Towards the end of 2019 it became evident, judging by the way interest rates were going, that pension fund managers might find it difficult to replicate prior years’ performances.
It even became more evident, when viewed against the realization that most of the assets under management by pension fund managers in Nigeria are invested in financial instruments that derive their benefits or even existence from the yield curve.
As if that was not enough challenge, and to add insult to injury, out of nowhere and without any notice, came coronavirus. Today, those two, Covid-19 and low yield are conniving to rub pension fund managers of a chest-beating performance and the pension fund investors of their hope for a long-lasting and blissful retirement.
Already, the impacts of those two are being felt by pension funds, not only in Nigeria but the world over. My pension fund account is yet to recover from the 18% drop it suffered in March 2020. Although Nigerian pension funds recorded positive returns during the first 4 months of the year, such returns are nothing to write home about, when compared to prior years’ returns.
According to an analysis conducted by Quantitative Financial Analytics, the RSA category of Nigerian pension funds generated an average of 1.64% on a year to date basis, as at April 30th, 2020, while the Retiree fund category generated an average return of 2.96%. Compared to a similar period in 2019, RSA funds generated an average return of 3.46% while the Retire fund category had an average of 4.13%. For the year to date, April 30th, 2020, Pension fund manager, Veritas Glanvills (VG) recorded the highest return in both categories of 4.24% and 5.38% respectively and a couple of funds made losses.
READ MORE: Nigerian Pension Funds Continue to Gather Positive performance, though in Trickles
The grass is not greener on the other side
Although those numbers are not what pension fund investors expected or hoped for, they are quite impressive when compared with what is happening elsewhere in the World. According to the Financial Times Adviser (FT Adviser), “the average pension fund fell by 15% in the first quarter of this year” in the UK, which represents “the worst quarterly performance on record”. In the United States of America, the story is the same. According to the Washington Post which described COVID-19 pandemic as a meltdown, “This meltdown has exposed the fragility of public pension systems in the United States”. In the wake of the pandemic, “Moody’s Investors Service estimated that the stock market sell-off vaporized $1 trillion of value from public pension portfolios or about 21 percent of the assets that pay for the retirement plans of state and local employees”.
In another reportorial, the NJ Spotlight, (a New Jersey Newsletter in the US), noted on March 26th, 2020, that Covid-19 hammered public pension workers to the extent that the pension system shed $6 billion since January 1st. S&P Ratings also estimated that, in the first quarter of 2020, “U.S. public pension funds in aggregate lost a cool $855 billion”.
Those underscore the bleak future facing pension fund industries all over the World and the need for Nigerian pension fund investors to be thankful with the 1% average gain that Nigerian pension fund managers were able to generate. It is hoped that as the fight to curb or eradicate Covid-19 rages on successfully, that the performance will improve rather than get eroded.
(READ MORE: Analysis: Your pension fund is worth less)
With that said, here are the 5 best pension fund performers in Nigeria as at April 30th 2020:
Retirement Savings Account, RSA, category:
Best Performing Fund:
Name of Fund: Veritas Glanvills Pensions RSA Pension Fund 2
YTD Performance %: 4.24%
YTD Gain per unit: N0.13
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Second Best Performing Fund:
Name of Fund: AIICO Pensions RSA fund 2
YTD Performance %: 3.75%
YTD Gain per unit: N0.14
3rd Best Performing Fund:
Name of Fund: OAK Pensions RSA Fund 2
YTD Performance %: 3.31%
YTD Gain per unit: N0.10
4th Best Performing Fund:
Name of Fund: Premium Pensions RSA Fund 2
YTD Performance %: 2.89%
YTD Gain per unit: N0.14
5th Best Performing Fund:
Name of Fund: Anchor Pensions RSA Fund 2
YTD Performance %: 2.69%
YTD Gain per unit: N0.07
(READ MORE:Is the pension asset just another cookie jar?)
Retirement Savings Account, RSA, category
Best Performing Fund:
Name of Fund: Veritas Glanvills Pension Retiree Fund 4
YTD Performance %: 5.38%
YTD Gain per unit: N0.19
Second Best Performing Fund:
Name of Fund: Radix Pensions Retiree fund 4
YTD Performance %: 5.17%
YTD Gain per unit: N0.11
3rd Best Performing Fund:
Name of Fund: Fidelity Pensions Retiree Fund 4
YTD Performance %: 4.27%
YTD Gain per unit: N0.14
4th Best Performing Fund:
Name of Fund: ARM Pensions Retiree Fund 4
YTD Performance %: 4.21%
YTD Gain per unit: N0.16
5th Best Performing Fund:
Name of Fund: OAK Pensions Retiree Fund 4
YTD Performance %: 3.94%
YTD Gain per unit: N0.15
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly-owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.
That’s bad