Pension funds favour FGN securities as shares dip in Q1, PenCom reports
MANAGERS OF PEN SION FUNDS in the country made more investment decisions favouring government securities in the first quarter of 2021 while interest in equities dipped, a new report by National Pension Commission (PenCom), the industry regulator, has shown.
The fund managers increased investment in such government securities as FGN bonds, treasury bills and agency bonds, and cut their investment in ordinary shares which then fell on a quarter-on-quarter basis.
The report shows that between January to March this year the value of investments in FGN bonds increased by N289.29 billion (4.62 percent), treasury bills by N93.51 billion (14.89 percent) and agency bonds by N2.29 billion (21.53 percent).
On the other hand, the value of investments in quoted ordinary shares (domestic and foreign) was N938.80 billion (7.61 percent of total assets under management), indicating a decrease of N12.58 billion (1.32 percent) compared to the N951.38 billion as of 31st December 2020.
The decrease in the value of investments in domestic quoted equities was primarily due to the depreciation in the prices of some stock during the reporting period, as the Nigerian Stock Exchange Pension Index (NSE-PI) depreciated by 1.88 percent from 1,388.64 basis points as at 31st December 2020 to 1,362.60 basis points as of 31 March 2021.
While investment in sukuk and green bonds decreased by N8.48 billion (9.07 percent) and N931.14 million (6.74 percent) respectively, the decrease in the value of investments in Sukuk and Green bonds was due to accrued coupons paid on investments in these asset classes during the period.
Investment in state government securities and corporate debt securities were valued at N109 billion and N620 billion, respectively, in the first quarter of 2021, representing a negative 20 percent and 25 percent from N136 billion and N836 billion during the last quarter. Similarly, local and foreign money market securities moved in the same direction landing at a total of N1.7 trillion and N8 billion, while the supra-national bond saw zero investment during the period.