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Funds Management

RSA Transfer: What to look for in a fund manager

If you are looking at transfering your RSA from one fund manager to another, here are a few things you might consider first.

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RSA Transfer: What to look for in a fund manager

The National Pension Commission just opened the transfer window for RSA holders to freely transfer from their current PFA to another one. According to PenCom and the code that governs pension accounts in Nigeria, transfer between PFAs is an event that happens once a year, and as such should be taken seriously, after all, the success of a fund has been known to be positively related to the fund manager’s skills.

READ: Nigeria’s pension assets rise to N10.8 trillion in May 2020

Why Fire Your Fund Manager: Before you make that transfer, have you asked yourself, why would I fire my current fund manager? One of the reasons, if not the major reason why investors fire their fund manager is because of poor performance. A fund manager that makes negative or near zero returns while his peers or the broad market index makes returns in double-digit will no doubt be on the chopping board during transfer times. However, before you fire that seemingly non-performing fund manager, find out how the market as a whole is doing or did. If the market is doing or did badly, then the issue with your fund manager probably derives from systemic risks that even the best fund managers may not be able to diversify away.

READ: Nigeria’s Micro Pension industry: A gold mine waiting to be tapped

Before Your Transfer:  It may be necessary to do your homework before you decide to transfer. Look at the portfolio information of the fund you want to transfer into, what assets is the fund manager investing in and what weights does he give to each asset type, compare that with what your current fund manager is investing in. Because of paucity of investible asset types in Nigeria and adherence to regulatory requirements, most pension fund managers in Nigeria invest in similar assets although with different weights. So pay attention to the difference in weights.

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READ: How to transfer your Retirement Savings Account (RSA)

How about Performance: Take a look at the historical performance of the fund you want to transfer into. While past performance does not guarantee future performance, it could give you an indication of the difference between your current fund manager and the prospective one. Ask the fund manager for their performance numbers over the last 5 years and look for out-performance consistency.

How much are you paying for the Services: Take a look at the fees being charged by the fund manager you want to transfer to in comparison with the one you currently have. As required by regulation, Nigerian pension fund managers are required to charge a given percentage of fees, do your research and make sure that the fee requirement is being adhered to by your prospective fund manager.

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READ: Mutual Fund Reporting: A call for standardization

Customer Services is of importance: Another thing to think through is the responsiveness of a fund manager to RSA holders. How quickly, truthfully, courteously and professionally does your current fund manager and your prospective fund manager respond to enquiries and questions from RSA holders?

Availability of information/data: Think about availability of information and data. In these days, data and information is money, especially when such is provided in a timely manner. Many pension fund managers have the prices of their pension funds readily available on their website but there are still many of them that you would go through the eye of a needle to get the information. There are 2 pension fund managers that I have sent over 10 emails with request for pension fund prices, and they have adamantly refused to respond and the information is not even on their website. For such fund managers, it becomes difficult to know their performance, at least independently and quickly. There is a fund manager that has the information in a format that is not amenable to analysis. If I were to make a change, I will dump those at a blink of the eye.

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Experience Matters: Take a look at who the fund manager employees.  These days, some fund managers in Nigeria are beginning to publish the names and qualifications/experiences of their fund managers on the fund factsheets, if you can find that information, it will be useful to know that your fund manager is a Chartered Financial Analyst, CFA or the like. Do not be shy, call the fund manager you want to transfer to and they will be happy to give the information, if they know you want to transfer to them, especially if you have large balance in your RSA account.

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READ: World’s biggest sovereign wealth fund now owns cryptos

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Fund Managers’ motivation: I know that it may not be that easy to glean information from fund managers, but if you can, find out if the guy overseeing your fund is being paid an incentive fee if he outperforms the index or if he generates a certain return. A fund manager that gets incentivized for his performance tends to be more motivated than one that just gets paid his normal salary irrespective of his investment performance. Therefore, go with those that get performance-based incentive fees.

While the above are only but a few things to ruminate about while you decide on if and where to transfer your RSA account, it is hoped that it will help make the transfer decision a bit easy.

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.

2 Comments

2 Comments

  1. Umar

    November 21, 2020 at 9:48 am

    Very useful. For how long will the transfer window be open?

  2. Florence

    November 21, 2020 at 9:54 am

    Thank you for this knowledge

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Funds Management

Before you transfer RSA: Best Pension Fund managers in Nigeria (1)

Pension fund managers based on the availability of information on the website, responsiveness to inquiries, and ease of navigation of the websites, among other factors.

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Pension

In a recently published article, I did a piece on what to look for in a fund manager. Since then, a few people have contacted me to ask for my recommendations.

