COVID-19 Update in Nigeria
US Capitol complex temporarily shut down
Champion Breweries gains 32.35% in a week, following Heineken’s indirect acquisition of its shares
Kinyungu Ventures Research calls for changes to cut-and-paste VC strategy in Africa
Flour Mills shares lose N7.4 billion on NSE, as investors book profit
COVID-19 Update in Nigeria
Daily Parallel Market Exchange Rate – ₦470/$1
4 cryptos gain over 400% in a month, far outperforming Bitcoin
Naira remains stable across forex markets as external reserve continues to rise
Oil prices tumble on fears of global economic recovery
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.
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.
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.
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.
Explore Data on the Nairametrics Research Website
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
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.
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.
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.
Debt Securities
Nigeria’s pension funds continue to divest from treasury bills
Since the beginning of 2020, pension fund managers have moved out about N1.112 trillion of treasury bills investments into mostly FGN Bonds.
As the low-interest regime that characterized most of 2020 continues with no immediate sign of an increase, pension fund managers have also continued to rid their portfolios of treasury bill investments.
Analysis of the recently released September 2020 edition of Pension Fund assets, by the Pension Commission of Nigeria, PenCom, shows that pension fund managers reallocated their assets away from treasury bills to FGN Bonds.
READ: Nigeria’s Micro Pension industry: A gold mine waiting to be tapped
In the month of September 2020, according to the latest report, pension fund managers closed out of treasury bill positions worth N0.224 trillion while loading up on FGN bonds worth N0.254 trillion. Since the beginning of 2020, pension fund managers have moved out about N1.112 trillion of treasury bills investments into mostly FGN Bonds.
READ: FG posts 27% revenue shortfall in 2020 as budget deficit hit N6.1 trillion
At the beginning of 2020, total pension fund assets invested in treasury bills stood at N1.88 trillion, but that has fallen to N0.78 trillion as at the end of September 2020. Put in another way, as at the end of 2019, 18.4% of pension fund assets were invested in treasury bills but as at September 30, 2020, pension funds’ treasury bill investment stood at 6.7%
READ: Pension Fund Assets hits N9.3 trillion as investment in FGN securities drops
Implications for domestic borrowing and monetary policy
Treasury bills serve a whole lot of purposes for the government. They are used as a means for the government to borrow to cover short term budgetary deficits as well as a means for the Central Bank to manage the supply of money and its inflationary effects.
READ: Worry for PFAs as pandemic-induced unemployment lowers new pension accounts
With the increasing and seeming lack of interest by pension fund managers, who, usually are big players in the treasury bill market, the government may find it a bit problematic raising the much-needed domestic borrowing from them.
READ: Nigeria’s Eurobond yield hit 12.8% as investors flee emerging markets
In like vein, the Central Bank’s ability to implement monetary policies through treasury bills and others, open market operation, may also suffer. May be, fiscal policy may become a more potent instrument of economic management, if that happens.
Funds Management
Nigeria’s Mutual Fund asset value grew by 50% in 2020
2020 appears to be the year with the highest growth in the value of mutual fund assets in Nigeria.
While the year 2020 will go down in the annals of history as one of the worst years in the history of mankind, it was not so bad for the Nigerian mutual fund industry.
Interestingly, 2020 appears to be the year with the highest growth in the value of mutual fund assets in Nigeria.
According to data from the Security and Exchange Commission, SEC, the total value of mutual funds in Nigeria stood at N1.042 trillion as at the end of 2019. The same data source now shows that as at the end of 2020, the net asset value, NAV of Nigerian mutual fund had risen to N1.572 trillion, representing an increase of 50.79%.
READ: How to redeem your unclaimed dividends in Nigeria
A deeper analysis of the industry reveals that in 2020, mutual fund contributions amounted to about N0.903 trillion while redemptions amounted to about N0.42 trillion. The same analysis points to the fact that mutual funds gathered an estimated sum of N46.7 billion in gains.
READ: Best Mutual Funds in Nigeria
Compared to 2019, the capital activities, comprising of subscriptions and redemptions were slightly far afield. In 2019, subscriptions stood at N0.52 trillion while redemptions came up to N0.14 trillion, resulting in a net inflow of N0.38 trillion. Net inflows for 2020 stands at N0.483 trillion. Unlike in 2019, when mutual funds made an estimated gain of N9.9 billion, the N46.7 billion made in 2020, makes Corona Virus a non-issue for the industry.
READ: Where to buy Real Estate in Lagos in 2021
Majority of the funds ended 2020 in the black, as 15, out of the 118 mutual funds on the SEC’s NAV Summary Report. The good thing about it is that no particular fund group dominated in making gains.
READ: Nigeria’s Asset to GDP Ratio Is low despite rise in Mutual Fund value
Although most of the funds that recorded huge gains came from the Euro Dollar category, Bond and Fixed income funds were not left behind as a whole lot of them stood out with mouth-watering gains. Out of nowhere, Stanbic IBTC Nigeria Equity fund sneaked in with some sizable gains too.
READ: How risky is your Mutual Fund?
On the downside, the two funds that recorded the greatest losses came from the Real Estate Investment fund category. Apparently, the Real Estate Investment Trust funds have not been doing good. Be that as it may, it is laudable that the Nigerian mutual fund industry stood out in 2020.
Funds Management
NLPC, Investment One and OAK PFAs generate highest ROI in three RSA funds for 11 months
The top PFAs with the highest return on investment (ROI) across three RSA funds, from January to November 2020.
