Fund Manager's Report

Fund Managers' Report As At 31st March, 2022

Domestic Economic Update

Just as the global economy and the continent are beginning to recover from the ravages of the COVID-19 pandemic, the Russia-Ukraine crisis has become a clog in the wheel of global economic growth, threatening to undo some of the progress made. That said, the Nigerian economy as measured by the Gross Domestic Product (GDP) grew by 3.98%, showing trajectory recovery on a path of positive growth in economic activities.

Meanwhile, the Nigeria’s Purchasing Managers Index (PMI) posted 54.10 points in Q1, 2022 (which is significantly above 50 points expansion threshold). The index grew at a slower rate when compared with 55.90 points recorded in Q4, 2021. New orders, suppliers' delivery times, output, employment and stocks of purchases growth slowed during the period under review.

Consumer Price Index (CPI), which measures Inflation rose to 15.70% in Q1, 2022 compared to 15.63% recorded in Q4, 2021, showing a back-pedalled with an uptick recorded in the previous quarter. However, the 12-months average decreased slightly by 22bps to 16.73 from 16.95% in Q4, 2021.

As it relates to governance update, the Federal Government of Nigeria mulls mandatory savings scheme for all Nigerians between 18 to 50 years of age, as it seeks ways of mobilizing funds to boost the national economy. Elsewhere, Mrs. Zainab Ahmed, minister of finance, budget and national planning, disclosed Federal Government`s plans to use $2.2 billion of the fund raised via Eurobond to cater for petrol under-recovery costs.

Financial Market Update

Capital Market Update

The stock market improved by 9.95% in Q1, 2022 to close the period at 46,965.48 basis points when compared with Q4, 2021 where it closed at 42,716.44 basis points. The Year-to-Date (YTD) returns currently stands at 9.95%. The positive performance in the period under review can be attributed to investors’ general bargain hunting for equities.

In line with our medium/long term view of the equity market, we maintained our hold strategy on the stocks in the portfolio but enhanced it a bit by taking profit in some stocks that are overvalued. Meanwhile, as a professional fund manager that is conscious of the performance of the portfolio, we explored pockets of available fixed income securities with impressive yields in the market to stabilize and improve return on investment.

The yields on Federal Government Bonds closed lower at the primary market in the period under review when compared with Q4, 2021 with stop rates on 10-year and 20-year FGN Bonds closing at 10.1500%, and 12.700% respectively. All the tenors of the FGN bonds were oversubscribed.

Foreign Exchange (FX) Market Update

At the official segment of the FX market, the naira appreciated by 4.32% to N416.17/$1 in Q1, 2022 when compared with its closed price of ₦435.00/$1 in Q4, 2021. However, at the parallel market, the naira depreciated marginally by 3.91% to closed at N587.00/$1 in Q1, 2022 when compared with its closed price of N564.90/$1 in Q4, 2021.

Monetary Policy And Inflation Update

The monetary policy committee (MPC) met in the period under review and left the rate unchanged.

The latest official inflation rate as released by the Bureau of Statistics shows a 12-months average of 16.73% while the year-on-year change was 15.70%.

Key Economic Indicators

Find below the key economic indicators for your perusal:

MAR-21 JUN-21 SEP-21 DEC-21 MAR-22
Exchange Rate (₦/USD)               
Official 379.00 380.69 380.69 435.00 416.17
Parallel 486.00 503.00 577.00 564.90 587.00
Monetary Policy Rate (MPR) % 11.50 11.50 11.50 11.50 11.50
Inflation Rate          
12-Mth Ave (%) 14.55 15.93 16.83 16.95 16.73
Year-on-Year (%) 18.17 17.75 16.63 15.63 15.70
Foreign Reserve (Billion USD) 36.20 33.37 36.41 40.53 39.55
Crude oil Price in the Int’l Market ($/barrel) 63.54 75.13 78.35 77.78 107.91
GDP Growth Rate 0.51% 5.01% 5.01% 3.98% 3.98%
NGX-ASI 39,045.13 37,907.28 40,221.17 42,716.44 46,965.48
NGX 30 1,555.92 1,594.87 1,674.51 1,722.30 1,791.07
NSE PENSION INDEX 1,362.60 1,479.77 1,552.33 1,624.09 1,704.43
Liquidity Ratio (%) 30.00 30.00 30.00 30.00 30.00
Cash Reserve Ratio (%) 27.50 27.50 27.50 27.50 27.50

 

NLPC PFA - RSA Fund I

The Asset Allocation and performance of our NLPC PFA – RSA Fund I as at 31st March, 2022 stood as follows:

Quoted Equities 6%, Government Securities 60%, Money Market 34%, Cash & Others 0%. The unit price grew from N1.2132 in January, 2022 to N1.2450 as at 31st March, 2022 translating to a year to date positive growth of 2.62% and an annualized return of 10.63%.

NLPC PFA - RSA Fund II

The Asset Allocation and performance of our NLPC PFA – RSA Fund II as at 31st March, 2022 stood as follows:

Quoted Equities 6%, Government Securities 67%, Money Market 12% and Cash & Others 15%. The unit price grew from N5.3186 in January, 2022 to N5.4606 as at 31st March, 2022 translating to a year to date positive growth of 2.67% and an annualized return of 10.83%.

NLPC PFA - RSA Fund III

The Asset Allocation and performance of our NLPC PFA – RSA Fund III as at 31st March, 2022 stood as follows:

Quoted Equities 3%, Government Securities 76%, Money Market 10% and Cash & Others 11%. The unit price grew from N1.6459 in January, 2022 to N1.6884 as at 31st March, 2022, translating to a year to date positive growth of 2.58% and an annualized return of 10.47%.

