Fund managers in Kenya continue to be risk-averse in asset allocation even as pension schemes show signs of subdued recovery.
Their returns showed appreciation even in the face of an economy ravished by the Covid-19 pandemic.
After a tough period in which retirees funds were significantly eroded by poor performance of the stock market where managers have substantially invested in equities, the schemes posted a 4.2 percent rise in assets in the third quarter ending September 30.
The improved performance from a growth of 4.1 percent in the quarter to June was attributed to the recovery of the economy as the country eased Covid-19 restrictions.
According to Zamara investment performance survey, the median overall returns for pension schemes excluding property for the three months, one-year, three-year and five-year periods were 4.2 percent, 9.4 percent, 9.6 percent and 11.4 percent respectively.
The survey covers 417 schemes with a total $8.4 billion of assets under management. “There were improved investor sentiments on the backdrop of signs of economic recovery after Kenya eased Covid-19 lockdowns,” said the survey.
The equity market posted mixed performance with the Nairobi Securities Exchange All Share Index gaining 1.6 per cent, a rally that was attributed to gain in large capitalisation stocks in the banking and telecommunications sector.
The offshore market, however, posted a decline in performance on the backdrop of growing concerns over the US elections and the world witness a new wave of Covid-19. The Development Markets Equity Index, the All World Equity Index and the Emerging Markets Index gained 7.5 percent, 7.7 percent and 8.7 percent respectively.
The low appetite for risk has forced the Kenya government to check plans to tap into massive pension funds to finance infrastructure projects under the Big Four Agenda.
They continue to demonstrate low-risk appetite with 245 schemes in the survey with assets under management amounting to $5.4 billion opting for moderate with asset allocation mainly in fixed income, equities and offshore.
Sanlam Investments East Africa Company remained the fund manager with the largest assets under management with total assets amounting to at $2 billion translating to 18.7 percent of total assets under fund management.
The top five fund managers were Sanlam, GenAfrica, Old Mutual, British-American Asset Managers and Coop Trust managing assets totalling $8 billion or 71.7 per cent of the entire assets.