Zamara Group chief executive Sundeep Raichura. FILE PHOTO | NMG
Summary
- The one-year median return for funds stood at eight per cent (average return at 8.2 per cent) by the end of September — half the return a year earlier — although they still outperformed inflation which averaged 5.7 per cent in the 12-month period.
- Equities returns averaged -6.6 per cent in the period for the schemes that were, however, boosted by fixed income investments, which provided an average return of 14.4 per cent.
Pension fund investment returns halved on an annualised basis
end of the third quarter 2018 as schemes felt the heat of an
underperforming equities market.
A survey by fund
administrator Zamara shows the one-year median return for funds stood at
eight per cent (average return at 8.2 per cent) by the end of September
— half the return a year earlier — although they still outperformed
inflation which averaged 5.7 per cent in the 12-month period.
Equities
returns averaged -6.6 per cent in the period for the schemes that were,
however, boosted by fixed income investments, which provided an average
return of 14.4 per cent.
“Over one year, the median return of the participating schemes
was eight per cent compared to 15.5 per cent over a similar period in
2017. The decline is a result of the stock market plummeting since the
first quarter of 2018,” said the Zamara report.
The survey covered 404 schemes with a total of Sh727.7 billion of assets under management.
The
NSE had a good performance in quarter one gaining Sh375 billion in
market cap to hit an all-time high of Sh2.896 trillion on April 5.
Since
this peak, however, the fortunes of the market have dipped with the
market cap dropping by a steep Sh764 billion to the current Sh2.132
trillion.
This drop has been most pronounced on the large caps that are preferred by large institutional investors such as pension funds.
Also Read
Market NewsEcobank rolls out money transfer app in 33 states
Market NewsInsurers to rely on experts as accounting rules loom
In the meantime, the fixed income segment has retained a
double-digit return, helped by stability in the currency exchange rate
and relatively flat movement in the yield curve, although short term
government securities have retreated modestly in interest rates this
year.
The movement in returns reflected in asset class allocations in the third quarter for the schemes surveyed by Zamara.
Investments
in the broader fixed income segment rose to 70.4 per cent at the end of
September compared to 68.4 per cent in June, while equities fell to
22.7 per cent from 25 per cent in the period.
Offshore investments rose from 1.7 per cent to 1.9 per cent, while property rose from 4.9 per cent to 5.1 per cent.
No comments:
Post a Comment