NSSF doubles investment in government debt securities

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Capital markets

NSSF doubles investment in government debt securities


The National Social Security Fund (CNSS) lodges on September 12, 2012. PHOTO | NJAU SALATON | NMG

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Summary

  • Public debt instruments have fixed cash yields ranging from 7.4% to 15% depending on duration.
  • Government securities accounted for 58.86% of NSSF’s 290.3 billion shillings of assets during the reporting period, a sharp increase from 39.76% of the 209.26 billion shillings portfolio in 2017.
  • The NSSF, which has hired six private asset managers to oversee the investment of 82.9% of its portfolio, last year increased its allocation to government securities by 20.39 billion shillings, compared to an average of 25.93 billion shillings over the previous two years.

The National Social Security Fund (NSSF) has more than doubled its holding of government securities in five years, signaling a trend of higher guaranteed returns in a market where listed stocks have generated lower returns and increased volatility.

The latest industry statistics show the public pension fund increased its holdings in treasury bills and treasury bills to 170.9 billion shillings last year from 83.2 billion shillings in 2017.

Public debt instruments have fixed cash yields ranging from 7.4% to 15% depending on duration.

Government securities accounted for 58.86% of the NSSF’s 290.3 billion shillings assets during the reporting period, a sharp increase from 39.76% of the 209.26 billion shillings portfolio in 2017 , according to the Retirement Benefits Authority report.

The NSSF, which has hired six private asset managers to oversee the investment of 82.9% of its portfolio, last year increased its allocation to government securities by 20.39 billion shillings, compared to an average of 25.93 billion shillings over the previous two years.

This came in the year that pension funds saw the strongest growth in lending to government among major investor groups like banks and insurers as they sought guaranteed returns in the wake of shocks. Covid-19 on profits.

Pension funds raised public debt holdings of 206.64 billion shillings to cross the 1.260 trillion shillings mark between January and December 2021, according to the Central Bank of Kenya, helping them outpace banks whose wallet decreased from 166.19 billion shillings to 2 shillings. 0.03 trillion.

“The regimes continued to invest heavily in government securities, with the asset class accounting for 45.69% of the [nearly Sh1.55 trillion] total assets under management,” RBA, the industry regulator, wrote in the report for 2021.

The heavy investment concentration in government fixed-income securities has coincided with a shift in policy from Treasury domestic borrowing toward longer-term bonds that favor investment preferences for schemes that manage people’s savings. retirees.

The average maturity of Treasury bills last December was 8.80 years compared to 7.5 years in June 2019 and 4.1 years in June 2018, according to the Treasury.

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