NLPC PFA - RSA Fund IV

The Asset Allocation and performance of our NLPC PFA – RSA Fund IV as at 31st March, 2022 stood as follows:

Quoted Equities 1%, Government Securities 77%, Money Market 17% and Cash & Others 5%. The unit price grew from N4.8681 in January, 2022 to N4.9828 as at 31st March, 2022 translating to a year to date positive growth of 2.36% and an annualized return of 9.56%.

NLPC PFA - RSA FUND V

The Asset Allocation and performance of our NLPC PFA – RSA Fund V as at 31st March, 2022 stood as follows:

Money Market 96% and Cash & Others 4%. The unit price grew from N1.1226 in January, 2022 to N1.1520 as at 31st March, 2022 translating to a year to date positive growth of 2.62% and an annualized return of 10.62%.

NLPC PFA - RSA FUND VI - ACTIVE

The Asset Allocation and performance of our NLPC PFA – RSA Fund VI - Active as at 31st March, 2022 stood as follows:

Quoted Equities 23%, Government Securities 66%, Money Market 3% and Cash & Others 8%. The unit price grew from N1.0042 in January, 2022 to N1.0679 as at 31st March, 2022 translating to a year to date positive growth of 6.34% and an annualized growth of 25.73%.

NLPC PFA - RSA FUND VI - RETIREE

The Asset Allocation and performance of our NLPC PFA – RSA Fund VI - Retiree as at 31st March, 2022 stood as follows:

Government Securities 94% and Cash & Others 6%. The unit price grew from N1.0000 in January, 2022 to N1.0065 as at 31st March, 2022 translating to year to date growth of 0.65% and an annualized growth of 3.95%.

Outlook & Strategy
  • The Nigerian economy is forecast to grow in Q2, 2022 as government’s infrastructure push, surge in oil price and the new oil bill should buoy fixed investment growth. The outlook is clouded by a potentially sharper-than-expected slowdown in China, low vaccination rate amid lingering Covid-19 uncertainty and the sanctions against Russia are expected to have a considerable backlash against the global economy as Russia is an interconnected economy both in the global commodity and financial markets. Other risk factors are: elevated price pressures, high inflation, tight FX liquidity and security issues, amongst others.   
  • Meanwhile, the stock market closed Q1, 2022 on a positive note. This can be attributed to impressive results released by some companies for the year ended 2021 and the fact that investors took position in stocks currently trading at a discount to their intrinsic values coupled with the surge in oil price. We expect the stock market to close slightly positive in Q2, 2022. In effect, we shall continue to maintain our medium to long term view of the equities market. Whilst holding on to stocks with good fundamentals, we shall continue to increase our holdings as buy opportunities exist.

  • Lastly, we expect yields in fixed income market to slightly increase in Q2, 2022 due to high budget deficit, low foreign reserve, CBN’s front-line action to prioritise price stability when push comes to shove, effect of quantitative tightening in the United State of America (US) and high inflation, amongst others. The downsides to our fixed income market forecast which may bring about dovish treatment from the CBN are: continuous increase in crude oil prices, an improved external account, declining inflation, significant growth in GDP, amongst others. In effect, we shall continue to explore strategies to take advantage of the fixed income market with focus on securities at the medium/long end of the yield curve in order to improve the portfolio return consequently.

NLPC PFA-RSA FUND I ASSET ALLOCATION AS AT 31ST MARCH, 2022
ASSET CLASS MARKET VALUE(N'MLN) WEIGHT(%)
GOVERNMENT SECURITY 55.66 60
MONEY MARKET 31.45 34
EQUITIES 5.56 6
OTHERS 0.28 0
TOTAL 92.95 100
NLPC PFA-RSA FUND II ASSET ALLOCATION AS AT 31ST MARCH, 2022
ASSET CLASS MARKET VALUE(N'BLN) WEIGHT(%)
GOVERNMENT SECURITY 90.31 67
MONEY MARKET 16.54 12
EQUITIES 8.23 6
OTHERS 20.20 15
TOTAL 135.27 100
NLPC PFA-RSA FUND III ASSET ALLOCATION AS AT 31ST MARCH, 2022
ASSET CLASS MARKET VALUE(N'BLN) WEIGHT(%)
GOVERNMENT SECURITY 102.92 76
MONEY MARKET 13.96 10
EQUITIES 3.97 3
OTHERS 14.29 11
TOTAL 135.14 100
NLPC PFA-RSA FUND IV ASSET ALLOCATION AS AT 31ST MARCH, 2022
ASSET CLASS MARKET VALUE(N'BLN) WEIGHT(%)
GOVERNMENT SECURITY 42.49 77
MONEY MARKET 9.13 17
EQUITIES 0.49 1
OTHERS 2.75 5
TOTAL 54.86 100
NLPC PFA-RSA FUND V ASSET ALLOCATION AS AT 31ST MARCH, 2022
ASSET CLASS MARKET VALUE(N'BLN) WEIGHT(%)
MONEY MARKET 1.79 96
OTHERS 0.08 4
TOTAL 1.87 100
NLPC PFA-RSA FUND VI - ACTIVE ASSET ALLOCATION AS AT 31ST MARCH, 2022
ASSET CLASS MARKET VALUE(N'BLN) WEIGHT(%)
GOVERNMENT SECURITY 51.89 66
MONEY MARKET 2.03 3
EQUITIES 18.05 23
OTHERS 5.99 8
TOTAL 77.96 100
NLPC PFA-RSA FUND VI - RETIREE ASSET ALLOCATION AS AT 31ST MARCH, 2022
ASSET CLASS MARKET VALUE(N'BLN) WEIGHT(%)
MONEY MARKET 5.75 80
OTHERS 1.45 20
TOTAL 7.20 100