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Investment of Retirement Benefits Scheme Funds by Amana Capital


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Investment of Retirement Benefits Scheme Funds by Amana Capital

  1. 1. Investment of Pension Funds Assets A Presentation From
  2. 2. Who is Amana Capital Limited? <ul><li>Founded in 2003 as first independent FM in Kenya </li></ul><ul><li>Licensed and Regulated by CMA and RBA </li></ul><ul><li>Board of Directors </li></ul><ul><ul><li>3 non-executive/independent directors </li></ul></ul><ul><ul><li>Good skills mix at board level </li></ul></ul><ul><li>Qualified & Experienced Fund Management Staff </li></ul><ul><ul><li>Head of FM is ex-AIG, ALICO </li></ul></ul><ul><ul><li>Staff combined experience > 40 years </li></ul></ul><ul><li>Located at Barclays Plaza, M4 </li></ul>
  3. 3. General investment philosophy <ul><li>Portfolio diversification – overall risk is minimized </li></ul><ul><li>Active portfolio management to generate long term capital growth in line with client’s investment guidelines. </li></ul><ul><li>Principal asset allocation set for a few years </li></ul><ul><li>Tactical investment strategy – manager takes advantage of market opportunities </li></ul><ul><li>Research-driven investment strategy, e.g. stock picking </li></ul><ul><li>Collective investment decisions – investment committee </li></ul><ul><li>Use of derivative instruments for efficient portfolio management – reduced portfolio volatility </li></ul>
  4. 4. Investment manager role <ul><li>Advise Trustees on available investments </li></ul><ul><li>Assist Trustees in developing the Scheme’s Investment Policy & Guidelines </li></ul><ul><li>Construct and actively manage the Scheme’s investment portfolio in line with RBA Investment Guidelines and Trustees’ Investment Policy </li></ul><ul><li>Report to Trustees on the performance of the Scheme’s investment portfolio on regular basis </li></ul><ul><li>To liaise with Custodian on matters relating to investment of Scheme assets </li></ul><ul><li>Ensure Members’ monthly contributions are remitted to Custodian within RBA’s stipulated period </li></ul>
  5. 5. Risk-reward profile
  6. 6. Investment process Derivatives overlay GDP Interest Corporate Top Growth Inflation Rates Profits Currencies Cash Bonds Equities Asset Allocation Investment Decision Point Stock Selection Company Credit Risk Sectoral Analysis Analysis Analysis Bottom
  7. 7. Return on Investment (1975 - 2004) Asset Average return (%) 3-month Bank deposit 10.5 91-day Treasury bill 13.5 Treasury bond 13.1 Stock market (NSE 20 Share Index) 16.8 CPI (Inflation) 13.4 Insured Schemes 8.0 Managed Schemes (3-yr average) 15.0
  8. 8. Stock market performance
  9. 9. Industry asset allocation 100.0% 12.1% Guaranteed funds 30.0% 4.6% Term deposits & cash 15.0% 5.6% Offshore investments 5.0% 0.1% Unlisted equities & other assets 30.0% 5.8% Immovable property 70.0% 24.0% Quoted equities 30.0% 4.8% Commercial paper & Corporate bonds 70.0% 43.0% Government securities (Treasury bills & bonds) RBA Maximum Allocation (%) Current Allocation (%) Asset Class
  10. 10. Comparative asset allocation 50.0% 45.0% 34.0% Bonds (Government & corporate) 1.0% 1.0% 2.0% 62.0% USA (%) 4.6% 5.0% Term deposits & cash 12.6% 5.0% Other assets 5.8% 1.0% Immovable property 27.0% 44.0% Quoted equities (Domestic & international) Kenya (%) Japan (%) Asset Class
  11. 11. Why asset allocation is important <ul><li>Retirement benefits schemes are a major source of long term capital in any economy </li></ul><ul><li>Plays an important economic development role – efficient asset allocation job creation & strong GDP growth </li></ul><ul><li>Plays an important role in capital markets deepening – source of long term capital </li></ul><ul><li>Has a direct impact on scheme members’ final retirement benefits – inflation protection an important consideration </li></ul>
  12. 12. Thank You