Economy
Pension Funds Missing Out On Equity Market Performance
By Quantitative Financial Analytics
Nigerian pension funds continue to show resilience and strength so far in 2017 as they gather improvements in performance but it seems that no matter how hard they try, they are lagging the performance of pure equity portfolios.
All the major indexes in Nigeria are recording mouth-watering performances in the upper double digits except NSE Insurance and NSE Oil and Gas Index whose performance is of single digits.
While NSE Banking index has generated a YTD return of 64.07%, NSE Pension index is showing its strength at 58.48% YTD return.
Not to be out done, the NSE Premium index is standing tall with a YTD return of 51.64%, the NSE Stock Index 30 is also doing the same with a return of 45.44%.
The NSE Industrial, Lotus Islamic and NSE Consumer indexes are proud of themselves with YTD returns of 42.27%, 30.66% and 37.36% respectively but the All-Share Index is beating them with its YTD return of 41.78%.
The fundamentals of the economy are so strong as reflected by the Nigerian equity market that the S&P Nigerian Sovereign index is doing better than the S&P African Sovereign Index. It may take the efforts of financial historians to remember the last time the market did so good.
Even among individual equities that trade on the floor of the exchange, a great majority have rewarded their holders with fantastic returns.
May and Baker has recorded a 261% return YTD, Stanbic IBTC Holdings, 168.24%, Fidson Healthcare Plc, 146.54% to mention but a few although there still are a few like MRS Oil, Forte Oil Plc and 7-Up Bottling Co that are still making negative returns.
For those saving for their retirement through various pension schemes, there is the temptation to find out how good their pensions are doing in the light of the performance of the equity market.
To such investors, my take on that question is that the pension funds are doing good but not so good comparatively.
Among the pension funds in the RSA category, only 6 can boast of double digit YTD returns with APT RSA fund taking the lead with 15.37% followed by AIICO pension RSA fund with 10.02%, according to analysis by Quantitative Financial Analytics.
The good news however is that all the RSA funds are showing positive YTD returns of some sort.
The story is the same among the Retiree fund category in which APT Pension fund leads the YTD return ranking with 14.94% followed by Crusader Pension Retiree fund with 12.81%. Like the RSA funds, all the Retiree funds show positive YTD returns.
There is no doubt that the Nigerian pension fund industry has been very resilient through thick and thin.
When the market headed south in Q2 2016, pension funds held their own and put some smiles of the faces of retirement minded investors and savers.
However, pension funds seem to be missing out on the current equity market performance mostly because of the asset classes pension funds are allowed by regulation to allocate their capital to.
In keeping with such regulatory requirements, Nigerian pension funds have only about 7.45% of their assets in the domestic equity market, according to analysis of latest data from Pencom.
With such little exposure to the equity market, it is difficult not to be hurt when the equity market performs good like it is doing now.
Another reason why pension funds are missing out on the largesse of the stock market is the low correlation between the stock market (All-Share Index) and pension funds.
Per analysis conducted by Quantitative Financial Analytics, many of the pension funds have low correlation to the market.
Correlation is a ratio that measures the degree to which asset types like stocks, bonds, pension funds or mutual funds move up and down at the same time.
When two asset types are highly correlated, they tend to move up or down together but when they have low correlation between them, then they do not gyrate up or down together as much as when they are highly correlated.
In another analysis, Quantitative Financial Analytics measured the relationship between the stock market and pension funds by calculating the beta of the pensions in relation to the All-Share index. The analysis reveals that Nigerian pension funds have very low beta with respect to the equity market. The result of these analysis is not surprising given that the asset allocation strategies of the pensions is over weight in bonds and other fixed securities.
The implication of this is that the pension funds do not move in tandem with the market. It is agreed that pension funds need to be pursue conservative investment strategies to reduce the risk of loss of investors’ capital, it may be reasonable to increase exposure to the equity market in such a way that returns can be maximized while controlling risk.
