As stock-taking and post mortem analysis of 2019 continues, analysts at Quantitative Financial Analysis have gone through their analysis tools to filter Nigerian mutual funds according to their performances in 2019. In one of my articles on why you should measure the performance of your portfolio of investment, I gave some convincing reasons for doing just that.
If you do not know where you are, in relation to your investment, you may not know if the strategy you are following will lead you to the promised land of investment goals. So, knowing the performance of your investment helps you know when to engage in any form of strategy shift or portfolio rebalancing.
Knowing how good or bad your mutual fund is doing in comparison with its peers, (peer comparison), helps you to know if you should continue with your current investment manager if you need to try another one, or even diversify across managers. The performance of your portfolio helps you know whether your asset selection is good enough in helping you achieve your financial goals.
Unfortunately, one bad part of knowing the performance of your fund is that it can make you sad, especially if you are losing money. With that summary of the need to know how your fund is doing, it may be imperative to warn you upfront that past performance is not a guarantee of future performance. This analysis is made on a compilation of fund data released by the Securities and Exchange Commission (SEC).
New Gold ETF leads the pack
In 2019, New Gold Etf took the lead as the best performing fund with a return of 161%, having ended the year at a unit price of N5,220 from previous year end close of N2,000. New Gold ETF is about the most volatile fund in Nigeria, and its risk-reward ratio is 19.33 to 16.55.
Vetiva Sovereign Bond ETF
They blazed the trail as the second best performing fund after recording a performance of 26.39%, by ending the year at unit price of N202.44 from its previous year-end close of N159.85. The fund, which benefits from positive price changes and exchange rate volatility, has a risk-reward ratio of 2.74 to 7.52.
United Capital Euro Bond Fund
It recorded a performance of 23.83% to take the third position of best fund performers. Again, benefiting from the volatility in the local currency, the fund rose from a previous year-end close of N32,904.26 to end 2019 at N40,746.82. On the risk-reward spectrum, the fund stands at 2.52 to 6.79.
Does size affect performance?
In many endeavours in life, the question of whether size affects performance always rears its ugly head at one time or the other. In the mutual fund arena, that question often comes to investors’ minds when looking at funds to invest in.
Though the effect of size on performance is a topic I would like to write in more detail about, suffice it to say here that only one of the many funds being managed by the largest asset management company in Nigeria, the Stanbic IBTC Asset Management company, made it to the list of high performers in 2019.
Even at that, its flagship fund, the Stanbic IBTC Absolute fund, ended up at the ninth position out of the ten best performing funds. That begs the question, does size matter? Be that as it may, below is the list of the 10 best performing mutual funds in 2019.
Best Performing Fund
- Name of Fund: New Gold ETF
- YTD Performance %: 161%
- YTD Gain per unit: N3,220
Second Best Performing Fund
- Name of Fund: Afrinvest Equity Fund
- YTD Performance %: 47.62%
- YTD Gain per unit: N47.62
Second Best Performing Fund
- Name of Fund: Vetiva S&P Nigeria Sovereign Bond Fund
- YTD Performance %: 26.39%
- YTD Gain per unit: N42.19
Third Best Performing Fund
- Name of Fund: United Capital Euro Bond Fund
- YTD Performance %: 23.83%
- YTD Gain per unit: N7,842.56
Fourth Best Performing Fund
- Name of Fund: ACAP Income Fund
- YTD Performance %: 22.34%
- YTD Gain per unit: N0.14
Fifth Best Performing Fund
- Name of Fund: Coronation Fixed Fund
- YTD Performance %: 15.73%
- YTD Gain per unit: N0.18
Sixth Best Performing Fund
- Name of Fund: Nigeria International Debt Fund
- YTD Performance %: 14.77%
- YTD Gain per unit: N40.37
Seven Best Performing Fund
- Name of Fund: Kedari Investment Fund
- YTD Performance %: 14.68%
- YTD Gain per unit: N18.37
Eight Best Performing Fund
- Name of Fund: Stanbic IBTC Absolute Fund
- YTD Performance %: 13.88%
- YTD Gain per unit: N453
Nine Best Performing Fund
- Name of Fund: Legacy Short Maturity Fund
- YTD Performance %: 12.65%
- YTD Gain per unit: N0.41
Pension Fund Administrators in Nigeria and their scorecard
All PFAs for Fund I, II, III, and IV recorded positive returns for the period despite COVID-19 pandemic.
Despite the disruptions caused by the COVID-19 pandemic, which affected most aspects of the Nigerian economy, Pension Fund Administrators (PFAs) in Nigeria performed satisfactorily, as they recorded positive returns between January and August 2020.
According to the report from Pension Nigeria, no PFA had negative returns on investment (ROI) during the period under review, indicating that all PFAs for Fund I, II, III, and IV recorded positive returns.
