For the current quarter, the average return achieved by the 422 pension schemes with total fund value of about Kshs. 759 Billion participating in the survey was -0.04% compared to 1.1% in the previous quarter. The negative performance would be expected to impact negatively on members’ benefits.
The negative return can mainly be attributed to negative returns on equity as well as offshore.
The highest performing scheme over the quarter recorded a return of 3.1%.
Over the 3 year period, pension schemes have recorded a return of 9.8% 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.
The returns on equities for this quarter improved to -6.0% compared to -12.5% achieved in the previous quarter.
The offshore returns took a dip with a quarter weighted return of -12.6% compared to the previous quarter at 4.1%.This decline in performance was majority driven by slowdown in global economic growth prospects and persistent trade conflict in major global economies.
The fixed income also achieved a lower quarter return of 2.90% compared to 3.8% in the previous quarter.
For the current quarter, it was noted that pension schemes invested most of their funds in fixed income, increasing their allocation to 63.1% compared to 59.4% in the previous quarter.
There was a reduction in allocation to equities to 22.6% in the current quarter compared to 26.5% 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.Download