PSPF RECORDS E744M LOCAL INVESTMENTS PROFIT

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.

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