CONTACTS: +254 726879488 (Mobile)
+254770 455 116 (Office)
By Steve Umidha
Having weathered the domestic economic downturn from the coronavirus pandemic, the Kenyan pension funds are expecting a rebound in local demand this year to boost profits and drive margin expansion.
The latest industry figures by Retirement Benefits Authority (RBA) reveal that retirement benefits assets under management increased by 5.77 percent from Sh1, 322.59 billion in June 2020 to Sh 1,398.95 billion in December 2020, compared to the same period last year in which assets grew by 7.76 percent, up from Sh1, 298.19 billion in December 2019.
RBA blamed the gentle growth to the impact of Covid-19 pandemic which it says affected the financial markets in the first half of 2020.
“The slow growth in the assets during the period can be attributed to the adverse effects of the Covid-19 pandemic which adversely affected the financial markets and the wider economy in the first half of 2020,” RBA noted in a statement yesterday.
The retirement benefits assets are however, expected to grow in the first half of 2021 albeit at a slow pace due to the sluggish rebound of the stock market and the unpredictable effects of the third wave of coronavirus (Covid-19) disease on improved positive sentiments.
The Jubilee administration is expected to revive stalled projects and increase spending on infrastructure, with fund managers eying to invest in capital-intensive infrastructure projects under the Big Four Agenda program this year.
The Big Four agenda comprises Food Security, Affordable Housing, Manufacturing and Affordable Healthcare whose plans cooled due to the global pandemic – key sectors the schemes will be looking to cash in on.
“The schemes are also expected to continue to invest in alternative assets given the broadening of the allowable investment categories and to take advantage of the public infrastructural projects under the big four agenda,” reads a statement by RBA.
Majority of fund managers last year continued to invest heavily in government securities with the asset class accounting for 44.72 percent of the total assets under management.
Industry players equally invested in immovable property which accounted for 17.96 percent, investments in guaranteed funds which accounted for 16.48 percent and investments in quoted equities which accounted for 15.59 percent.
Gen Africa asset managers had the largest share of assets under management amounting to Sh 237 billion which translates to 18.48 percent of the total assets under fund management, dislodging Sanlam Investments East Africa Company to position two with assets amounting to Sh 227 billion which translates to 17.65 percent of the total assets under fund management.
Top five fund managers during the period were (GENAFRICA Asset Managers, Sanlam Investments East Africa, Old Mutual Investment Group Limited, British –American Asset Managers Ltd and Coop Trust) managed the bulk of the investments with the total assets under management (AUM) amounting to Sh920.46 billion accounting for 71.55 percent of the entire AUM.