Retirees' invested assets up 15% to Sh2tr in first six months - RBA

The retirement benefits assets under management grew by 14.6 per cent in the first six months of the year to almost cross the Sh2 trillion mark on favorable markets and economic conditions.

The report by the Retirement Benefits Authority (RBA) shows assets grew by Sh253.3 billion during the review period to Sh1.98 trillion from Sh1.72 trillion. 

Compared to the same period last year, the assets grew by 16.1 per cent, up from Sh1.7 trillion.

"The period witnessed stabilization of the exchange rate and inflation rate. More than three-quarters, (10 out of 13) of the investment asset classes recorded positive performance during the first half of the year 2024," the report reads.

However, the remaining three investment asset classes recorded negative performance during the period under review. These include immovable property, fixed deposits, cash and call deposits held with banks.

Fund managers and approved issuers held the majority of the assets amounting to 1.89 trillion.

The assets under management included Sh348.70 billion of the National Social Security Fund (NSSF), which were managed by six external fund managers.

Internally managed funds were at Sh52.45 billion while the trustees of the various schemes directly managed Sh51.06 billion of property investments.

The investment trend of schemes continued to favour fixed-income assets.

More than half (51.12 per cent) of the scheme assets under management were invested in government securities followed by 20.45 per cent investment in guaranteed funds.

Investments in immovable property and quoted equities accounted for 11.95 per cent and 8.85 percent of the total assets under management respectively.

During the period, there was investment of Sh61.62 million under any other asset.

Comparing the year-on-year performance, significant growth was recorded in offshore investments (68.78 per cent), private equity and venture capital (63.35 per cent), government securities(24.19 per cent) and guaranteed funds (23.73 per cent).

However, the highest negative growth was recorded in unquoted equities at 22.5 and 21.4 per cent.

The investment trend tends to shift towards fixed-income assets such as government securities and guaranteed funds.

The period also witnessed diversification to alternative assets such as private equity and offshore investment.

The significant growth in offshore investment is attributable to the exchange rate movement where the shilling had considerably lost value against the dollar hence making offshore investments more attractive.

The percentage increase in investment in commercial paper and non-listed bonds issued by private companies was not included in the bar graph as it was an outlier with over 10,000 per cent change.

This is due to an investment of Sh3 billion in Linzi sukuk bond by one of the schemes during the period.

Comparing the same period last year (June 2023), the total AUM increased by 18 per cent up from Sh1.59 trillion.

The total assets managed by fund managers amounted to Sh1.48 trillion while the approved issuers managed only Sh404.60 billion despite managing funds for the majority of the schemes.

The investments under the guaranteed funds have been on upward trajectory following a shift to safer assets owing to volatility in the stock market and the high interest rates.

The total investments held by NSSF increased by Sh73.89 billion to stand at Sh402 billion in June 2024, up from Sh328.11 billion in December 2023.

The overall NSSF portfolio is heavily invested in government securities representing 67.87 percent of the total assets.

This is followed by quoted equities and immovable property at 14.51 per cent and 9.95 per cent, respectively.