This is quite impressive, given that the pandemic had impacted most aspects of the Nigerian economy negatively, causing a 1.95% (year-to-date) decline of the NSE’s All Share index, while the country’s Gross Domestic Product (GDP) contracted by 6.1% in the second quarter of 2020.
Industry average Return on Investment (ROI)
- Fund I industry with 20 PFAs, recorded an average of 8.14% returns between January and August 2020.
- Fund II industry has 22 PFAs, and recorded an average return of 9.33%.
- Fund III recorded an industry average returns of 10.37%, with 22 PFAs.
- While Fund IV with 22 PFAs, recorded 9.01% return on investment.
It is worth noting that no single PFA was dominant in all the four funds. NLPC PFA Limited and Investment One Pension Managers Limited, however, had dominance in three funds.
Veritas Glanvills pensions Limited, Fidelity Pension Managers Limited, and IEI-Anchor Pension Managers Limited topped the list in two funds. Radix Pension Fund Managers Limited, Stanbic IBTC Pension Managers Limited, Sigma Pensions Limited, OAK Pensions Limited, AXA Mansard Pension Managers Limited, NPF Pensions Limited, Crusader Sterling Pensions Limited, and Nigerian University Pension Management Limited dominated the list in one fund.
How the PFAs performed in each of the Funds
- Fund I – Veritas Glanvills Pensions Limited topped the list in average return on investment on Fund I with 21.11%, followed by Stanbic IBTC Pension Managers 12.33%, Sigma Pensions Limited 11.95%, OAK Pensions Limited 11.59%, and IEI-Anchor Pension Managers 9.88%.
- Fund II – NLPC Pension Fund Administrators Limited led the pack with an average return on investment of 24.32%, followed by IEI-Anchor Pension Managers Limited 11.59%, Crusader Sterling Pensions Limited 10.74%, Investment One Pension Managers Limited 10.65%, and Nigerian University Pensions Limited 10.25%
- Fund III – NLPC Pension Fund Administrators Limited dominated the top 5 list with 24.84%, followed by Investment One Pension Managers Limited 17.58%, Radix Pension Fund Managers 14.78%, Fidelity Pension Managers Limited 12.45%, and AXA Mansard Pensions Limited 11.46%.
- Fund IV – NLPC Pension fund Administrators Limited maintained the lead in the top 5 PFAs with 23.59%, followed by Investment One Pension Managers Limited with 15.28%, Fidelity Pension Managers Limited with 12.3%, NPF Pensions Limited with 10.98%, and Veritas Glanvills Pensions Limited with 9.74%.
How all the PFAs performed in all the Fund categories
12 out of the 22 PFAs performed above the average ROI of 9.28%, for all the funds put together. NLPC Pension Fund Administrators Limited topped the list (20.33%), followed by Investment One Pension Managers Limited (14.5%), Veritas Glanvills Pensions limited (12.02%), AXA Mansard Pensions (10%), OAK Pensions Limited (9.7%).
Others include Leadway Pensure PFA Limited (9.67%), Crusader Sterling Pensions Limited (9.65%), AIICO Pension Managers (9.61%), IEI-Anchor Pension Managers Limited (9.51%), Fidelity Pension Managers (9.46%), Stanbic IBTC Pension Managers (9.45%), and Radix Pension Fund Managers Limited (9.28%).
Meanwhile, 10 PFAs performed below the average ROI, with Premium Pensions Limited (4.96%) at the bottom of the list, followed by APT Pension Fund Managers (5.81%), First Guarantee Pensions Limited (6.46%), TrustFund Pensions Plc (6.61%), ARM Pension managers (7.0%).
Other Administrators that made the list includes, Nigeria University Pension Management Co. Limited (7.23%), Pension Alliance Limited (7.40%), FCMB Pensions Limited (7.60%), Sigma Pensions (8.86%), NPF Pensions Limited (8.95%).
In Nigeria, the requirement for the Contributory Pension Scheme is that the pension funds are to be privately and exclusively managed by licensed Pension Fund Administrators (PFA). The main functions of the PFAs are to open Retirement Savings Accounts (RSA) for employees, invest and manage pension fund assets, payment of retirement benefits, and accounting for all transactions relating to the pension funds under their management.
Currently, there are twenty-two (22) PFAs in Nigeria with a total asset value in excess of N11 trillion as of date.
(Read Also: Lagos approves 33% increase for all state pensioners)
Effective from 2nd July 2018, the MultiFund Structure for Retirement Savings Accounts (RSA) was required to be implemented across all the PFAs in Nigeria. The Multi-Fund structure is a framework that aims to align the age and risk profile of RSA holders, by dividing the RSA Fund into four distinct fund categories;
- RSA FUND I: Retirement Savings Account Fund I (An Active Contributor who is below 50 years of age, and chooses for his contribution to be invested in this fund).
