Liberty deal investors zero return

Liberty Life Assurance’s fund managers are grappling with challenges in generating returns on their guaranteed fund investment for the fiscal year 2023, navigating through what has proven to be a difficult balancing act.

In the latest communique to clients, Managing Director Nkoregamba Mwebesa warned the portfolio did not yield any profit for the year 2023. This stagnation was attributed to underperformance of the equities market and losses in the Treasury bonds market, which was exacerbated by a rapid rise in yields at primary auctions.

“We wish to advise that the Board of Liberty Life Assurance recently met and reviewed the company’s financial performance for the year 2023. Consequently, the final rate of return for the guaranteed pension fund portfolio is 0 per cent,” Mwebesa said.

Funds performance

Mwebesa said in an effort to address investor concerns and navigate through Kenya’s difficult economic conditions, Liberty Life Assurance has shifted its strategy. The company will now offer a 9 per cent guaranteed rate from 2024 to 2028, aiming to provide a buffer against the economic challenges and to aid in the recovery of the fund’s performance.

“We believe this guaranteed rate will provide a much needed cushion against the tough economic climate prevailing in Kenya currently and help the fund recover from the lower returns that this environment created,” Mwebesa said.

This move comes amidst a backdrop of growth in the retirement benefits sector, as reported by the Retirement Benefits Authority (RBA), which saw assets under management increase significantly in the first half of 2023 by 8.09 per cent to Sh1.7 trillion in June 2023.This spike follows Sh1.6 trillion posted in December 2022, representing a 12.44 per cent increase from Sh1.5 trillion in June 2022, indicating a positive trend in Kenya’s retirement benefits asset management.

The authority observed a significant shift in investment strategies, with a marked preference for more stable assets, with fund manager opting for assets that are perceived to be less susceptible to market volatility, amidst a global economic landscape that continues to be unpredictable.

This trend was underscored by the substantial 60.25 per cent increase in fixed deposit investments, which soared from Sh42.2 billion in December 2022 to Sh67.7 billion by December 2023.