If GEPF moves 20% of funds offshore, it could be more devastating than credit downgrade
Government employees may score, but economy could suffer
The Government Employees Pension Fund’s (GEPF) plan to move some of its investments offshore is warranted, but it can impose additional strain on the rand and trigger more economic woes for the country, investment analysts said on Tuesday. Rowan Burger, head of strategy at Momentum Investments, said the fund can get better returns from increased offshore exposure in the short to medium term, which was in line with its fiduciary duty to optimise returns for its members. However, chief economist at Econometrix, Azar Jammine, said a sudden outflow of just a little of GEPF’s funds could be more devastating than even the impact of a credit downgrade. "A Moody’s downgrade can trigger about R100bn to R150bn of capital outflows … if the GEPF moved just 20% of its funds offshore, we’d be looking at about R400bn in outflows," he said. With only 10% of the GEPF’s funds allowed for investment offshore, public servants have been distinctly disadvantaged compared to workers in the private sector,...
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