The Public Service Superannuation Fund (PSSF), a pension scheme catering to new employees in the civil service, has added Kenya’s Eurobonds and NSE-listed stocks to its portfolio for the first time in a move to diversify its investment base.
The PSSF has revealed in its annual report for the year ended June that it made investments of Sh2.6 billion in the Kenyan external debt securities including the one issued in February this year and which matures in 2031.
The bulk of the scheme’s investment in Eurobonds are held in the recently issued paper at Sh1.64 billion while the fund has smaller holdings in notes maturing in 2027, 2028, 2032 and 2034.
The fair value of the notes purchased has however dropped to Sh2.1 billion as of June 30, 2024 to reflect investors’ reaction to changes in interest rates.
The defined contribution scheme has also added equities to its portfolio having purchased shares worth Sh3.9 billion in the review period.
The shares purchased are spread across Nairobi Securities Exchange (NSE) counters including Absa Bank Kenya, Co-operative Bank of Kenya, Equity Group Holdings, KCB Group, Safaricom and East African Breweries.
The shares purchased during the year ended June with a valuation of Sh4.3 billion with the jump representing fair value gains from the improved stock performance at the Nairobi Securities Exchange.
The PSSF also raised its holdings of Treasury bonds and bills to Sh125.1 billion from Sh77.9 billion a year earlier.
Other assets in the scheme’s portfolio in the period include Sh9.8 billion in call and fixed deposits which make up about six percent of the fund’s investments.
PSSF earned Sh14.05 billion as net income from investments, a rise from Sh5.5 billion previously.
The PSSF paid out its first ever benefits to members during the year, making a payout of Sh59.5 million which includes Sh9.6 million in commutation and lumpsum and Sh49.8 million for the death of members in service.
The increased earnings from investing coupled with fresh contributions from its 442,929 members helped lift the fund’s value from Sh84.7 billion to Sh140.2 billion.
The move by PSSF to hold assets outside of Treasury bills and bonds represents a step away from a stance that limited investments to government securities in the backdrop of the Covid-19 pandemic shock.
“The fund has adopted a result-oriented and risk-based approach to balance between appetite for good returns and risk exposure. Owing to the impact of Covid-19 pandemic on investment returns, the board decided to invest in government securities to ensure guaranteed returns on the investments,” PSSF said in its previous annual report.
PSSF, like any other pension scheme can invest in alternative asset classes including immovable properties, guaranteed funds, corporate bonds, private equity and real estate investment trusts (Reits), albeit at lower amounts compared to fixed income securities.
