The Nigerian Pension Fund Index gained a whopping 16% in June as investor sentiments sent stocks soaring to record highs.
The NGX data also shows the Pension Fund Index has returned a whopping 44% YTD or 88% in annualized returns one of the best six months since we started tracking the index performance.
The NGX Pension Fund Index in Nigeria is a benchmark that monitors the progress of pension fund assets under management (AUM) in the country. Its purpose is to serve as a standard for evaluating the performance of pension fund investments in Nigeria.
The index comprises highly capitalized and easily tradable stocks that are prevalent in the pension fund industry. They include heavyweights like the FUGAZ, SWOOTs, etc.
According to the NGX, The NGX pension tracks the top 40 companies in terms of market capitalization and liquidity. The positive performance of the index is likely to benefit pension fund contributors, especially those who select aggressive fund categories.
The performance of the pension funds in the first half of the year is also likely to lead to a windfall for pension fund administrators who earn fees from their assets under management.
This performance does not also come as a surprise as about 116 stocks out of 157 posted positive gains in the month YTD June 30th, 2023. Out of the 116 stocks that posted positive gains, about 103 posted double-digit gains. Another 84 stocks beat inflation most of which are captured in the pension fund index.
Will Fund I gain?
Whilst this performance will boost returns and AUMs for pension funds, data from Pencom for March shows only about 6.69% of the N15.5 trillion in net asset value of all pension funds is invested in the stock market.
Records from Pencom also show PFA’s added N127 billion to invest in equities in the first quarter of 2023 up by 16%. The allocation may likely have increased in the second quarter of the year as investors anticipate a smooth transition of power.
However, it is unlikely to have surpassed 10% as most of their funds are allocated to safe fixed-income instruments, despite offering lower yields. Records also show yields for fixed-income securities have been delivering negative real returns as the inflation rate jumped to 22.4%.
Pension Funds have a limit to how much of their funds they can allocate to equities. According to the Pencom regulations Funds I, II, III, IV, V, and VI can only allocate a maximum of 30%, 25%, 10%, 5%, 5%, and 25% respectively.
Pencom records also show the RSA Fund II, which is the default RSA Fund under the Multi-Fund Structure, maintained the largest share of the Active RSA Funds as it represented 60.15% of the RSA ‘Active’ Funds. The RSA Fund Fund III is next with 38.74%. Meanwhile, the more aggressive RSA Fund 1 had just 0.79%
Thus, Fund I which is suitable for young contributors who have a long-term investment horizon and can tolerate high volatility, will likely miss out on the gains recorded in June.
Best-performing stocks that pension funds invest in
The Nigerian Pension Fund Index gained a whopping 16% in June as investor sentiments sent stocks soaring to record highs.
The NGX data also shows the Pension Fund Index has returned a whopping 44% YTD.
The NGX Pension Fund Index in Nigeria is a benchmark that monitors the progress of pension fund assets under management (AUM) in the country. There are 40 companies listed in the NGX Pension Index.
Nairametrics tracked the Top 10 best-performing stocks Year To Date (YTD) in this index.
- Transcorp Corporation Plc (210.62%)
Transcorp Corporation Plc is the top-performing stock in the NGX Pension Fund Index with a gain of 210.62% YTD.
The company began the year trading at N1.13 per share. At the close of trading activities in June 2023, Transcorp’s share price is N3.51
The market capitalization gained N96.74 billion YTD to close June 2023 at N142.67 billion.
The Group in the first quarter (Q1) of 2023 declared N32.39 billion in revenue, representing an increase of 3.30% from N31.39 billion in Q1 2022.
- Sterling Financial Holdings Company Plc (140%)
Sterling Financial Holdings Company Plc shares have appreciated 140% YTD. The company began the year trading at N1.4 per share. At the close of trading activities in June 2023, the Sterling share price is N3.36.
The market capitalization gained N56.43 billion YTD to close June 2023 at N96.73 billion.
In its audited financial statements for the year ending 31st December 2022, The Group’s Gross Earnings were up 16.64% to N175.14 billion from 150.15 billion posted in 2021, driven by strong growth in interest income.
Profit before Tax grew by 29.26% to N20.76 billion as against N16.06 billion posted in 2021.
- BUA Foods (108.46%)
The share price of BUA Foods Plc has appreciated 108.46% YTD. The company began the year trading at N65 per share. At the close of trading activities in June 2023, BUA Foods’ share price is N135.5.
The market capitalization gained N1.27 trillion YTD to close June 2023 at N2.44 trillion.
In its audited financial statements for the year ending 31st December 2022, The Group reported a Profit Before Tax growth of 38% to N107.2 billion for the full year 2022 from N77.5 billion posted in 2021.
- AXA Mansard Insurance Plc (97.50%)
The share price of AXA Mansard Insurance Plc has appreciated 97.50% YTD. The company began the year trading at N2 per share. At the close of trading activities in June 2023, AXA Mansard’s share price is N3.95.
The market capitalization gained N17.55 billion YTD to close June 2023 at N35.55 billion.
In its audited financial statements for the year ending 31st December 2022, The Company reported N3.629 billion as profit before tax for the year, representing a 37.3% decline from the N5.784 billion pre-tax profit reported in 2021.
- Access Holdings Plc (95.29%)
Access Holdings Plc shares have appreciated 95.29% YTD. The company began the year trading at N8.5 per share. At the close of trading activities in June 2023, Access Holdings’ share price is N16.6.
The market capitalization gained N287.92 billion YTD to close June 2023 at N590.05 billion.
In its audited financial statements for the year ending 31st December 2022, The Group’s gross earnings were up by 43% to N1.39 trillion from N971.89 billion reported in 2021, driven by strong growth in interest income.
Profit Before Tax dropped by 5% to N167.68 billion as against N176.58 billion posted in 2021.
- PZ Cussons Plc (93.83%)
PZ Cussons Plc shares have appreciated 93.83% YTD. The company began the year trading at N11.35 per share. At the close of trading activities in June 2023, PZ Cusson’s share price is N22.
The market capitalization gained N42.29 billion YTD to close June 2023 at N87.35 billion.
- TotalEnergies Marketing Nigeria Plc (81.35%)
TotalEnergies Marketing Nigeria Plc shares have appreciated 81.35% YTD. The company began the year trading at N193 per share. At the close of trading activities in June 2023, TotalEnergy’s share price is N350.
The market capitalization gained N53.3 billion YTD to close June 2023 at N118.83 billion.
- Nascon Allied Industries Plc (68.47%)
Shares of Nascon Allied Industries Plc appreciated 68.47% YTD. The company began the year trading at N11.1 per share. At the close of trading activities in June 2023, Nascon’s share price is N18.7.
The market capitalization gained N20.13 billion YTD to close June 2023 at N49.54 billion.
- Stanbic IBTC Holdings Plc (61.43%)
Shares of Stanbic IBTC Holdings Plc appreciated 61.43% YTD. The company began the year trading at N33.45 per share. At the close of trading activities in June 2023, Stanbic IBTC’s share price is N54.
The market capitalization gained N266.27 billion YTD to close June 2023 at N699.68 billion.
- UBA Plc (61.18%)
Shares of UBA Plc appreciated 61.18% YTD. The company began the year trading at N7.6 per share. At the close of trading activities in June 2023, the UBA’s share price is N12.25.
The market capitalization gained N159.03 billion YTD to close June 2023 at N418.94 billion.
