PORTFOLIO ANALYSIS OF PENSION FUNDS INVESTMENT IN NIGERIA

Abstract

The study is aimed at analyzing the portfolio of pension funds investment by Pension Funds
Administrators in Nigeria. Therefore, this study employed Ex-post facto research designs. The
study utilized data from secondary source. Data were obtained from the annual reports and
accounts of the National Pension Commission (PenCom) that made up the sample for the study
for the period 2007 to Third Quarter 2012. The population of the study is the thirty – five (35)
licensed Pension Fund operators and the Approved Existing Scheme. The sample was drawn
randomly, thus thirty- five (35) pension fund operators were selected for the study. In this
direction, a sample time frame of six years was used for the study covering the period 2007 to
third quarter 2012. In this study, data generated through the secondary source were
subjec0ted to empirical test and statistical analysis using multiple Regression and
Covariance\Correlation Matrix. The result showed that equity which had the highest percent in
the portfolio also returned the highest value of N2.8528bn. The consistent increase in return
over an increase in the weight of the asset classes in the portfolio suggests a direct relationship
between size of asset in a portfolio and its return. We therefore recommend that Capital
Market Operators are enjoined to continuously scan the macro-economic environment and
liaise with institutional investors, in order to develop investible products that will satisfy the
risk-reward profile of institutional investors. We also call for increased Investors’ confidence;
there is need for high corporate governance practices, market discipline and strict
enforcement of rules in the capital market. The National Pension Commission will continue to
partner with relevant stakeholders, make its Investment Regulation more flexible and
encourage increased pension fund investments in order to further develop and deepen the
Nigerian capital market.
Keywords: Portfolio Anal