Pension fund investors should however take solace in the fact that what they are missing in high performance they are gaining in low risk.
A risk analysis conducted by Quantitative Financial Analytics using the standard deviation of returns for pension funds and equities shows that the pension funds are much less risky than equities.
While the seemingly riskiest pension fund has a standard deviation of 1.37, the corresponding number for equities is 31.58, according to the analysis.
Investment performance analysis experts are united in the opinion that risk adjusted returns are more meaningful than absolute returns. So pension fund investors can go to sleep in comfort knowing that what they lost in capital appreciation they gain in capital preservation.
By Adedapo Adesanya
If all the critical stakeholders put their hands on the deck, Nigeria can meet or surpass Brazil’s $94.41 billion export performance to China in 2024 because the country has all it takes to achieve this goal.
This was the view of the Director-General of the Nigeria-China Strategic Partnership (NCSP), Mr Joseph Tegbe, when he met with the Minister of State for Industry, Trade, and Investment, Mr John Owan Enoh, to discuss move to accelerate Nigeria’s industrial revolution.
The meeting, which held in Abuja, explored actionable strategies to unlock the full industrial potential of both sectors within the framework of President Bola Ahmed Tinubu’s Renewed Hope Agenda with an overarching goal to shift Nigeria from an import-dependent economy to a production- and export-led industrial powerhouse.
Mr Tegbe emphasized that the Nigeria-China Strategic Partnership is committed to supporting this transformation, noting the country’s readiness to evolve from a consumption-driven economy into a strategic development partner—particularly with China.
He highlighted the mining sector’s vast potential, with over 40 commercially viable minerals as critical enablers of industrial growth.
The DG emphasized the need to build out local beneficiation, processing, and refining capacity—an agenda supported by clear regulatory reforms and investment incentives rather than continuing the raw export of mineral resources.
The Industrial Revolution Working Groups (IRWG)—a flagship initiative of the Presidential Council on Industrial Revitalization—are already operational, working to resolve regulatory bottlenecks, improve access to infrastructure and financing, and unlock sustainable growth across the mining value chain.
Mr Tegbe said the automotive sector was receiving focused government attention, with policies in place to make Nigeria a regional hub for vehicle assembly and full-scale manufacturing, adding that the Nigeria First Policy has already begun to stimulate demand for domestically assembled vehicles, while boosting investor confidence in the sector.
“There is a strong commitment to the implementation of a structured national automotive policy, aiming to move from basic vehicle assembly to advanced manufacturing that integrates local supply chains and paves the way for electric and energy-efficient mobility,” he said.
Speaking on Nigeria’s comprehensive strategic partnership with China, Mr Tegbe shared updates on landmark agreements secured with major Chinese firms including Huawei, China Communications Construction Company (CCCC), Chilwee Group, and Choice International Group (CIG).
According to him, these companies are bringing advanced technologies, skilled manpower, and capital into Nigeria’s automotive, mining, manufacturing, communication and clean energy sectors—contributing directly to job creation, technology transfer, and industrial innovation.
“These partnerships are not only vital for job creation, but they will also strengthen our technical capabilities, expand industrial output, and accelerate localization of production,” said Mr Tegbe, adding that, “We are changing the narrative—Nigeria must no longer be seen as a mere consumer market; but an active industrial partner.”
In his remarks, Mr Enoh reaffirmed the federal government’s renewed commitment to three priority sectors—Sugar, Cotton-Textile-Garment (CTG), and Automobiles—each backed by active industry councils to drive localized production, stimulate domestic demand, and boost Nigeria’s global industrial competitiveness.
At the center of this shift is the Nigeria First Policy, a landmark presidential directive that mandates all Ministries, Departments, and Agencies (MDAs) to prioritize Nigerian-made goods and services in public procurement.
This policy is already restructuring supply chains, catalyzing job creation, and reducing overreliance on imports across key sectors.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed in the green territory as it saw a 0.13 per cent rise on Tuesday, May 20.
