- Q1 growth driven by strong global financial markets
- Global Equities is top performing asset class for DPF
The net total assets of Botswana’s second largest pension fund, the Debswana Pension Fund (DPF), increased by 6.10 percent to close the quarter at P10.2 billion, DPF has disclosed in its business e-brief report for the first quarter of 2023.
This is an increase on the P9,545 billion accrued at the Q4 2022 assessment. DPF says despite the quarter end market risks, financial markets overall generated positive returns.
On portfolio performance as at 31st March 2023, it says 2023 started off on a high note as global financial markets generated strong positive performance in Q1 despite numerous market risks materialising. The DPF also notes that dwindling recession concerns, strong corporate earnings, declining inflation, and increased expectations of pauses in central bank hikes contributed to positive market performance for Q2.
According to the diversified pension fund, global equities rallied, growth stocks topped value stocks, and government fixed income instruments outperformed corporate debt in the quarter. “Towards the end of quarter, there was significant volatility emanating mainly from the USA’s banking sector as Silicon Valley Bank (SVB), a mid-cap technology focused regional bank, collapsed,” says the report. “Its collapse resulted in mild contagion as other US regional banks, namely First Republic Bank and PacWest, collapsed or were on the brink of collapse.
“Concerns about the stability of the banking system spread from the United States to Europe, as Swiss Bank Credit Suisse also collapsed before its competitor, Union Bank of Switzerland (UBS), bought it out in order to stabilise the banking secto.” Meanwhile, DPF has emphasised that its top performing asset class was Global Equities, which increased by 12.73 percent in Botswana Pula during the quarter under review. “The next top performing asset class for the first quarter was African Equities, which rose 9.46 percent, followed by Chinese Equities, which advanced 9.29 percent,” the report notes.
Emerging Market Equities, Emerging Market Bonds, Global Property, Global Bonds, and cash delivered strong performance in the quarter, generating 6.79 percent, 4.70 percent, 5.47 percent, 6.29 percent and 3.16 percent respectively. In addition, DPF says domestic assets provided tepid results for the quarter, with Botswana Equities and Botswana Cash contributed positively, yielding 2.25 percent and 2.07 percent respectively.
“Botswana Bonds were muted for the quarter returning 0.61 percent while Botswana Property was negative yielding, declining by -0.07 percent,” the report notes. “The worst-performing asset class for the quarter was Africa Private Equity, which declined by -7.94 percent. The Fund’s Market Channel increased 6.44 percent during the quarter. “During the period under review, returns remained consistent, with Debswana Pension Fund’s Life Stage Models investment strategy whereby the most aggressive Market Channel outperformed the most while the least aggressive Pensioner Channel registered relatively lower returns.”
