Pension Funds Administrators, PFAs, investments into federal government securities increased by 6.3 per cent to N25.6 trillion in the fourth quarter 2021, Q4’21, from N24.1trillion in the corresponding period of 2020.
This comes at the backdrop of increased yields in fixed income securities, an asset class that includes federal government securities such as FGN bond, Treasury bill, Agency bond, Sukuk bond and Green bond.
Vanguard’s findings from the latest data of the National Pension Commission, PenCom, shows that FGN bonds attracted the highest pension fund investment at N24.7 trillion, thus accounting for the 96.5 per cent of the total value of the federal government securities during the period.
Trailing behind the FGN bond is Treasury bill posting N810.9 billion, thus accounting for 3.2 per cent of the total value of pension fund assets of the federal government securities, followed by Sukuk bond recording N321.6 billion. This accounted for 1.3 per cent of the value of total federal government securities.
Green bond took the fourth position recording N201.5 billion as it accounted for 0.8 per cent of the value of federal government securities while Agency bond recorded N41.7 billion in the quarter under review.
Commenting on the investment behaviour of PFAs, analysts, and Head of Research and
Investment at Fidelity Securities Limited, FSL, Mr. Victor Chiazor said: “Over the years, PFA investments have always been highly skewed towards FGN Securities given the low-risk nature of the instrument. We have however seen a significant rise in yield environment in the period under review”.
Also commenting, Vice Executive Chairman, High Cap Securities Limited, Mr. David Adonri, said: “In the period under review, yield on fixed income securities and bank fixed deposits rose. As a result, investors were encouraged to invest in debt instruments such as government securities”.
