Fund managers record marginal quarter one asset growth

Fund managers grew their assets by 3.3 per cent in the first half of last year even as the financial markets struggled with early withdraws by scheme members and poor equities performance.

Jubilee Financial Services recorded the highest growth of 12.5 per cent to Sh10.2 billion, followed by CFC Stanbic which grew to Sh58.5 billion from Sh53.2 billion.

“The retirement benefit assets held by the 17 registered fund managers continued to grow rising from Sh316.5 billion in December 2010 to Sh327 billion in June 2011,” said Mr Edward Odundo CEO of the Retirement Benefit Authority (RBA).

The growth was attributed to increased contributions due to new schemes and investments in real estate.

“There has been an extra asset class as schemes embraced property investments, which did well and contributions have gone up because of new schemes and new employees,” said Anthony Mwithiga the Chief Investment Officer at CFC Stanbic.

To ensure deepened inclusion the retirement benefit authority launched a pension scheme for the informal market dubbed “Mbao Pension Scheme”. The scheme allows for a minimum weekly contribution of Sh100 which can be contributed through mobile platforms such as M-Pesa and Airtel Money.

With the depreciation of the local currency from early last year, offshore investments, comprising five per cent of the fund managers’ portfolio, proved a handy fall-back while the resultant tightening of monetary policy to support the shilling favoured the managers who hold huge cash volumes.

Banks were forced to raise their deposit rates to attract cash with suave fund managers taking advantage of the situation. Data from RBA indicates that the managers increased the amount held in fixed deposits by Sh3.8 billion in six months from December of the previous year with analysts observing that the amount was deposited for short periods. Short tenures provided managers with flexibility to take advantage of any shifts in interest rates.

The only exemptions to the growth were Co-op Trust and Old Mutual managers whose portfolios declined by Sh1.5 billion and Sh4 billion respectively. Co-op Trust attributed the decline to voluntary withdrawal following a review of industry regulations to allow contributors to access up to 50 per cent of their employers’ contribution before retirement on top of drawing their full contributions.

“We are the largest locally owned manager and so when government allowed the early withdrawal we were affected more due to the local schemes’ (as opposed to those handling multinationals’) component,” said Titus Karanja, head of Co-op Trust, which is a subsidiary of Co-operative Bank.

The growth of the industry as a whole was slow compared to the previous year with the regulator also pointing at the amendment of the retirement benefit regulations.