The Nigerian pension funds' Net Asset Value (NAV) in the domestic and foreign stock market has witnessed an impressive growth of 59.6%, escalating to N1.54 trillion by the end of September 2023. This surge from N965 billion in the corresponding period of 2022 is largely credited to the bullish run in the stock market, as indicated by the latest data from the National Pension Commission (PenCom).
The performance of the Nigerian Exchange Limited (NGX) All-Share Index (ASI) observed a notable gain of 29.52% during the first nine months of 2023, predominantly propelled by local institutional investors. The NGX Pension Index, which rallied by an impressive 58.9%, closing at 2,848.38 points, mirrors the pension industry's augmented exposure in the stock market. Total assets of the industry saw an increase of 20.3%, amounting to N17.349 trillion, marking a substantial growth from N14.424 trillion in the previous year.
FGN Securities and Corporate Debt Securities Register Growth
A significant proportion of the pension assets were held in Federal government (FGN) securities, which registered a 23% growth, reaching N11.309 trillion. Corporate debt securities also observed a growth of 24.7%, amounting to N1.855 trillion. However, a decline of 22% was noticed in money market instruments, which toppled to N1.638 trillion.
Analysts, including Victor Chiazor from FSL Securities Limited, perceive this growth trend as beneficial for pension fund managers and investors. They underline the significance of economic stability and wise investment strategies. Despite the growth, pension funds' exposure to stocks remains limited due to the stringent guidelines set by PenCom. This is aimed at ensuring the security of contributors' retirement savings by limiting investments in volatile assets.