Stanbic IBTC, APT Pension and Veritas Glanvills led the list of best performing PFAs in Nigeria between January and October 2021, printing average returns on investment of 8.02%, 7.27%, and 7.2% respectively.
This is according to analysis carried out by Nairalytics, the research arm of Nairametrics on the 22 PFAs operating in Nigeria.
The Nigerian Pension industry continue to grow their returns albeit single digit, as competition continues to stiffen, evident in the number of RSA contributors that have switched PFAs since the opening of the transfer window.
According to data from the Nigerian Pension Commission (PENCOM), a total of 35,719 contributors have switched PFAs between January and September 2021, following the 2,799 contributors that switched last year immediately after the transfer window was opened.
This has increased the level of competition in the industry, as they try to outperform each other by recording gains in their various fund categories. However, due to the challenges faced by the Nigerian economy, following the covid-19 pandemic, it has become a harder challenge for fund managers to record double-digit gains in terms of ROI that is capable of hedging against an inflation rate of almost 16%.
A look at the equities market shows that as of the end of October 2021, the market has only been able to manage a 4.39% year-to-date gain, affected by a tumultuous first half of the year.
Nairametrics presents a ranking of the best performing pension funds between January and October 2021, you can read previous ranking on best PFAs YTD September 2021 and best PFAs in Q3 2021.
Where the money is going to
According to the pension funds industry report for the month of September, Nigeria’s pension fund assets hit its highest on record at N13 trillion as of 30th September 2021, as the newly Sharia-compliant pension fund (Fund VI) added N7.6 billion to the assets of the industry.
A further breakdown of the report shows that 63.2% (N8.22 trillion) of the total net assets was invested in FGN securities, most of which was in bonds. This is quite a conservative move by Nigerian PFAs given the less risky nature of FGN securities to investors, however, its yields are usually in the single-digit region.
A cursory look at the bond offers by the DMO shows that the two and three years FGN savings bond have maintained single-digit yield all year long, although it is beginning to record some level of increase compared to earlier in the year when they were issued at 4.214% and 5.214% respectively.
Notably, the recently auctioned bond offers for November 2021 were stated at 7.376% and 8.376% annually for the 2-year and 3-year FGN Savings Bond respectively.
On the other hand, 17.6% of the PFA funds were invested into local money market instruments at N2.29 trillion, which includes bank placements and commercial papers. The Pension’s industry invested a sum of N116.84 billion in mutual funds as of September 2021, which represents a decline of 27.6% year-to-date.
This could be attributed to the not so good performance of Nigerian mutual funds so far in the year. The recently ranking by Nairametrics on Nigerian mutual funds shows that only 56.5% of the 131 registered funds recorded gains in the month of October 2021, with an industry average ROI of 1.66%.
Overall best-performing PFAs year-to-date
The average overall ROI for the period stood at 5.05% as of October 2021, while the RSA Fund IV was the best fund category in the period under review with 5.76% returns on Investment between January and October 2021.
Stanbic IBTC, APT Pension, and Veritas Glanvills Pensions led the list of best performing PFAs year-to-date in terms of overall performance.
Third Position: Veritas Glanvills Pensions Limited
Year to date returns – 7.2%
Second Position: APT Pension Fund Managers Limited
Year to date returns – 7.27%
First Position: Stanbic IBTC Pension Managers Limited
Year to date returns – 8.02%
Nairalytics
Best PFAs by fund category
RSA Fund I
Stanbic IBTC led the list of best PFAs in the Fund I category with 10.38% ROI, followed by APT Pension (9.74%), and ARM Pension Managers with 6.48% returns. On average, the fund category printed an ROI of 4.25% in the period under review.
Understandably, the fund is the riskiest of the funds under consideration. The fund is designed for active contributors who are 49 years of age and below, majorly for the sake of maximizing the returns on investment through diversifying 20% to 75% of the funds in income instruments.
Although contributors can shift from this fund to fund II or III once they attain 50 years of age.
Third Position: ARM Pension Managers Limited
Year to date returns – 6.48%
Second Position: APT Pension Fund Managers Limited
Year to date returns – 9.74%
First Position: Stanbic IBTC Pension Managers Limited
Year to date returns – 10.38%
RSA Fund II
The RSA Fund II printed year-to-date returns of 5.03%, led by APT Pensions 9.97% ROI, followed by Sigma and Tangerine Pensions with 8.21% and 7.75% returns respectively. This fund is also a risky category as about 10% to 55% of the funds can be invested in variable income instruments.
It is a default fund for contributors who are 49 years and below and active contributors can shift to fund I based on their risk appetite. It is worth noting that fund II with N5.67 trillion contributors fund accounted for the largest share of the total net assets in the pension industry as of September 2021.
Third Position: Tangerine Pensions
Year to date returns – 7.75%
Second Position: Sigma Pensions Limited
Year to date returns – 8.21%
First Position: APT Pension Fund Managers Limited
Year to date returns – 9.97%
Others on the list include Veritas Glanvills (7.63%), ARM Pension (7.6%), and Trustfund Pensions with 7.55% returns.
RSA Fund III
The fund III category recorded an ROI of 5.49% year-to-date, second-best only to the RSA Fund IV category. The list was led by Tangerine Pension with 7.72% % returns on investment followed by Veritas Glanvills Pensions and ARM Pension Managers with 7.59% and 7.4% respectively
It is a conservative fund with only about 5% to 20% invested in variable income instruments. It is a fund for contributors who are 50 years and above. Although the contributors can shift to Fund II, upon request.
Third Position: ARM Pension Managers Limited
Year to date returns – 7.4%
Second Position: Veritas Glanvills Pensions Limited
Year to date returns – 7.59%
First Position: Tangerine Pensions
Year to date returns – 7.72%
Others include Trustfund Pension (7.19%), Sigma Pensions (7.13%), First Guarantee Pension (7.09%), and Stanbic IBTC with 7.06% returns.
RSA Fund IV
The highly conservative fund printed a return on investment of 5.76% year-to-date October 2021, indicating the best performing fund category in the period under review. Meanwhile, the best performing PFAs under this category were First Guarantee Pension, Sigma Pensions, and Veritas Glanvills Pensions with 8.52%, 8.35%, and 8.05% ROI respectively.
This fund category is only open to retirees and mostly conservatives. Contributors in this fund cannot move from this fund to any other fund. About 10% of the fund can be invested in variable income instruments.
Third Position: Veritas Glanvills Pensions Limited
Year to date returns – 8.05%
Second Position: Sigma Pensions Limited
Year to date returns – 8.35%
First Position: First Guarantee Pension Limited
Year to date returns – 8.52%
Others include Stanbic IBTC (7.4%), Trustfund Pensions (7.19%), and Leadway Pensure PFA with 7.15% returns.
How we determine top performers
- The percentage difference between the bid price on the last day of the period under review and the bid price on the last day of the prior year provides us with our YTD returns.
- This is done across all fund categories where prices are published.
- Bid prices and other associated data is obtained from the websites of all Pension Funds provided that they are published on their website on the day it was captured.
- For this ranking, we obtained information from the website of all PFAs except Crusader Sterling Pension and Fidelity Pensions whose info we were unable to obtain as at the time of compiling this report
- All efforts to obtain the data from the two PFA failed as of press time.
Contact info@nairametric.com for enquiries about this publication.
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