PFAs Ramp Up Investment in FGN Securities by 17.7% to N13.8trn
- Pension fund administrators are taking advantage of the high interest rates by increasing investment in FG securities
- The investment from PFAs rose to N13.8 trillion in November 2024, marking an 18% increase year-on-year
- The investment assets include FG Bonds, Treasury Bills, Agency Bonds, SUKUK Bonds and Green Bonds
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
Pension Fund Administrators (PFAs) have increased their investments in Federal Government of Nigeria (FGN) Securities by 17.7%.
Year-on-year, PFA investments in FGN securities have risen to N13.8 trillion in November 2024, compared to N11.749 trillion recorded in November 2023.
Source: Getty Images
This is contained in the National Pension Commission (PenCom) monthly report published on its website.
This is an apparent move to take advantage of the increased interest rates.
Vanguard reports that the PFAs have spread their investments across Federal Government Bonds, Treasury Bills, Agency Bonds, SUKUK bonds and Green bonds.
Breakdown of PFA investments
As the PenCom report reflects, PFAs increased their investment in federal government bonds by 6.2%, from N11.254 trillion in November 2023 to N11.957 trillion in the following year.
The highest growth was seen in Treasury Bills where investments rose by 136.6 % from N243.1 billion in November 2023 to N575.2 billion in 2024.
There were also increased investments in Agency bonds, from 10.05 billion in 2023 to N10.6 billion in 2024.
Green bond investments declined 97.3% from 106.9 billion in November 2023 to 2.9 billion in November 2024.
Investment in SUKUK bonds also dropped 21.7%, down from 134.8 billion in November 2023 to N105 billion in November 2024.
Analysts say the investments are safe
According to analysts, PFAs' decision to increase their investments in federal government securities is foolproof, as these securities are mostly considered to be low-risk assets.
Mr David Adonri, Executive Vice Chairman and Analyst at High CAP Securities Limited, explained that the move was necessary.
He noted that federal government bonds are among the safest and lowest-risk investment assets. The high interest rate regime also makes this decision attractive to investors.
Head of Investment and Research at Fidelity Securities Limited, FSL, Mr Victor Chiazor, agreed with this opinion, noting that the high interest rate makes the environment very friendly for investments now.
He added that if the inflation rate and benchmark interest rate maintain an upward trend, investments in government securities will grow even more in 2025.
PFA activities to be exposed in Rebased GDP
In related news, Legit.ng reported that experts predict that the rebased GDP will beam light on the activities within the Pension Fund Administrators.
Reacting to the NBS's decision to capture PFA activities in rebased GDP, experts said the decision was long overdue, given the sector's growth.
They noted that with the inclusion, stakeholders and regulators would get a clearer picture of the financial happenings within PFAs in Nigeria.
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Source: Legit.ng
