The financial system’s largest institutional investor, Social Safety and Nationwide Insurance coverage Belief (SSNIT), has indicated a strategic shift towards a fixed-income centered portfolio – a transfer that might considerably influence the funding panorama.
The present portfolio of GH¢16.7billion, as of 2023, is closely weighted towards equities (49.3 %) and various investments (34 %), with solely 16.7 % allotted to fastened earnings. Nevertheless, SSNIT plans to dramatically rebalance this allocation within the short-term; by greater than doubling the fastened earnings allocation to 48.8% whereas considerably decreasing each equities and various investments
SSNIT Director-Basic, Kofi Bosompem Osafo-Maafo, outlined the belief’s new course throughout a current media engagement.
“The technique is to lower our actual property portfolio and reduce our fairness investments, and that’s going into fastened earnings which supplies us extra,” Mr. Osafo-Maafo said. “If that occurs, then we come to a place which is extra in keeping with the place we wish to be.”
Because the technique progresses, the fastened earnings allocation is about to extend additional to 60 % within the long-term, whereas equities can be decreased to 26 % and various investments stabilised at 14 %. This shift suggests a transfer towards a extra conservative, income-focused portfolio over time.
“We have now an asset allocation coverage that’s threat management-driven. 60 % of our funding must be in fastened earnings devices and 40 % in non-fixed earnings devices,” defined Patricia Fosu, Basic Supervisor of SSNIT’s Funding and Growth Division.
The Belief is contemplating drastic measures to rebalance its portfolio, together with the potential sale of its in depth lodge belongings.
Mr. Osafo-Maafo described this as a “brutal choice”, however one that might quickly speed up the shift towards desired asset allocation. “Assuming we took the brutal choice of promoting the motels, we’d be there,” he defined. “However that’s what we do. That’s fund administration. It could’t be static.”
The lodge divestment course of, initiated in 2018, has confronted challenges as a result of fee negotiation points. Negotiations with most well-liked bidder Rock Metropolis, which provided US$61.2million for SSNIT’s 60 % stake in 4 motels, have stalled over fee phrases disagreement.
Past motels, SSNIT is eyeing different potential divestments says Ms. Fosu: “We’re overly uncovered to equities. Our goal says that we must be at 26 % within the long-term, however we’re at 49.3 %”.
The Belief goals to cut back its funding in unlisted equities from 35.8 % to 4 % within the long-term, whereas rising listed equities allocation from 13.5 % to 22 %.
Investments in actual property can be decreased considerably from the present stage of 30.5 % to 10 % within the shortest potential timeframe.
“We’re finishing all our actual property tasks. We aren’t enterprise any new actual property tasks till we’ve been capable of promote the properties that we’ve accomplished,” Ms. Fosu added.
This shift represents a big change for SSNIT, which has lengthy been a significant participant in Ghana’s actual property and fairness markets. The Belief is the nation’s largest business property developer, with investments spanning scholar lodging in addition to the facility technology and ICT sectors.
On the Ghana Inventory Trade, SSNIT holds investments price GH¢2.42billion with stakes in 22 out of 36 listed shares. Within the banking sector, it has investments in 8 out of 23 business banks.
As SSNIT navigates this transition, it should additionally handle excellent authorities arrears. Mr. Osafo-Maafo famous that of GH¢2.5billion owed, authorities has paid GH¢1.4billion – with negotiations ongoing for the rest together with curiosity and penalties.
The Belief’s funding portfolio is predominantly home, says Ms. Fosu
“As of December 2023, 99 % of our investments are home. We have now 16.2 % of our investments within the power sector, about 15.7 % in providers, 3.5 % in manufacturing, 15.2 % within the monetary providers sector and 37.5 % in actual property,” she added.
This strategic shift by SSNIT might have far-reaching implications for Ghana’s funding panorama. Because the nation’s largest institutional investor repositions its portfolio, it could set off a ripple-effect throughout varied sectors of the financial system. The transfer towards fastened earnings might doubtlessly influence liquidity within the fairness markets and actual property sector, whereas rising demand for presidency and company bonds.