NLPC Pension Fund Administrators Limited, Investment One Pension Managers Limited and OAK Pensions Limited have emerged in the elite list (top five) of PFAs with the highest return on investment (ROI) across three RSA funds, from January to November 2020.
This is according to a disclosure by Pension Nigeria, seen by Nairametrics. According to the disclosure, the RSA funds in which the aforementioned firms made the elite list include; RSA Fund II, RSA Fund III and RSA Fund IV. Both Investment One and NLPC missed out of the top five in the RSA Fund I category.
READ: FCMB Group Announces N170bn Gross Revenue
RSA Fund I
The RSA Fund I is a special but optional fund in which RSA account holders who are below 50 years of age can opt-into. The top 5 PFAs with the highest rate of Returns on Investment (ROI) for the period under review are;
- APT Pensions Fund Managers Limited led the chart with 40.59%
- Followed by Veritas Glanvills Pensions Limited with 38.65%
- AXA Mansard Pensions Limited recorded returns of 37.31%
- Stanbic IBTC Pension Managers Limited recorded 34.10%
- OAK Pensions Limited completed the elite list with 33.28%.
READ: Stanbic IBTC Pension Managers reveals breakdown of its massive N2.53 trillion AUM.
RSA Fund II
The RSA Fund II is the default fund under the Multifund structure for RSA holders who are below 50 years old. The top 5 PFAs with the highest ROI in this category include are;
- NLPC Pension Fund Administrators Limited recorded a 52.11% ROI in this category.
- Followed closely by Investment One Pension Managers Limited with 29.90% ROI.
- IEI-Anchor Pension Managers Limited recorded returns of 28.41%
- OAK Pensions Limited recorded returns of 24.02%
- Fidelity Pensions Managers Limited completed the top 5 with returns of 23.56%.
READ: Premium Pensions RSA Fund tops Nigerian RSA funds with 7.55% return
RSA Fund III
RSA Fund III is the default fund for RSA holders who are 50 years and above but have not retired. The top five in this category for the period under review are;
- NLPC Pension Fund Administrators Limited also led the chart in this category, recording returns of 44.58%
- Investment One Pensions Managers Limited followed closely with returns of 35.29%.
- AXA Mansard Pension Limited recorded returns of 31.02%
- Radix Pension Fund Managers Limited recorded returns of 29.97%
- OAK Pensions Limited completed the top five in this category with returns of 27.75.
READ: PFAs earn N1.69 trillion as ROI
RSA Fund IV
This is the Retiree Fund. All RSA holders that have retired are automatically moved to Fund IV. The top five in this category are;
- NLPC Pension Fund Administrators Limited led with 37.71%
- Investment One Pension Managers Limited followed closely with 35.14%
- Fidelity Pension Managers Limited recorded returns of 23.85%
- Radix Pension Fund Managers Limited recorded returns of 21.09%
- Nigeria Police Force Pensions Limited completed the top five in this category with returns of 20.29%
READ: What to expect from Nigeria’s capital market in 2021
The chart below shows all PFAs based on the average returns on Investment for each PFA for January to December.
Source: computed from Pension Nigeria data.
What you should know
- No PFA had a negative return on investment for the period under review.
- The Industry Average for all the funds type is 19.83%. Fund I recorded an average ROI of 21.99%. Fund II recorded an average of 20.93%. Fund III posted an average of 20.14%. Fund IV posted an average of 16.13%.
- No PFA was among the top 5 in all the four funds.
- Recall that Nairametrics had earlier reported that TrustFund, Radix Pension Fund Managers Limited, and three others had emerged in the top 5 most profitable PFAs for RSA fund II in the month of November 2020.
READ: FCMB assures of enhanced performance as shareholders approve results at AGM
Hafsat Aliyu
November 27, 2020 at 4:46 pm
Please what are the merits and demerits of transferring RSA for the holders now. I’ve been with one PFA since 2011
Ardo
November 28, 2020 at 6:53 pm
Dear Hafsat. In a short term, the merit of transferring you RSA account to another PFA is good service delivery, Return on investment (ROI) and exiting process; which is known as retirement benefit. You need to visit the Pension Commission (PENCOM) website. They are the regulators of all PFA’s in Nigeria.You would get accurate, details and reliable result. And you can also ask similar questions for your satisfaction. Social media can mislead you.
In addition to that, Pension Commission have published the return on investment (ROI) of all the 22 license PFA before they open transfer window, for four (4) years. Make a wise choice don’t allow yourself to be mislead. Thanks
Kachi
November 27, 2020 at 7:05 pm
Thanks for the nuggets of information. Please can you correct the name of Anchor Pension to reflect their full name – IEI-ANCHOR PENSIONS
Emeka
November 28, 2020 at 7:54 am
Thanks. I am looking forward to the next part of this article.
Onyeka
November 28, 2020 at 8:05 am
job well done, I’m also interested to know the pros and cons with respect for changing from one RSA to another. I will like to have the full analysis when completed.
thanks
Anonymous
November 28, 2020 at 8:07 am
Job well done
Seun
November 28, 2020 at 12:28 pm
No mention of Crusadersterling Pension that has consistently lead all other PFAs in terms of return on investment for the past 6 years. That should be the benchmark for contributors who want to switch from one PFA to the other. Look out for the fund price history of the PFAs before making your decision. Growth in your fund and excellent service delivery is what pension is all about.