The market capitalisation was higher during the session by N2.39 billion to N1.847 trillion from the N1.844 trillion recorded on Monday, and the NASD Unlisted Security Index (NSI) went up by 4.09 points to 3,154.58 points from the 3,150.49 points quoted at the last trading day.
There was a decline in the volume of securities traded at the bourse yesterday by 98.6 per cent to 572,645 units from the 42.0 million units recorded a day earlier, the value of shares transacted during the session also went down by 97.1 per cent to N6.1 million from N210.6 million, and the number of deals increased by 122.2 per cent to 20 deals from the nine deals achieved in the previous session.
The NASD OTC exchange ended the trading day with four price gainers and one price loser led by Central Securities Clearing System (CSCS) Plc, which fell by N1.83 to settle at N23.87 per share, in contrast to Monday’s closing price of N25.70 per share.
However, Geo-Fluids Plc gained 22 Kobo to close at N2.53 per unit versus the previous day’s N2.31 per unit, Food Concepts Plc rose by 14 Kobo to N1.55 per share from N1.41 per share, FrieslandCampina Wamco Nigeria Plc added 10 Kobo to sell at N40.10 per unit compared with the previous day’s N40.00 per unit, and UBN Property Plc grew by 9 Kobo to N2.25 per share from N2.16 per share.
At the close of transactions, Impresit Bakolori Plc was the most active stock by volume on a year-to-date basis with 536.9 million units worth N524.7 million, followed by Geo-Fluids Plc with 266.7 million units valued at N471.3 million, and Okitipupa Plc with 153.6 million units sold for N4.9 billion.
Okitipupa Plc was the most traded stock by value on a year-to-date basis with 153.6 million valued at N4.9 billion, trailed by FrieslandCampina Wamco Nigeria Plc with 21.9 million units sold for N843.0 million, and Impresit Bakolori Plc with 536.9 million units worth N524.7 million.
By Adedapo Adesanya
The Naira further appreciated against the US Dollar on Tuesday, May 20, 2025, by 0.48 per cent or N7.69 at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as the Central Bank of Nigeria (CBN) retained the benchmark interest rate at 27.50 per cent.
During the trading session, the exchange rate closed at N1,591.25/$1, in contrast to the preceding day’s value of N1,598.94/$1.
In the same vein, the local currency gained N10.79 against the Pound Sterling yesterday in the official market to sell for N2,126.60/£1 versus Monday’s price of N2,137.29/£1 and chalked up N7.51 on the Euro to finish at N1,791.49/€1 compared with the previous day’s N1,799.00/€1.
In the black market, the Nigerian currency maintained stability against the Dollar during the session to quote at N1,625/$1.
At the end of the 300th Monetary Policy Committee (MPC) meeting on Tuesday, the Monetary Policy Rate (MPR) was left at 27.50 per cent, the Cash Reserve Ratio (CRR) remained at 50 per cent, and the Liquidity Ratio (LR) was kept at 30 per cent.
In addition, the Governor of the CBN, Mr Yemi Cardoso, said the Naira is stable and more competitive in the FX market, indicating stability for the Nigerian economy.
In the cryptocurrency market, Cardano (ADA) jumped by 2.5 per cent to trade at $0.7549, Dogecoin (DOGE) appreciated by 1.6 per cent to sell at $0.2278, Bitcoin (BTC) increased its value by 1.4 per cent to end at $107,038.79, Binance Coin (BNB) rose by 1.2 per cent to finish at $655.82, Ethereum (ETH) increased by 0.7 per cent to $2,557.02, and Solana (SOL) went up by 0.6 per cent to close at $169.02.
On the flip side, Litecoin (LTC) recorded a 0.8 per cent depreciation to settle at $95.07, and Ripple (XRP) slumped by 0.2 per cent to $2.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchange at $1.00 apiece.
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