Exposure to SA economy slows GEPF investment growth
The Government Employees Pension Fund portfolio has only grown by 0.88% during 2019
The continent’s largest pension fund has seen the growth of its investment portfolio grind to a halt for the financial year, because of its exposure to the SA economy.
The Government Employees Pension Fund (GEPF) published its annual report for the year ending March 2019 in Johannesburg on Thursday, which showed that its portfolio only grew by 0.88% to R1.818bn during the year as poor returns from the JSE weighed on its equity.
“We need to find other sources of income and return. This is related to the question of the diversification of the GEPF [into international assets]. If we are exposed to the SA economy ... then our portfolio hits a plateau,” said Abel Sithole, the GEPF’s principal executive officer.
Business Day TV spoke to the GEPF's principal executive officer Abel Sithole about the fund's diversification strategy as exposure to the SA economy has taken its toll on investment growth.
The small increase in the portfolio is largely due to the difference between contributions from members and investment income being greater than the benefits paid to members, essentially meaning the value of the portfolio remained static during 2019.
The GEPF’s investment manager, the Public Investment Corporation (PIC), has been the subject of a commission of inquiry led by retired supreme court judge Lex Mpati. The commission’s final report is due to be handed to President Cyril Ramaphosa on December 15.
Sithole said the GEPF is gearing up to conduct greater scrutiny of the decisions of the PIC. “We would like to have sight of what the PIC is doing, as opposed to telling them what to do.”