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INVESTMENT POLICIES.
Royal Trust PFA Ltd investment policies and goals are guided by the provision of the National Pension Reform Act and its internal investment policies. Together, these two forms the bedrock of its investment policies. The Royal Trust PFA Ltd investment policy emphasizes the safety of the principal fund, good returns that outperform long-term inflation rate, proper asset allocations, diversified investment choices and categories that survive perpetual changes of current market trends, efficient investment control and supervision process. All these factors would be taken into consideration to help guide our investment policies to counter balance cyclical economic effects and generate satisfactory returns to our fund members.
Similarly, other than maximizing good returns on investment, Royal Trust PFA Ltd would make it a policy to pay equal attention to its investment supervision role by publishing its investment policy statement for self-compliance and inform related parties of mutual anticipated roles and responsibilities. The investment policies would also outlines investment guidance and risk management frame work which aims at protecting the fund against possible investment risk.
Furthermore, in order to assure organizational credibility, fund members confidence and societal acceptability, Royal Trust PFA Ltd would apply the principles of good corporate governance in its investment administration. This in fact is regarded as a key driver for successful organizational management and a practical guideline for good fund management. The mechanism to be evolved would ensure equitable access to all relevant information presented with consistency, accuracy and completeness.
INVESTMENT OBJECTIVES.
Our investment objective shall include the following: Maintain a portfolio of secured and sufficiently liquid assets, which will generate income and capital growth to meet the cost of current and future benefits of contributors.
To provide satisfactory returns on the fund.
To ensure that contributors funds are managed in such a way to hedge against the vagaries of inflation
To comply with statutory guidelines in respect of the above.
ASSET MIX.
The long-term asset mix of the fund will be determined by the following factors:
1. Demographics of the members of the fund under management and the expected future growth thereof.
2. Projected long term cash flows.
3. The correlation between the funds assets, liabilities and cash flows.
4. The objective for real rate of return
5. The desire to maintain a stable level of contribution for members of the fund under our management.
6. The historic pattern of equity investments producing higher rates of return than debt instruments over the longer term, which pattern is expected to persist.
7.The role of foreign markets and asset classes in optimizing the trade-off between risk (defined as volatility) and return, recognizing the restriction imposed by National Pension Commission from time to time.
The long-term asset mix of the fund will be determined by the following factors:
Our investment guideline will be strictly in line with the provision of the Pension Reform Act 2004, particularly as provided under PART IX for investment of contributions under the scheme, and that of our Board. In addition any further guidelines that may be issued from time to time by the National Pension Commission.
APPROVAL LIMITS: All approvals for investment of Pension Funds shall be subject to the approval of the Investment Strategy Committee of Royal Trust PFA..
PORTFOLIO DIVERSIFICATION.
To achieve a balanced investment portfolio, our portfolio structure will be diversified in order to achieve the following diversification requirements:
i. Reduce the funds total return volatility
ii. Reduce the exposure to any single component of capital market or investment class.
iii. Reduce the risk of returns vis-a- vis inflation
iv. Increase the long-term risk adjusted return potential of the fund.
ASSET ALLOCATION STRUCTURE.
Investment that are permitted shall be classified within the general categories of
i. Equity Investments: This include common stocks of public quoted shares on the Nigerian Stock Exchange official list, initial public offerings of quoted companies, convertible bonds and preference shares traded at the secondary market and other derivatives actively traded at the secondary market.
ii. Fixed Income Investment: Federal government bonds, corporate bonds, mortgage backed securities, short and long-dated publicly-traded debt securities and their equivalent issued and traded at the Nigerian Stock Exchange.
iii. Money market instruments: Including treasury bills, banks deposits, promissory notes, CP’s Bankers Acceptances etc.
Real Estate and Other Investments: This include investment in real property, off-shore property etc.
SINGLE FUND STRUCTURE OF ASSET ALLOCATION (PROPOSED)
MONEY MARKET Bank Placements
Treasury bills
Commercial Papers : SUB-TOTAL = 40%
BONDS FGN Bonds
State Bonds
Corporate Bonds : SUB- TOTAL = 30% EQUITIES : SUB- TOTAL = 30%
TOTAL 100%
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