Pension Scheme Survey Performance – Q4, 2021

Performance Review

For the current quarter, the average return achieved by the 419 pension schemes with a total fund value of about Kshs. 850 Billion (excluding property) participating in the survey was 0.7% compared to 3.4% in the previous quarter. This lower return was largely due to the decline in equities from Q4 2020 majorly as a result of investor uncertainty over the emergence and persistence of COVID-19 variants and the upcoming general elections.

The lower return can mainly be attributed to a decrease in equities from Q4 2020 majorly as a result of the investor uncertainty.

The highest-performing scheme over the quarter recorded a return of 2.9%.

Over the 3-year period, pension schemes have recorded a return of 10.0% p.a. The 3-year performance is a better gauge of performance as the volatility of returns is smoothened.

It would be useful for trustees to engage in better strategies in order to maximize members’ returns.

Quarter Performance

Fixed income asset class increased to 2.2% from 2.0% in the same quarter last year. The increase in fixed income was attributable to an expected rise in bond yields driven by heavy domestic borrowing by the government to fund the upcoming elections and fast-track infrastructure projects.

The equities also achieved a lower quarter return of -4.4% compared to 5.2% in the previous quarter. The negative returns were attributable to a decrease in equities from Q4 2020 majorly as a result of investor uncertainty over the emergence and persistence of Covid-19 variants and the upcoming general elections.

Asset Allocation

For the current quarter, it was noted that pension schemes invested most of their funds in fixed income, increasing their allocation to 72.7% compared to 70.2% in the previous quarter.

The allocation to equities decreased to 24.9% in the current quarter compared to 27.9% in the previous quarter.

Overall, ideal asset allocation is needed to ensure pension schemes can meet their targeted returns.

For a more detailed report on their performance, download the report here.

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