The Nairobi Securities Exchange on November 16, 2012. Returns from stocks were slightly hit between April and June when the bourse was on a decline. FILE
What you need to know:
A survey of retirement schemes shows that returns from stocks took a small bump between April and June, when the bourse was on a decline.
Stock market volatility slowed down gains for pension savers in the second quarter of the year, but solid returns from fixed income securities kept retirees’ investments on the positive earnings curve.
A survey of retirement schemes by the Actuarial Services East Africa (ACTSERV ) for up to the end of June 2013 shows that returns from stocks took a small bump between April and June, when the bourse was on a decline.
“The second quarter of 2013 saw a drop in the overall weighted average return of 4.6 per cent performance compared to 7.9 per cent in the first quarter of 2013. This return out-performed the overall inflation of 1.2 per cent,” says the survey.
The survey shows that between April and June, returns from the equities market stood at negative 1.2 per cent against a 27.4 per cent return between January and March 2013.
Returns from offshore markets stood at negative 3.8 per cent from negative 2.7 per cent over the same period. The fixed income market however made up for losses made from both the equities and the offshore markets.
“The overall return was buoyed by the weighted average fixed income return of 8.2 per cent, up from 0.2 per cent in the first quarter of 2013,” says the survey.
The market was mostly volatile at the end of the first quarter and the beginning of the second quarter, which coincided with the General Election.
Listed firm Pan Africa Insurance said in its half-year performance report that fixed income, property and other income sources were the main profit drivers in the first six months of the year.
“This improvement has largely resulted from fair value gains on an unlisted investment. The operating surplus of Sh315 million is attributable to steady growth in our life business profitability, profits from our property portfolio and interest from our investment activities,” said the firm when it released its half-year results.
Pan African Life’s net profits for the first half of the year stood at Sh800 million, a near four-fold increase from the previous half’s Sh218 million.
The rally on the NSE towards the end of the second quarter has been carried over to the third quarter, which should continue as the economy picks after government-related spending kicks in and stalled plans resume.
The ACTSERV report looked at 110 pension schemes holding a combined Sh137 billion.
A similar survey by Alexander Forbes that also looked at pension funds showed that the contributor returns outpaced the rate of inflation for the first six months of the year.
The Alexander Forbes Consulting Actuaries Schemes Survey indicates that between January and June assets under the management of trustees made a 26.2 per cent return, outpacing the 4.9 per cent rate of inflation recorded at the end of the first half.
The survey looked at 131 schemes with Sh201.3 billion in assets under management.
