Kenyan pension fund managers have been challenged to consider alternative investment classes for better returns and reduce risk exposure in government securities.
According to the Retirement Benefits Authority (RBA) despite the investment guidelines providing a category of 16 asset classes, schemes continued to invest heavily in government securities that accounting for 51.12pc of the total assets under management which is pegged at Ksh 1.9 trillion.
“Alternative investments are not new. They are as ols as the traditional investments. The only thing that is new is that the adoption has taken too long,” said Anthony Mwithiga Chairman of the Fund Managers Association.
Of the total AUM, guaranteed funds account for 20.45pc while Investments in immovable property and quoted equities accounted for 11.9pc and 8.85pc respectively.
The low investment in alternative asset classes has also been blamed on unwillingness by trustees to invest in the assets as they are deemed risky.
“Because of lack of information, knowledge and lack of understanding of these products, most people shy away from them,” said Caroline Kodo, Administrator, Central Bank of Kenya Pension Fund.
“We have a chance now as industry players including RBA to give the knowledge to the people to understand these alternative investments better.”
RBA has further been challenges to build capacity of trustees in order to expand investments in other asset classes as the authority targets to raise AUM from the current 1.9 trillion to Ksh 3.2 trillion within five years.
“There are various asset classes that are available. In fact the final thing is awareness because the people who make decisions are trustees of pension funds and the trustees also need to be empowered that there are other alternatives including offshore investments,” said Charles Machira, RBA Chief Executive Officer.
Investments in alternative classes such as private equity and REITS currently stands at 1pc of total AUM.
They were speaking during the two day retirement benefits sector convention which ended Friday.
