NSSF narrows gap with Pinebridge on 8pc assets growth

Money Markets

The National Social Security Fund building in Nairobi. Sh70.8 billion of NSSF’s funds is externally managed by six contracted managers. PHOTO | FILE 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• Industry data puts the size of assets under the National Social Security Fund’s management at Sh147.7 billion, compared to assets worth Sh161.8 billion under private fund manager Pinebridge.

NSSF has narrowed the gap with top fund manager Pinebridge Investments after assets under management grew by nearly eight per cent in the year to June 2014.

Industry data released by the Retirements Benefits Authority (RBA) puts the size of assets under the National Social Security Fund’s management at Sh147.7 billion, compared to assets worth Sh161.8 billion under private fund manager Pinebridge.

Pinebridge overtook NSSF in portfolio size in the second half of 2013, the first time a private fund manager had done so. This was after Pinebridge grew its portfolio by Sh40 billion to Sh156 billion.

“The overall portfolio (of NSSF) was well diversified though with heavy investments in quoted securities, immovable property and government securities at 38.6 per cent, 26.7 per cent and 26.4 per cent respectively,” said RBA in the industry report.

“However, the manager with the largest assets under management remained Pinebridge Investments with 25.7 per cent of the market share at Sh161.8 billion of assets.”

Private funds which draw their contributions pegged on employees’ salaries have the benefit of growing their pool of resources as wages rise, unlike the NSSF which receives a flat Sh400 per contributor.

NSSF was expected to grow its collections with the implementation of higher deductions, but these have been on hold due to legal hurdles.

READ: Pinebridge beats NSSF in portfolio size for first time

The RBA report shows total industry assets grew by 7.7 per cent in the six months to June 2014 to stand at Sh750.02 billion.

The amount was composed of the Sh628.18 billion held by the fund managers and insurance issuers, Sh76.8 billion internally administered by NSSF and an additional Sh45.02 billion of property investments directly managed by scheme trustees.

Sh70.8 billion of NSSF’s funds is externally managed by six contracted managers. Genesis Kenya, majority owned by Centum, was third with Sh114.3 billion in assets under management.

ICEA Lion, with a smaller asset portfolio size at Sh53.9 billion, remained the fund manager with the largest number of schemes under management at 336, or 26 per cent of the industry total.

Equity return

“The top tier fund managers (Pinebridge, Genesis Kenya, Stanlib Investments Kenya, Omam Asset Managers and ICEA Lion) continue to account for 80 per cent of the total investments under management at Sh501.5 billion,” said RBA.

In terms of asset allocation mix, the pension managers held 32 per cent of their assets in government securities, 26 per cent in equities and 17 per cent in property

An industry report by Alexander Forbes (AF), at the end of last year, revealed returns from equities were falling while those of fixed income rose, pointing to an expected shift towards government securities.

“The average equity return for all schemes over the year to December 2014 was 18.7 per cent which was a drop compared to 24.9 per cent as at September 2014,” said AF in the report.