Pensions Industry Asset Under Management Increased by 20.3% YoY to N12.29trn in December 2020

Proshare

Wednesday, February 24, 2021 / 9:34 AM / By FBNQuest Research / Header Image Credit: Getty Images

 

We see from PenCom data that the assets under management (AUM) of the regulated pension industry increased by 20.3% y/y to NGN12.29trn (USD30.0bn) at end-December, and were flat m/m. The asset mix remains heavily concentrated in FGN securities, which accounted for 66.2% of the total. Pencom's Kenyan counterpart, the Retirement Benefits Authority, shows total AUM of KES1.32trn (USD12.4bn) at June '20: there was sizeable exposure to immovable property (18.6%) and listed equities (14.2%) alongside the largest share in government securities (44.0%).

 

Fund managers in Nigeria will have their reasons for paying limited attention to assets such as real estate, private equity and infrastructure funds. The corporate debt market has grown in recent months from a small base with some high-profile new issues. Holdings rose by 47.4% y/y to NGN836bn in December.

 

The holdings of FGN paper are predominantly the bonds, which represented 55.6% of total AUM. Over 12 months the share of NTBs has collapsed from 18.4% to 5.1% as the returns have tanked. The initial trigger was the CBN circular of October 2019 that excluded domestic nonbank players (notably the PFAs) from the market in its OMO bills.

 

The yields on the FGN bonds have risen by about four percentage points in mid-curve since the start of the year. That said, they are still well under water when we allow for headline inflation running over 16% y/y.

 

The share of domestic equities rose from 5.4% to 7.0% over the twelve months, and members' holdings by 55.2% to NGN858bn. Over the period the all-share index increased by 50.0%, which offers some limited evidence for the theory that the surge on the stock market in Q4 '20 was driven by changes in asset allocation by domestic investors.

 

We should remember too that retail players account for more than 40% of domestic investor transactions on the NSE. Domestic institutions other than the PFAs may well have also made similar shifts in their asset allocation.

 

The average value of a retirement savings account (RSA) at end-December was NGN1.02m, unchanged from the previous month.

 

Just NGN81m was invested at end-December in the newest RSA fund (no V), which has been created for micro pensions. The fund has been in operation since January '20 and could become a game changer if the industry finds the best marketing strategy.   

 

AUM of PFAs, Dec 2020 (% shares)                                                                     Total: NGN12.29trn

Proshare Nigeria Pvt. Ltd.

Sources: National Pension Commission (PenCom); FBNQuest Capital Research


Proshare Nigeria Pvt. Ltd.


Related News

1.       5 Things to Note Before You Switch from One PFA To Another

2.      Asset Under Management Increased by 23% YoY to N12.29trn in November 2020

3.      PENCOM to Launch the Retirement Savings Account Transfer System on November 16, 2020

4.      Changing Landscape for the PFAs, AUM Rose by 20.2% to N11.35trn in August 2020

5.      Tips on How to Plan for a Restful Retirement Life

6.      The Popularity of FGN Bonds with the PFAs, AUM Rose by 18.8% in June 2020 to N11.09trn

7.      NICN Declares Limiting Retirees Above 50 Years to 25% Lump Payment Unlawful

8.     That Our RSA Transfer Process May Be Truly Equitable and Ethical

9.      Asset Under Management Rose by 17% YoY in May to N10.8trn

10.  Nigerian PFAs Conundrum; Robust Liquidity, Limited Asset Classes

 

 Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP