The high-interest regime that characterized the Nigerian market in the early to the end of 2019 seems to have paid off, as many pension funds in Nigeria recorded impressive performances in the year.
Irrespective of the poor scorecard of the Nigerian stock market in 2019, the Nigerian pension funds continued their winning streak, having been shielded by the over-allocation of their assets to the fixed income instruments of the market.
The Retirement Savings Account, RSA, category made an average of 13%, with returns ranging from 19.38% to 6.94%. Information about the performances of AXA Pensions RSA and Crusader Pension RSA were not available and efforts to get such information yielded no result. Those are therefore excluded in this report. Below are the 5 best performing RSA funds as at the end of 2019.
Best Performing Fund
- Name of Fund: APT Pensions RSA Pension Fund 2
- YTD Performance %: 19.38%
- YTD Gain per unit: N0.54
Second Best Performing Fund
- Name of Fund: AIICO Pensions RSA fund 2
- YTD Performance %: 16.45%
- YTD Gain per unit: N0.52
3rd Best Performing Fund
- Name of Fund: Premium Pensions RSA Fund 2
- YTD Performance %: 15.95%
- YTD Gain per unit: N0.65
4th Best Performing Fund
- Name of Fund: Fidelity Pensions RSA Fund 2
- YTD Performance %: 15.17%
- YTD Gain per unit: N0.43
5th Best Performing Fund
- Name of Fund: Investment One Pensions RSA Fund 2
- YTD Performance %: 14.78%
- YTD Gain per unit: N0.37
[READ MORE: This is how much Federal Government borrowed from Pension Funds in 2019)
Retiree Fund Performance
Retiree Pension Funds, otherwise known as fund 4, performed slightly less than the RSA funds, for the first time since I started tracking pension funds in Nigeria over 5 years ago. This may not be unconnected with the falling interest rate trend that was the hallmark of the fourth quarter of the year, as Retiree funds have greater exposure to fixed income securities.
On average, however, Retiree funds did better than RSA funds, generating an average return of 13.63% in 2019. The returns, which ranged from 18.5% to 9.34%, have Veritas Glanvills (VG) Retiree fund taking the lead. Again, AXA Mansard and Crusader Retiree Pensions funds are excluded from the analysis for lack of data.
Here are the best 5 Retiree funds
Best Performing Fund
- Name of Fund: Veritas Glanvills Pension Retiree Fund 4
- YTD Performance %: 18.50%
- YTD Gain per unit: N0.56
Second Best Performing Fund
- Name of Fund: Investment One Pensions Retiree fund 4
- YTD Performance %: 17.02%
- YTD Gain per unit: N0.37
3rd Best Performing Fund
- Name of Fund: Fidelity Pensions Retiree Fund 4
- YTD Performance %: 17.02%
- YTD Gain per unit: N0.48
4th Best Performing Fund
- Name of Fund: APT Pensions Retiree Fund 4
- YTD Performance %: 15.75%
- YTD Gain per unit: N0.48
5th Best Performing Fund
- Name of Fund: AIICO Pensions Retiree Fund 4
- YTD Performance %: 15.72%
- YTD Gain per unit: N0.49
[READ MORE: Pension funds managers are really going to struggle in 2020 – Sigma Pensions CEO)
NSE Pensions Index Performance
Compared to the NSE Pensions Index, which is predominantly equity-based, both RSA and Retiree funds outperformed the index. The YTD performance of the index stood at minus 12.7%, meaning that all the funds beat the index with double-digit outperformance. Pension fund investors should not wallow in the euphoria of beating the index so badly, because I sincerely believe that the NSE Pensions Index is not a good benchmark for measuring the performance of pension funds.
It is very much akin to comparing apples to oranges. The NSE Pensions Index is an equity-based index, while the pension funds, be it RSA or Retiree, are fixed income-based funds; they are not the same in both components and strategy. Both the Stock Exchange, the Security and Exchange Commission and the Pension Commission should do Nigerian pension fund investors and analysts favour and come up with an index that is worthy of a pension fund industry that is worth over N10 trillion.
Until that happens, pension fund investors will continue to be deluded in the “fact” that their funds are beating the market.
In spite of lack of a better benchmark, pension fund managers in Nigeria have been doing great, both in performance and transparency.