Equities Market Attracts N2.3trn From Pension Fund Assets

The pension fund operators seem to have found a comfortable investment outlet as investment of pension assets in the equities market attracted N2.3 trillion as at March 2024, having risen from N1.77 trillion in December 2023.

This development, according to data from the National Pension Commission(PenCom), translates to N530 billion invested in the equities market within three months under review. This also means the equities market had attracted about 11.79 per cent of the N19.6 trillion pension fund assets as at March 2024.

On his part, the executive secretary/chief executive officer(CEO), Pension Fund Operators Association of Nigeria(PenOp), Oguche Agudah, while reacting to this development, noted that, there is an increase in allocation to domestic listed equities by the pension funds from 8.56 percent to 9.89 percent of their total assets, adding that, foreign ordinary shares also played a role in the surge, even as the devaluation of the Naira meant the revaluation of foreign assets upwards, leading to a growth in the value of foreign assets held by CPFAs by over N118 billion.

Despite the performance of listed equities (both foreign and domestic), fixed-income securities, he noted, also played a significant part in this surge, saying, both federal government securities and corporate debt securities increased by N219 billion and N291 billion respectively.

This growth in asset value, he stated, is a result of a push by the Nigerian government to mop up liquidity, offering high yields on government securities as it seeks to combat inflation.

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Analysts at Coronation, while assessing investment in equities between 2022 and 2023 had said: “From the beginning of 2023 to the end of July, the total AUM of Nigeria’s pension funds rose by 13.8 per cent to N17.1 trillion. The value of their equity holdings rose by 47.5 per cent to N1.3 trillion over the same period. The 25.5 per cent rise in the NGX All-Share Index over that period does not account for that increase.

“So, either Nigerian pension funds are very good stock pickers, or they are net purchasers of equities. The big rise in their equity position was likely a combination of net purchases of up to N200.0 billion, we think – and reasonable stock selection.”