·    As interest rate hike, others drive up FG securities

By Peter Egwuatu

Total pension fund assets has hit N14.4 trillion in the third quarter of 2022, Q3’22, indicating a 6.0 percent growth as against N13.6 trillion in the corresponding g period of 2021, Q3’21.

The Federal Government securities accounted for 63.7 per cent of the total pension assets for the period under review, a situation believed to have been triggered by the prevailing high interest rate environment.

The Pension Fund Administrators, PFAs, invested N9.2 trillion in the FG securities, representing a growth of 10.1 per cent in Q3’22 from N8.3 trillion in January 2022.

The FG securities include FGN Bonds, Treasury Bills, Agency Bonds, Sukuk, and Green Bonds.

Analysts’ views

Commenting on the data, analyst and Head of Investment and Research at Fidelity Securities Limited, FSL, Mr Victor Chiazor, said: “The rise in PFAs’ investments in Federal Government securities over the last nine months was triggered by the high interest rate regime following the increase of the Monetary Policy Rate, MPR, by the CBN to time rising inflation.

‘‘We expect PFAs investment in Federal Government securities in the fourth quarter to continue to grow but investments in equities will be based on the yield environment, performance of the equities market during the year and the political dynamics in the year.”

In his own part, analyst and Managing Director/CEO of APT Securities and Funds Limited, Mallam Garba Kurfi, said: “The Investment in FGN Bonds by PFAs is necessary because of its availability and risk free when compared with the other securities. Most aged people prefer their money to be invested in less risky assets; more than N7.9 trillion in the Nigerian financial market were invested into Bonds. There are no any available instruments to invest like Bonds. There is a need for more financial products that can give alternative and provide high return like Bonds in the financial markets in order to attract pensions funds investments.”