August 16, 2023

Pension Funds’ investment in equities grows by 36% to N1.4trn

Nigeria’s pension assets grow by over 3%

By Emma Ujah, Abuja Bureau Chief and Peter Egwuatu

The Net Asset Value, NAV, of Pension Fund Administrators, PFAs, investments in equities has risen by 36.6 % to N1.460 trillion at the end of first half 2023, HI’23, from N1.069 trillion in the corresponding period of 2022, H1’22, while the NAV of their investments in the Federal Government Bonds, FGN Bond, grew by 20.6 % to N10.858 trillion from N9.007 trillion in H1’22.

Meanwhile, the FGN Bond auction this month attracted a total subscription of N312. 56 billion, according to the result released by the Debt Management Office (DMO).

Investment experts have attributed the faster growth of PFAs’ assets in equities to higher yields in the equities market.

However, the experts posited that with the continuous raising of interest rate by the Central Bank of Nigeria, CBN through the Monetary Policy Rate, MPR, the possibility is high that financial investment managers might generally migrate to  high yielding debt instrument in the second half of the year, H2’23.

Commenting on the development, the Chief Executive Officer, APT Securities and Funds Limited, Mallam Garba Kurfi said: “The equities price attracted more investment into equities especially as the inflation rate keeps going up which pushed investment in Fixed Income into negative returns.  

‘‘Although things might change in H2’23 as yield in equities falls and return in debt instruments increase following the continuous rise in MPR.”

On the subscription to the FGN Bond this month DMO stated yesterday, “In spite of current market conditions, the Auction received a total subscription of ?312.56 billion.”

The DMO held the FGN Bond Auction for August amidst monetary policy tightening and uncertainties.

Four (4) instruments were offered to investors at the Auction (14.55% FGN April 2029, 14.70% FGN June 2033, 15.45% FGN June 2038 and 15.70% FGN June 2053) for N90 billion each.

The DMO revealed that investors’ appetite for the 15.70% FGN June 2053 (30-year Bond) remained strong, with a bid-to-cover ratio of 2.71 times.

The amount allotted to successful bidders for the four (4) instruments stood at N227.76 billion.

According to the DMO, “Allotments were made at 13.85% for the 14.55% FGN April 2029, 15.00% for the 14.70% FGN June 2033, 15.20% for the 15.45% FGN June 2038 and 15.85% for the 15.70% FGN June 2053.”

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