Global equities lift Debswana's P7bn pension fund
Mbongeni Mguni | Friday October 5, 2018 14:36
The Debswana Pension Fund (DPF) has more than 12,000 members and holds about P7 billion in assets locally and offshore through 10 fund managers. The assets include local cash, local and offshore equities, property, local and offshore bonds, African private equity and emerging market equities.
According to statements the DPF shared with members this week, global equities cancelled out losses from a downturn in local equities, where the Botswana Stock Exchange continues to shed value, led by several heavyweight counters. The DPF’s global equities portfolio gained 10.6% in the quarter to June 30, and over 36 months to June 30, 2018, had gained 10.4%. “The worst performing asset class was local equities which posted a return of -0.11%, but the Fund managed to outperform the benchmark with a negative return of -2.18,” the DPF reported.
“Over the quarter, of the two local equity managers, Allan Gray was the top performer manager returning 0.04% versus Investec, which posted a return of -1.04%.” As at June 30, 2018 nearly half of the DPF’s assets were invested in offshore equities (46%), compared to 18% in local equities, 14% in local bonds and 11% in local property.
By December 31, 2017, the DPF had 19% in local assets, 12% in local bonds, seven percent in local property and 46% in offshore equity.
“Local assets continue to struggle. Local equities continue to be a significant detractor, the Domestic Companies Index only returning 2.29% over the last three years. “Different factors such as unemployment (retrenchment in the mines), low bank rates (the DCI mainly consists of financial sector counters), low business confidence and a limited market size, have all contributed to the poor performance,” DPF trustees wrote in the recently released 2017 Annual Report. After sliding in the months from January 2018, the DCI marked a brief turnaround in May with marginal gains. However, the Exchange quickly returned to losses and Choppies catastrophic fall last week, pushed the DCI to -11.54% by the end of September.