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Funds Management

Pension RSA Holders withdrew N14.97bn for job losses in 2020 – PenCom report

A total of N14.97bn was withdrawn by the RSA holders who were under the age of 50 years in 9 months in 2020.

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Nigerian Pension funds, 2019 pension fund performance ranking

The National Pension Commission has released its third quarter report of the year, which shows that the sum of N8.1billion was paid to 13,569 RSA holders.

  • The 13,569 RSA holders (made up of Private – 12,740 RSA holders, FG – 324 RSA holders, State – 505 RSA holders), were under the age of 50 years and disengaged from work, but unable to secure another job within four months of disengagement.
  • In Q1 2020, N4.31billion was paid to 8,221 RSA holders made up of Private – 7,403 RSA holders, FGN – 143 RSA holders, and State – 675 RSA holders.
  • In Q2 2020, N2.56billion was paid to 4,668 RSA holders; Private – 4,263 RSA holders, FGN – 144 RSA holders, and 144 – State RSA holders.
  • Cumulatively, between Q1 and Q3 2020, N14.97billion was paid to 26,458 RSA holders, made up of 24,406 Private RSA holders, FGN – 611 RSA holders, and State – 1441 RSA Holders. This amount represents +11.2% of N13.46bn paid to the 28,268 RSA holders from Q1 to Q3 2019, made up of Private – 25,297 RSA holders, FGN – 529 RSA holders and State -2,442 RSA holders.

What you should know

  • The Pension Reform Act 2014 allows RSA holders who are under the age of 50 years and are disengaged from work, but unable to secure another job within four months of disengagement to access to 25% of their retirement savings balances.
  • The Covid-19 pandemic seriously challenged the entire economy and quite a number of workers lost their jobs in the process.
  • More people accessed this window in 2019 (i.e. 28,268 RSA holders) than in 2020 (26,458 RSA holders), though the amount withdrawn in 2020 (N14.97billion) is higher than the 2019 (N13.46billion) by over N1.5billion.
  • There was a growing figure in Q3 2020 as more people may have lost their jobs in the previous quarters and accessed the window in Q3 2020. We may likely continue to witness spikes in the coming quarters, until economic activities become relatively normalized.

Johnson is a risk management professional and banker with unbridled passion for research and writing. He graduated top of the class with B.sc Statistics from the University of Nigeria and an MBA degree with specialization in Finance from Ambrose Alli University Ekpoma, with fellowships from the Association of Enterprise Risk management Professionals(FERP) and Institute of Credit and Collections management of Nigeria (FICCM). He is currently pursuing his PhD in Risk management in one of the top-rated universities in the UK.

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Funds Management

Nigeria’s pension asset dips N51.3 billion in February 2021

Nigeria’s pension asset fell to its lowest position in four months, lost N51.3 billion in February 2021

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Nigerian Pension funds, 2019 pension fund performance ranking

Nigeria’s total pension assets lost a total of N51.3 billion to stand at N12.25 trillion in the month of February 2021. This is according to the monthly pension report released by the Nigerian Pension Commission.

According to data compiled by Nairametrics Research, Nigeria’s pension assets fell to their lowest position in four months, characterized by the decline in bond prices, and profit-taking activities in the Nigerian equity market.

READ: Best Pension Funds in Nigeria for the month of February 2021

Highlights

  • The total pension asset declined by 0.42% from N12.29 trillion recorded as of January 2021 to N12.25 trillion in February 2021.
  • Federal Government bonds stood at N7.34 trillion, accounting for 59.6% of the total pension asset under management.
  • Also, local money market securities, which stood at N1.62 trillion as of February 2021, accounted for 13.4% of the gross asset for the period under review.
  • Mutual funds recorded a decline of 1.3% to stand at N158.96 billion from N162.1 billion recorded in the previous month.
  • However, treasury bills increased by 5.5% from N670.34 billion recorded as of the last day of January 2021 to N676.91 billion at the end of February 2021.

READ: How foreign exchange risks and others affect the Nigerian pension industry 

A cursory look at the data revealed that the pension asset had reduced by N6.93 billion in the previous month, before losing N51.28 billion in the period under review.

As of February 2021, RSA Fund II accounted for 43.82% of the total pension asset, as it stood at N5.37 trillion, followed by Fund III with N3.16 trillion (25.79%), and CPFAs at N1.47 trillion (11.98%).

Why the decline?

While responding to questions regarding the recent decline in pension fund assets, Oguche Agudah, the CEO of Pension Fund Operators Association of Nigeria (PenOp), stated that it was due to the decline in prices of fixed securities.

  • He, however, called on pension contributors to increase their contributions as that would guaranty more funds. He also called on employers in the private and government sector to remit due pension contributions.
  • Commenting on the reasons for the loss, Mrs Amaka Andy-Azike, the head of branding and communication of PenOp, stated that the losses are however unrealized losses and would have recovered in the month of March as the yield of government securities continues to trend upward.
  • She, therefore, called on pension contributors to be calm as there was no cause for worry. Mrs Amaka also reiterated that the pension scheme prioritises secured investments rather than riskier instruments that could yield higher returns.
  • Nairametrics had reported that Nigerian Pension Fund Administrators across the different fund types, dipped significantly in the month of February 2021 as only 22% of the funds recorded positive growth in the month.

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Funds Management

Nigeria’s Best performing Mutual Funds in Q1 2021

The Net Asset Value of the listed Nigerian Mutual Funds dipped by 4.01% in Q1 2021

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Best Mutual Funds in Nigeria

Mutual Funds in Nigeria recorded a bearish performance in the first quarter of 2021 as only 25 funds posted positive growth in the review month against 59 declines while 34 funds remained flat in March.

