Connect with us

Markets

Nigerian Pension Fund Index posts double-digit gains for 2021

Published

on

Nigerian equity market dips marginally   

Nigerian Pension Fund Index closed the year ended 2021 with a double-digit gain of 16.96%, beating the stock market All-Share Index which posted a return of 6.07%.

Among the major performers, this year are the likes of Honeywell, Guinness, FBN Holdings, NAHCO which posted a return of 183%, 105% and 63% and 59% respectively.

The Nigerian Pension Index is made up of about 40 stocks cutting across several industries in the country including Consumer Goods, Banking, Telecommunications, and Industrials. Stocks included in this index pay dividends regularly, are very liquid (trading volumes) and have consistently delivered profits over the years

About 15 of the stocks in this index reported double-digit growth year on year. Only 11 stocks posted losses with GTB Hold Co the worst performing with a -20% return.

At 16.96% Nigerian Pension Fund Index beat the inflation rate by a few basis points, a performance that most pension fund contributors will be proud of. The inflation rate for the month of November was 15.4% while the average inflation for the year is around 13%.

Despite the double-digit growth recorded in 2021, the index still fell short of repeating the impressive 31.74% growth reported by the index in 2020 where Nigerian stocks were on the fly.

In terms of investments in equities, Nigerian Pension funds are likely to have invested less in equities this year as a percentage of their total net asset value, a major bane for the equities market. As of September 2021, Pension Funds allocated less of their Net Asset Values towards equities with about N873.4 billion invested out of a total of N13 trillion.

Over N8.2 trillion is invested in FGN Securities and another N2.2 trillion in local money market securities. When compared to 2020, about N858 billion was invested in local equities out of N12.3 trillion.

Nigeria Pension Fund Asset managers prefer to invest contributors’ funds in fixed income securities such as safer and more secure government securities as well as corporate bonds which pay them fixed returns.

This model has often been criticized by analysts who admonish PFAs for not aggressively seeking higher returns for the funds they manage choosing to go for low yield less risky investments

They have also often blamed this on stringent pension rules which forbid them from taking risky bets with contributors’ money. However, last year, Pencom fully implemented its multi-fund investment structure where PFAs can create funds that meet the risk appetite of their contributors. This has so far failed to skew net asset values towards stocks, perhaps underpinning why stock market performance was weaker this year.

For the second year running, foreign investors have dumped Nigerian equities as forex policies restrict their ability to take their money out. This leaves local investor participation as the major source of demand in the stock market. Pension Funds being the largest single institutional drivers of demand remain key to a vibrant stock market in Nigeria. (Nairametrics)

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Politics20 hours ago

Minister directs new marshals to smoke out illegal miners

Politics20 hours ago

Nigeria’s Electoral Body, INEC Says It Won’t Recognise Labour Party’s Controversial National Convention

Sports20 hours ago

Super Eagles: We’re focused on World Cup qualifying campaign – Omeruo

News20 hours ago

Binance: It’s negligence – Ex-DSS director reveals why Anjarwalla escaped, questions NSA

Entertainment20 hours ago

Carter Efe opened fake social media account in my name to drag Davido – Young Duu

News20 hours ago

Okuama 17 soldiers killings: Nigerian Army declares eight persons wanted [FULL LIST]

Politics20 hours ago

Nigerian Political Parties Lack Identity, Ideology, Says Ruling APC National Chairman, Ganduje

Entertainment2 days ago

Actors Guild Debunks Death Of Zack Orji

Entertainment1 week ago

How social media criticisms crippled my career – Cardi B

Business1 week ago

Apple was accused of blocking rivals from accessing hardware and software features of its iPhone, Bloomberg reported on Wednesday.

Entertainment1 week ago

I didn’t know I was in Yvonne Nelson’s book – Iyanya

News1 week ago

Nigerian Government Should Treat Bandits Like Niger Delta Militants, Grant Them Amnesty – Sheikh Gumi

Economy1 week ago

Dump Your Hoarded Dollars Now To Avoid Sorrow And Tears, Tinubu Presidency Advises Currency Speculators

News1 week ago

N32bn Lying Dormant In Bank Account Since 2003, Power Minister Speaks On Stalled Metering Project

Entertainment1 week ago

Mohbad’s autopsy results to be ready soon – Dr Richard Somiari

Social Media Auto Publish Powered By : XYZScripts.com