Times Of Swaziland: PSPF RECORDS E744M LOCAL INVESTMENTS PROFIT

PSPF RECORDS E744M LOCAL INVESTMENTS PROFIT
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Mhlengi Magongo on 28/12/2022 12:30:00


MBABANE – Investors and contributors to Public Service Pensions Fund (PSPF)
can ‘rest easy’ as the fund has this year displayed investment success.
Despite Eswatini experiencing economic challenges posed by the unrest, COVID-19
and the unexpected shut down of businesses, PSPF was able to record positives in
their performance. The fund made investments abroad and locally which were all
attributed to profit. PSPF recorded a profit of E744 million from local
investments, which were hiked by 41 per cent in the current reporting period.
This was disclosed in their annual report for the year 2022. According to the
financials, PSPF’s Investment strategy had a target to invest 30 per cent of
the assets in the foreign portfolio (South Africa), 20 per cent in off-shore
equities and the other 50 per cent in the domestic portfolio (Eswatini).
Managers
Fourty one per cent of the portfolio was invested in South African listed
equities only and there were seven (7) investment managers appointed for this
investment mandate. These are Allan Gray, Sanlam Investment Management, Aluwani
Capital Partners, Stanlib Asset Management Limited, Old Mutual Investment Group,
African Alliance and Balondolozi Investment Group. This, according to PSPF, was
experienced investment managers who have consistently outperformed in the period
under review and are on the Alexander Forbes Investment Manager Watch. These
investment managers delivered a combined average return of 20.5 per cent gross
of fees against a benchmark of 20.4 per cent in the period under review.
Investment income under this portfolio was mainly interest, dividends and
realised profits. Other income on this portfolio was revaluation gains on
adjustment of market value of investments. The revaluation gains accounted for
E1.1 billion in the period under review.
Investment
The other 19 per cent off-shore portfolio was managed by two appointed
investment managers namely, Stanlib Global and Alexander Forbes Jersey. However,
due to the strict lockdown laws in China, the Russia-Ukraine conflict and the
high inflation rate, the two investment managers delivered a combined average
return of 2.9 per cent gross of fees against a benchmark of 6.6 per cent in
period under review. This resulted in an underperformance of 3.7 per cent.
Income under this portfolio is mainly revaluation gains on adjustment of market
value of investments.
Revaluation
The revaluation gains on this portfolio accounted for E161 million in the period
under review. The fund achieved exceptional performance with a net surplus of
E2.7 billion recorded in the financial year ended 2022 compared to a net surplus
of E5.4 billion in the financial year ended 2021. This resulted in an increase
in Net Asset Value of the fund from E27.5 billion to 30.3 billion. The main
drivers being the out performance of the listed equities in the foreign
portfolio of South African equities, which recorded revaluation gains of E1.1
billion as recognised through profit or loss. This translates to a growth in net
asset value of 10 percent. The domestic portfolio assets also grew by E573
million, while the domestic portfolio had a revaluation gain of E161 million as
recognised through profit or loss.
Development
Another positive development for PSPF was the observed growth of the total
investments made in the local (Eswatini) landscape reaching a total of E12.4
billion (41 per cent) of the total assets. Through this asset base, the fund has
this year recorded a  combined income of E744 million from the local markets.
One can now confidently submit that the local market has gradually matured to be
able to sustain large investments such as the ones undertaken by PSPF. The own
portfolio comprising direct investments from within participated in government
bonds, equities and corporate bonds. This portfolio had a market value of E6.5
billion against E6.3 billion. This portfolio consisted of 52 per cent of the
domestic portfolio against 55 per cent of domestic portfolio as at March 31,
2021. This represents 21 per cent of total portfolio against 23 per cent of
total portfolio as at March 31, 2021. The Fund delivered total investment income
of 7.5 per cent against 7.6 per cent for the year ended March 31, 2021 under
this portfolio. This translates to a decrease of 0.1 per cent. The main drivers
were interest on loans of E659 million against E677 million in 2021, dividends
of E85 million against E53 million in 2021 and rental income of E33 million
against E31 million in 2021.