Mutual funds have been considered as a good alternative investment opportunity, particularly for retail investors because it gives them access to diversified and professionally managed portfolios at a low price.

However, data obtained from the Security and Exchange Commission revealed that on average, the 118 listed funds as of 31st March 2021, dipped by 1.91%, having recorded a similar decline in the month of February.

  • Also, the net asset value declined by 4.01% from N1.57 trillion as of 31st December 2020 to N1.51 trillion as of 1st April 2021.
  • This is could be partly attributed to the bearish performance recorded in the Nigerian Stock Exchange market as data from the NSE showed that the All-Share Index dipped by 3.63% year to date as of April 1, 2021.
  • A comparison of the performance of the fund types indicated that despite the fall in total net asset value in Q1 2021, Bond funds grew by +14.82%, Ethical funds by +12.95%, Fixed income funds by +12.91%.
  • Real estate funds and infrastructure funds grew marginally by +0.69% and +0.43% respectively. Other funds recorded losses with the money market funds recording the highest loss of -20.68%.

Nairametrics tracked the performance of these mutual funds by comparing the fund prices as of 31st December 2020 with the fund prices as of 1st of April 2021.

Below were the top-performing mutual funds in Q1 2021. We also highlighted their performance in terms of changes in net asset value and included profiles of the funds as described on their websites.


ARM Ethical Fund – Asset & Resources Mgt. Company Ltd. (Ethical Funds)

The ARM Ethical Fund is suitable for Islamic investors who want long-term capital growth by investing strictly according to the principles of Islamic finance and ethical values. The Fund invests only in investments screened by a Shari’ah Advisory Board.

It invests in equities, real estates, and other investments that do not involve interest-bearing transactions.

December 31st, 2020

Fund Price – N35.46

April 1st, 2021

Fund Price – N36.55

Return – 3.06%

Ranking – Fifth

Commentary: The ARM Ethical Fund was the fifth-best performing fund in the first quarter of the year. The unit price appreciated by 3.06% while the net assets value increased by 3.15% from N358.96 million as of 31st December 2020 to N370.27 million as of 1st April 2021.

Jaiz bank

Vantage Dollar Fund – Investment One Funds Management (Fixed Income Fund)

Vantage Dollar Fund is an open-ended Unit Trust Scheme by Investment One Funds. The Fund seeks to provide investors with a bias for Dollar-denominated securities and access to such securities, which ordinarily would be inaccessible to them by virtue of the minimum amount typically required to make such investments.

December 31st, 2020

Fund PriceN502.90

April 1st, 2021

Fund PriceN518.95

Return – 3.19%

Ranking – Fourth

Commentary: The Ventage Dollar fund performed as the fourth-best performing fund in the first quarter of the year. The unit price appreciated by 3.19% while the net assets value declined by -2.97% from N1.85 billion as of December 31st, 2020 to N1.79 billion as of April 1st 2021.

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FSDH Dollar Fund – FSDH Asset Management Ltd. (Fixed Income Funds)

This is an open-ended mutual fund that invests in US Dollar denominated Fixed Income Securities issued by Nigerian Sovereign and Corporate Entities. The objective of the fund is to provide customers with the opportunity to invest in dollar-denominated instruments.

The minimum amount required to invest in the fund is $1,000.

December 31st, 2020

Fund Price – N415.10

April 1st, 2021

Fund Price – N431.44

Return – 3.94%

Ranking – Third

Commentary: The FSDH Dollar Fund was the third best performing fund in the first quarter of the year. The unit price appreciated by 3.94% while the net assets value increased by 41.99% from N846.27 million as of December 31st, 2020 to N1.2 billion as of April 1st 2021.


FBNQuest Asset Management Limited – Institutional (Bond Funds)

The FBN Nigeria Eurobond (USD) designed for institutional investors is also invested in US Dollar-denominated debt instruments issued by the Nigerian government and reputable corporate institutions and managed by FBNQuest Asset Management Limited.

To begin investment as an institutional investor, a minimum of $100,000 is required for a minimum tenor of 180 days.

December 31st, 2020

Fund Price – N49,283.56

April 1st, 2021

Fund Price – N51,682.31

Return – 4.86%

Ranking – Second

Commentary: The FBNQuest Asset Management Limited bond funds created for institutional investors was the second best performing fund in the first quarter of the year. The unit price appreciated by 4.86% while the net assets value increased by 5.69% from N571.01 million as of December 31st, 2020 to N603.51 million as of April 1st 2021.


FBNQuest Asset Management Limited – Retail (Bond Funds)

The FBN Nigeria Eurobond is a fixed income mutual fund that invests in the US Dollar-denominated debt instruments issued by the Nigerian government and reputable corporate institutions. Investments can be made into this fund by both retail and institutional investors.

To get started as a retail investor, a minimum investment of $2,500 is required and the minimum holding period is 180 days.

December 31st, 2020

Fund Price – N49,346.65

April 1st, 2021

Fund Price – N51,751.89

Return – 4.87%

Ranking – First

Commentary: The FBNQuest Asset Management Limited bond funds created for retail investors was the First best performing fund in the first quarter of the year. The unit price appreciated by 4.87% while the net assets value increased by 18.29% from N4.57 billion as of December 31st, 2020 to N5.41 billion as of April 1st 2021.


Bubbling under

  • Legacy Equity Fund – 1.95%
  • PACAM Equity Fund – 1.81%
  • Stanbic IBTC Shariah Fixed Income Fund – 1.66%
  • AVA GAM Fixed income Dollar Fund – 1.65%
  • United Capital Fixed – 1.51%

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