Assets under Management (AUM) at the country’s largest pension fund by value, Debswana Pension Fund (DPF) closed the second quarter of the year (2023) at P10.527 billion.
The information contained in DPF’s second-quarter economic brief shows that the fund value jumped from P10.2 billion which was recorded in the first quarter.
“The Fund reached a new record high in the quarter. The Fund continues to monitor key risks as it moves into the second half of the year comprising of fragile global growth, persistent inflation, hawkish central banks, geo-political tensions, and supply chain disruptions,” noted the fund led by CEO Gosego January.
Furthermore, the pension fund said the current market dynamics continue to warrant caution and a disciplined investment strategy, which will safeguard consistent and positive returns.
According to DPF, the top-performing asset class for the Fund was African Equities, which increased 10.06 per cent (in BWP) with the next top-performing asset class for Quarter 2 being Global Equities, which rose 7.99 per cent, followed by Emerging Market bonds, which advanced 6.52 per cent.
On the other hand, the Emerging Market Equities, Global Property and Global Cash delivered a strong performance in the quarter, generating 5.31 per cent, 2.49 per cent, and 2.29 per cent, respectively.
“Domestic assets similarly generated positive results for the quarter. Botswana Property, Botswana Equities and Botswana Bonds contributed positively, yielding 2.22 per cent, 4.45 per cent and 1.97 per cent, respectively. Botswana Cash was muted for the quarter, returning 0.26 per cent,” said DPF.
DPF also said its worst-performing Asset Class for the quarter was China, which declined by 7.63 per cent, adding that the Fund’s Market Channel increased 4.76 per cent during the quarter, with the Conservative Channel rising 4.32 per cent and the Pensioner Channel improving by 4.17 per cent.
Meanwhile, the fund said 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.
“On a twelve-month basis, the Fund generated positive returns net of investment fees. During the 12-month period, the Market Channel delivered 16.38 per cent while the Conservative Channel rose 14.87 per cent and the Pensioner Channel generated 14.19 per cent. The Fund has steadily recovered from previous negative yielding quarters,” buttressed the diversified pension fund.
Turning the focus to the performance of the global market, DPF indicated that the markets remained in the bullish territory in the second quarter of the year, as asset prices continued to rise as the Technology stocks, particularly stocks related to Artificial Intelligence (AI), were the dominant theme in the quarter.
“The strong performance of AI stocks in Q2 demonstrates the growing importance of AI to the global economy and society. AI is a disruptive technology with the potential to revolutionise many of the industries and solve some of the world’s most pressing problems if utilised responsibly,” it said.
DPF also said AI has powered the growth of cloud computing businesses of major technology firms such as Amazon, Alphabet and Microsoft, thereby providing a much-needed tailwind for stock performance.
“There are concerns amongst investors that the current rally of AI-fueled technology stocks could be a bubble, similar to the dot-com bubble of 2001. Against this background, investors should proceed with caution to ensure prudent investing,” said DPF on the quarter under review.