Unfortunately, I do not recommend fund managers, however, I try as much as possible to put the facts out there and leave readers, RSA holders and investors, to make their choice. This is even more important now with the transfer window open for RSA holders.

For those who want to use the pension fund performance as part of the decision variable for choosing where to transfer to, please refer to my recent piece on the YTD ranking of pension funds or contact me directly via the comments page of this article.

READ: Sacked workers cash in N2.56 billion in 25% early pension withdrawal

Recently, I did a piece on the most transparent pension fund administrators in Nigeria, that article too can be a reference point. Although, a lot has changed since I wrote that piece, either as a result of the article or as a result of adherence to best practice requirements by the pension fund administrators or managers.

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So, here are my take on pension fund managers based on the availability of information on the website, responsiveness to enquiries, and ease of navigation of the websites, among other factors, in no particular order.

READ: SEC extends deadline for filing quarterly financial statement due on October 30, 2020

OAK Pension Fund Administrators

Wow! OAk, you rock! This fund administrator packaged the pricing information in such a downloadable form that anyone can see it in pdf format for the entire month. However, the only issue is that for anyone without the ability to translate pdf files into excel, the historical analysis may be a problem.

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Current and past Funds’ audited financial statements are also available for download. I did not see a chart of the fees or portfolio structure, two pertinent pieces of information that investors may need.

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Sigma Fund Administrators

Its presentation of the daily reporting for all four funds is a beauty to behold. The data comes in an easily downloadable form. With their information on portfolio structure, it is easy to know what the funds are invested in and to what extent.

You can also easily find the fee structure, which shows you how much fee you are or will be charged. Also available, are current and past audited financial statements for the various pension funds.

READ: NNPC releases audited financial statements, refineries record losses of N154 billion

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First Guarantee Fund Administrators

It reported on all 4 in the last 10 business days, thereby meeting the minimum requirement. Again, it would have been good to show the entire month for people who had no time to visit the site weekly.

Stanbic IBTC

The implication of this is that historical data is lacking on the site. There is information on portfolio structure, so it is easily discernible what the funds invest in, however, I could not see any fee chart that shows what investors are being charged. There are audited financial statements but they take an undue amount of time to open up when clicked on.

READ: PZ Cussons suffers a pre-tax loss of N7.984 billion in 2020

Stanbic IBTC Fund Administrators

This is one of the most transparent fund managers in Nigeria in mutual and pension funds. In a beautiful format that can be copied, this fund administrator reports its prices for all 5 funds (including micro pension fund). With portfolio structure information readily available and up to date, you can see where your funds reinvested.

However, the only information I saw about fees, is the flat administration fee charge. There is need to put any other fee charged out there for investors to see. The audited financial reports on display are about the pension fund and fund returns for 2019. I did not see the returns for earlier years, although there is information on 3-year rolling returns.

Anchor Fund Administrators

It reports in a very imaginative form, where you can get pricing information for a long period of time. There is also an updated portfolio structure detailing what the funds are invested in and the percentages. There is also a rate of return page where you can see the historical performance of the funds. There are current and past financial reports on display for download and analysis.

READ: Nigeria’s pension fund assets increase to N8.14 trillion

Legacy Pension Fund Administrators

It reports on funds – all 5 funds (including micro pension fund), on beautifully and strategically positioned clickable icons on their website. The icons which opens up when you click on the view history, displays the required information which is accessible by defining the period of interest.

Information on the portfolio structure comes in a downloadable format, so you can easily know what the funds are invested in. There is information about the admin fees charged, but that is so close to the price icon that you need to look very closely to see.

The annual rate of return of the funds is also available dating from 2006 (depending on when the fund was launched). You can also see each fund audited financial statement, the latest of which is for 2019, as expected.

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READ: Why African Alliance has not released its FY 2019 and Q1 2020 results

ARM Pension Fund Administrators

It reports on all 5 funds (including micro pension fund) on beautifully positioned and strategically clickable icons on their website. Past and current funds’ audited financial statements are readily available. It does not, however, look like there were information on portfolio structure, fee or rate of returns as I could not find those on the web site.

Conclusion

I will be releasing another part of this piece as it is not possible to evaluate all the PFAs in one article. So, stay tuned.

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Funds Management

Cowrywise launches 6 new mutual funds

Cowrywise has partnered with Asset and Resource Management Holding Company (ARM Holdco) to launch six new mutual funds.

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Cowrywise to re-launch as Cowrywise Circles

In a bid to attract more first time investors into the mutual funds’ space, Cowrywise recently announced its partnership with Asset and Resource Management Holding Company (ARM Holdco) to launch six (6) new mutual funds.

This is according to a disclosure by the firm, as seen by Nairametrics.

