Pension fund returns fell to 2.4 percent in the second quarter of the year compared to 6.5 percent in quarter one as underperforming equities eroded the positive gains recorded by fixed income investments.
Industry analysis by pension fund administrator Zamara shows the weighted average return from equities investment during the quarter stood at -3 percent, while fixed-income investments gave a return of 4.3 percent.
In the first quarter of the year, equities had given a return of 14 percent, while fixed income gave funds a return of 3.7 percent.
Returns from offshore investments also slowed down quarter-on-quarter, from 12.2 percent to 6.2 percent.
In the year to June 2019, the weighted average return of the surveyed schemes was 7.9 percent, compared to 13.4 percent over a similar period in 2018.
“Improved performance of the fixed-income assets was offset by weak performance of the equity asset class,” said Zamara in the second quarter report.
NSE data compiled by Standard Investment Bank shows that in the first quarter of the year, the NSE All Share Index recorded a gain of 12.3 percent, but fortunes reversed in the second quarter with the index contracting by 5.1 percent.
The stock market has seen share price dips partly due to companies reporting weaker profitability, while in the longer term the lack of credit to the private sector has also affected the ability of local investors to raise enough capital to pump into the market.
Pension funds on average invested 21.4 percent of their assets in equities by the end of June, cutting back from 23.5 percent in March in reaction to the diminishing returns.
They in turn raised their fixed income allocation to 66.4 percent from 63.2 percent.
Property investments fell from 11.6 percent to 11.3 percent, as did offshore investments which halved from 1.8 percent to 0.9 percent between March and June.