of rebalancing and asset reallocation on an ongoing basis and in line with the realities of the market.

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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