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DPF investment drive pays off, FUND clocks BWP8 billion mark

Publishing Date : 13 January, 2020


Debswana Pension Fund, Botswana second largest and the country’s leading private sector pension fund continues to deliver upward trajectories as it pursues its quest of diversifying its investment portfolio and cultivating wealth for its members.

Information from the fund, released late last year mirrors impressive performance for the Fund’s major investment portfolios in the first three quarters of 2019 amid the year’s challenging economic circumstances. The third quarter of 2019, ending September 2019 presented a third consecutive quarterly positive investment performance by the Fund’s assets. Performance for the quarter was characterized by satisfactory returns in the Market, Conservative, Pensioner and Contingency Channels.

The Fund’s Net Total Assets increased 2.96 percent from BWP 7.861 billion in Quarter 2 2019 to BWP 8.103 billion in Quarter 3.  The positive returns according to DPF were partially driven by the continued rally in international markets led by Developed Market equities.
Furthermore the Fund experienced positive performance in the third quarter of the year, with the Market Channel increasing 3.02 percent, the Conservative Channel rising 2.79 percent and the Pensioner Channel returning 2.92 percent.

On a twelve-month basis, the Fund generated positive returns net of investment fees, the Market Channel reporting a return of 6.43 percent followed by the Pensioner Channel at 7.64 percent while the Conservative Channel returned 7.20 percent. Executives at Debswana Pension Fund say decelerating global growth and lower inflation forecasts across developed markets have resulted in key interest rate cuts and supportive monetary policy by major central banks, which has underpinned global stocks and bonds. In addition, the local equity market marginally contributed to the positive performance as the domestic listed equity managers posted flat returns.

The top performing asset class for the Fund was property, which returned 6.31 percent (in BWP). The next top performing asset class for Quarter 3 was private equity, which returned 6.03 percent, followed by global bonds, which returned 4.14 percent. Foreign equities extended their gains as the appetite for listed stocks surged, in anticipation of further interest rate cuts and elevated corporate earnings in certain sectors of the economy. Global equities returned 4.10 percent while the Domestic Companies Index decreased 1.03 percent on a total return basis. Emerging Market equities gained 1.70 percent.

In an environment of positive performances by global equity managers, Veritas was the Fund’s outperforming manager for Quarter 3 with a return of 5.27 percent. Marathon was the second best performing manager returning 4.81 percent. The least performing global equity manager was Southeastern, posting a modest 0.55 percent. Local equities returned an above benchmark return.

The Botswana Stock Exchange Domestic Company Index, which declined 1.03 percent over the quarter, underperformed Allan Gray which returned -0.16 percent and Investec which remained flat at 0.01 percent. Of the two Local Bond managers, BIFM was the top performer, posting a return of 1.39 percent for the quarter, ahead of Investec’s gain of 1.00 percent. In 2018 Debswana Pension Fund, established a subsidiary fund administration company to which it outsources benefit administration functions, bearing the name Mmila Fund Administrators.

In her 2019 end of year message Debswana Pension Fund Chief Executive Officer, Gosego January revealed that Mmila has been granted a license as a response to regulatory changes in the Pension Fund industry, which came into effect in April 2017. “Against this background, I am pleased to advise that Mmila Fund Administrators is now fully operational and there has been a seamless transition between the two entities,” she said.

January explained that Global Markets have remained somewhat challenged largely due to the US-China Trade War that brought about market uncertainty and volatility consequently leading to loosening of monetary and fiscal policy in markets such as the US and EU.
“We are however pleased that despite these market headwinds, the fund performance has been strong and grew quarter by quarter, crossing the BWP 8 Billion mark at the end of Quarter 3 2019, Growing Returns for our members is a top priority for the fund and in so doing, we continue to identify areas of investment and pay close attention to global emerging trends.”

In 2019 The Fund commenced roll out of its 2019-2023 strategy, according to January the strategy will deliver even more returns to its members in 2020. “There are potential market challenges as has been speculated, however, I believe that DPF is poised to attain greatness in 2020 and beyond,” she said.