- RSA FUND II: Retirement Savings Account Fund II (default fund for all Active Contributors, who are below 50 years of age)
- RSA FUND III: Retirement Savings Account Fund III (default fund for all Active Contributors, who are 50 years and above)
- RSA FUND IV: Retirement Savings Account Fund IV (Fund for Retirees only)
In implementing the Multifund framework, the Pension Commission allows Retirement Savings Account (RSA) holders to move from one fund category to another.
- Fund I – It is a special but optional fund category that RSA holders who are below 50 years of age can request to be moved to. It has the highest exposure to the stock market amongst all the funds under the multifund structure, as a higher percentage of the fund is usually invested in buying shares of companies, compared to other fund categories.
- Fund II – It is the default fund under the multifund framework for RSA holders who are below 50 years of age. Most RSA holders fall under this category. It is quite necessary to consciously monitor the performance of Fund I to assist in making decisions, whether to move to fund I or remain in the fund category.
- Fund III – It is the default fund for RSA holders who are 50 years of age and above, but are still active in the employment service. The multifund structure permits the PFAs to move anybody who is 50 years and above from Fund II to fund III. The law allows the RSA holders to request to be moved back to fund II if she/he so desires. If the RSA holder is 50 years and above and has not requested to be moved back to fund II, he/she will be automatically moved in Fund III. It is imperative the RSA holder monitors the performance of Funds III and II, as to be able to decide whether to remain in fund III or migrate to fund II.
- Fund IV – It is otherwise known as the Retiree fund. All the RSA holders who are retired from active service are automatically moved to fund IV category, and the retirees are not permitted to move to any other fund categories.
PenCom recovers N17.51billion from defaulting employers, imposes penalties
N17.51 billion was recovered by PenCom from employers who refused to remit pensions from workers’salaries
The National Pension Commission has recovered N17.51 billion from employers that refused to remit deducted monthly pensions from their workers’ salaries to their Retirement Savings Accounts with the respective Pension Fund Administrators.
This was disclosed by the Commission in its 2020 second quarter report which was released on Friday.
Out of the N17.51 billion, the principal contribution was N8.89 billion, while the penalty imposed on the employers was N8.63 billion.
The report read, “Following the issuance of demand notices to some defaulting employers whose outstanding pension contribution liabilities had been established by the recovery agents, 16 of the affected employers remitted the sum of N261.33 million representing principal contribution of N152.79million and penalty of N108.54million during the quarter. This brought the total recoveries made from inception as at June 30, 2020 to N17.51billion.”
According to the report, one batch of NSITF lump sum payment application totalling N225,442.72 was however received on behalf of five NSITF members during the quarter.
It said the application was processed and five members’ contributions were transferred to their bank accounts.
Consequently, it added, the cumulative sum of N2.94billion had been paid into the bank accounts of 36,551 NSITF contributors as lump sum/one off payment from inception to June 30.
For the quarter ended June 30, the commission said it processed monthly pension payments totalling N62.25million in respect of 3,629 NSITF pensioners.
As of June 30, it said the total pension payment to NSITF pensioners amounted to N4.73billion.
The commission added that it reviewed the request for the payment of attributable income to eligible NSITF members and granted a “no objection” for payment of N2.92billion to 165,954 eligible NSITF members whose NSITF contributions were refunded to their RSAs or bank accounts as of December 2018.
Report any employer without Group Life Insurance for employees – PenCom
PenCom has ordered that employers without Group Life Insurance policy for their employees be reported to the agency.
The National Pension Commission says any employer not remitting pension contributions or does not have a Group Life Insurance policy should be reported to the Pension Commission.
This was announced in a statement by the National Pension Commission this week.
The statement said any citizens can report anonymously to the Commission, through a letter of complaint stating the name and address of the employer and also the months outstanding, which would enable PenCom recovery agents go after the employer.
PenCom also urged all employees working in organizations that have implemented the Contributory Pension Scheme, that it is their right under Section 4(5) of the PRA 2014 to have Life Insurance Policy taken on their behalf by their employers for an insured amount of no less than 3 times their annual emolument.
Nairametrics reported in February that PenCom announced effective from March 2020, companies, with no insurance covers for their staff, would no longer be allowed to do any government business.
According to PenCom’s annual report on the submission of group life insurance certificates for the year 2018, only 172 employers obtained the group life insurance policy for a total of 39,946 employees in compliance with the Pension Reform Act 2014.
It noted that the deadline was issued because of the low number of companies that have insurance covers for their staff. PenCom noted that the new regulation was to ensure that the companies open appropriate pension accounts for the workers.