Nigeria's Pension Industry Asset Under Management Increased by 17.9% YoY to N12.30trn in Jan 2021


Wednesday, March 31, 2021 / 09:18 AM / by FBNQuest  Research / Header Image Credit: Ecographics

Proshare Nigeria Pvt. Ltd.

We learn from PenCom's latest monthly report that the assets under management (AUM) of the regulated pension industry increased by 17.9% y/y to NGN12.30trn (USD31.2bn) at end-January, and were flat m/m. The asset mix remained heavily skewed towards FGN securities, which represented 65.9% of the total. The corporate debt market has grown from a small base with some high-profile new issues. Holdings rose by 28.2% y/y to NGN836bn in January. When we add state government and supranational issuance into the mix, we find fixed income exposure equivalent to 73.8% of the industry's AUM. 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%).


The holdings of FGN paper are predominantly the bonds, which represented 59.6% of total AUM. This was an increase of four percentage points in just one month. Over 12 months the share of NTBs has collapsed from 15.2% to 5.4%.


The share of domestic equities rose from 5.7% to 7.5% over the twelve months, and members' holdings by 54.6% to NGN920bn. Over the period the all-share index (ASI) increased by 47.0%.


We have seen some sharp market movements. The ASI was still in negative territory ytd at the start of October '20 and closed the year with a thumping gain of 50.0%, making it the best performing index.


One driver was the noted shift by PFAs into equities as returns on first NTBs and then FGN bonds crashed in November and December. At that point, the dividends paid by a good number of blue-chip listed companies offered a better return than FGN paper.


While we have a plausible explanation for the surge on the ASI in Q4 '20 we now have to prepare for the consequences of a retracement in yields on FGN paper. For the 364-day NTB the yield has recovered from below 1% in December to above 6%, and for the longest maturity FGN bond (Mar '50) from less than 7% to about 11.5% over the same timeframe.


The average value of a retirement savings account (RSA) at end-January was NGN1.03m, marginally higher than the previous month.


Just NGN81m was invested at end-January in the newest RSA fund (no V), which has been created for micro pensions. It has been in operation since January '20.


AUM of PFAs, Jan 2021 (% shares)                                                          Total: NGN12.30trn

Proshare Nigeria Pvt. Ltd.

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

Proshare Nigeria Pvt. Ltd.

Related News

  1. Pensions Industry Asset Under Management Increased by 20.3% YoY to N12.29trn in December 2020
  2. 5 Things to Note Before You Switch from One PFA To Another
  3. Asset Under Management Increased by 23% YoY to N12.29trn in November 2020
  4. PENCOM to Launch the Retirement Savings Account Transfer System on November 16, 2020
  5. Changing Landscape for the PFAs, AUM Rose by 20.2% to N11.35trn in August 2020
  6. Tips on How to Plan for a Restful Retirement Life
  7. The Popularity of FGN Bonds with the PFAs, AUM Rose by 18.8% in June 2020 to N11.09trn
  8. NICN Declares Limiting Retirees Above 50 Years to 25% Lump Payment Unlawful
  9. That Our RSA Transfer Process May Be Truly Equitable and Ethical
  10. Asset Under Management Rose by 17% YoY in May to N10.8trn


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Related News