This archive report was first published on 11 May 2020.
As the Covid-19 pandemic continues to ravage the world, Kenyan pensioners have suffered a significant financial blow, losing over Ksh35 billion ($350 million) in just three months.
According to a survey conducted by Zamara Consulting Actuaries, the returns on pensioners’ investments in the three months to March 31 dropped, prompting a shift from equities to bonds.
“Pension funds have been heavily exposed to equities. And with this kind of downturn in the market, they are also heavily impacted,” said Sundeep Raichura, Zamara Group chief executive, in an interview with The EastAfrican last week.
The survey, which covered 415 pension schemes with a total of Ksh852.4 billion ($8.52 billion) in assets under management, found that the average returns for pension schemes during quarter one declined by 4.2 per cent largely due to the poor performance of the equities market.
However, Raichura remains optimistic, expecting a good rebound of the market if the situation normalises.
At the end of the quarter, schemes had shifted about 75 per cent of their assets to fixed income investments, 18.8 per cent to equities, 5.7 per cent to property and 0.5 per cent to offshore investments.
Chief executive of Standard Investment Bank James Wangunyu advised pension funds to take advantage of the prevailing low valuations on the stock market to boost their investments with a long-term view.
“This is the time to buy and own companies that are cheaply priced,” he said.
The Capital Markets Authority notes that both the coronavirus and locust invasion will have an adverse effect on agriculture, tourism, manufacturing, and transport companies, making it an excellent opportunity for long-term investors to take advantage of underpriced shares for future capital gains and dividend payments.