What they are saying

Cowrywise said: “We are excited to launch 6 new mutual funds from Asset and Resources Management Holding Company (ARM Holdco) on Cowrywise. With this partnership, Cowrywise users get more quality investment options in Naira and dollars. Also, this is in line with our continuous drive to get 10 million first time investors into the mutual funds’ space.”

What you should know

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The six (6) new mutual funds listed are; ARM Eurobond Fund (Dollar fund), ARM Discovery Balanced Fund, ARM Aggressive Growth Fund, ARM Ethical Fund (Halal investments), ARM Money Market Fund, and ARM Fixed Income Fund.

According to Investopedia, a mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets.

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Funds Management

Pension Fund performance ranking for October 2020

Below are the 5 best performing RSA funds as at the end of October 2020, on a year to date (YTD) basis.

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Pension funds

In what could be best described as magic, in an environment where the markets all over the world are grappling with the effects of a pandemic, Nigerian pension fund managers are churning out positive performances in double digits.

The high-interest regime that characterized the Nigerian market in the early to the tail end of 2019 paid off for many pension funds in Nigeria who recorded impressive performances in 2019. It, however, beats my imagination that under current low-interest regime of 2020 and other headwinds in the market, that pension fund managers would even do better, in terms of performance in 2020.

Going by an analysis conducted by Quantitative Financial Analytics based on pricing information gleaned from various fund managers’ websites, the Retirement Savings Account (RSA) category made an average of 18.61%, with returns ranging from 52% to 8.99%.

Information about the performance of Crusader Pension RSA was not available and efforts to get such information yielded no result. Crusader Pensions RSA is therefore excluded in this report.

Below are the 5 best performing RSA funds as at the end of October 2020, on a year to date (YTD) basis.

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Best Performing Fund:

Name of Fund: NLPC Pensions RSA Pension Fund 2

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YTD Performance %:  52%

YTD Gain per unit:  N2.05

 

2nd Best Performing Fund:

Name of Fund: AXA Pensions RSA fund 2

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YTD Performance %:  29.2%

Stanbic IBTC

YTD Gain per unit:  N0.88

 

3rd Best Performing Fund:

Name of Fund: Anchor Pensions RSA Fund 2

YTD Performance %:  26.87%

YTD Gain per unit:  N0.73

 

4th Best Performing Fund:

Name of Fund: Fidelity Pensions RSA Fund 2

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YTD Performance %:  23.34%

YTD Gain per unit:  N0.75

 

5th Best Performing Fund:

Name of Fund: OAK Pensions RSA Fund 2

YTD Performance %:  22.44%

YTD Gain per unit:  N0.68


 

Retiree Fund Performance

Retiree Pension funds, otherwise known as fund 4, performed slightly less than the RSA funds. On average, Retiree funds generated an average return of 15.15% on a YTD basis as at October 2020. The returns which ranged from 39.26% to 7.65% have the NPLC Retiree fund taking the lead. Again, Crusader Retiree Pensions funds is excluded from the analysis for lack of data.

Here are the best 5 Retiree funds.

 

Best Performing Fund:

Name of Fund:  NLPC Pension Retiree Fund 4

YTD Performance %:  39.26%

YTD Gain per unit:  N1.34

 

2nd Best Performing Fund:

Name of Fund: Investment One Pensions Retiree fund 4

YTD Performance %:  36.18%

YTD Gain per unit:  N0.91

 

3rd Best Performing Fund:

Name of Fund: Fidelity Pensions Retiree Fund 4

YTD Performance %:  24.64%

YTD Gain per unit:  N0.81

 

4th Best Performing Fund:

Name of Fund: AXA Pensions Retiree Fund 4

YTD Performance %:  21.56%

YTD Gain per unit:  N0.65

 

5th Best Performing Fund:

Name of Fund: NPF Pensions Retiree Fund 4

YTD Performance %:  19.19%

YTD Gain per unit:  N0.28

 

PENCOM Transfer Window

The type of performance noted above is good news for retirement planning. The goal of anyone planning and saving for retirement is to make such gains that would enable them retire gracefully and with so much financial accumulation that could help them do just that.

The importance of knowing how pension funds have and continue to perform cannot be timelier than now, given that the National Pension Commission of Nigeria has opened the transfer window for RSA account holders to decide on where to transfer their pension funds.

While it is widely known that past performance is not an indication of future performance, pension fund performance alone should not be the only reason or decision variable in transferring from one pension fund administrator (PFA) to another.

RSA account holders are enjoined to make their decisions as holistic as possible by considering all the factors before they move their funds. For those who want a complete list of the YTD performance of pension funds, you can make such request through the comment section of this publication.

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