For the current quarter, the average return achieved by the 383 pension schemes with a total fund value of about Kshs 768 Billion participating in the survey was 4.2% compared to 2.5% in the previous quarter. The positive return can mainly be attributed to high returns in the equity and offshore asset classes.
The highest performing scheme over the quarter recorded a return of 5.9%.
Over the 3 year period, pension schemes have recorded a return of 9.5% 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.
Equities and offshore returns declined this quarter to 5.1% and 11.3% compared to 5.4% and 22.9% achieved in the previous quarter. Global markets closed low over the quarter due to the ongoing COVID-19 impact and the US presidential elections.
Fixed income recorded improved performance of 4.0% from 2.6% in the previous quarter.
For the current quarter, it was noted that pension schemes invested most of their funds in fixed income, slightly decreasing to 78.2% from 78.3% in the previous quarter.
The allocation to equities slightly increased to 20.8% in the current quarter compared to 20.7% 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.