Pension Scheme Survey Performance – Q4, 2022

Performance Review

For the current quarter, the average return achieved by the 422 pension schemes with total fund value of about Kshs. 879Billion (excluding property) participating in the survey was 2.3% compared to -3.0% in the previous quarter. This lower return was largely due to the decline in equities from Q3 2022 attributable to investor concern driven by continuing high inflation, geopolitical tensions and tightening monetary policy. The increase in fixed income was attributable to easing of liquidity in the money market as seen in decline in the interbank rate.

The highest performing scheme over the quarter recorded a return of 4.2%.

Over the 3 year period, pension schemes have recorded a return of 6.0% 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 better strategies in order to maximize members’ returns.

Fixed income asset class increased to 2.9% from 2.3% in the same quarter last year. The increase in fixed income was attributable to easing of liquidity in the money market as seen in decline in the interbank rate.

Equities achieved a lower quarter return of -0.1% compared to 6.3% in the previous quarter. The negative returns were attributable to persistent high inflation due to high energy prices and supply chain disruptions driven by the Russia-Ukraine conflict.

Offshore achieved a higher quarter return of 7.4% compared to -2.8% in the previous quarter. The positive equities returns were majorly as a result of investors optimism that elevated global inflation could be cooling, policy tightening would slow and strong corporate earnings.

Asset Allocation

For the current quarter, it was noted that pension schemes invested most of their funds in fixed income, increasing their allocation to 76.5% compared to 76.4% in the previous quarter.

The allocation to equities increased to 21.8% in the current quarter compared to 21.5% 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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