The Botswana Public Officers Pension Fund (BPOPF) said its strategic investment policy came in handy as it managed to absorb shocks of the global recession.
Chief Executive Officer of the multi-billion Pula fund, Ephraim Letebele, told The Telegraph the strategy was robust because of its geographical spread.
“We managed to be balanced because of this spread,” Letebele said.
The fund, through its managers that include top asset managers in the country like Bifm, Investec, Flemming, Coronation and Allan Gray, shifted markets at the height of the recession in a bid to dribble the credit crunch.
The Pension Regulation dictates that fund managers can invest a maximum of 70 percent offshore, and 30 percent within the country.
On the other hand, the local pension fund industry is worth an estimated P36 billion, while the Domestic Company Index (DCI) has a market capitalisation of P29.9 billion, with a free float of only P12.5 billion in the market, which the pension funds have access to.
BPOPF remains a significant investor locally, with 50 percent of all the issued local bonds and just under 50 percent of the tradable shares listed in the Botswana Stock Exchange (BSE), the fund said in 2009 at the height of the recession.
The majority of the fund’s offshore assets are exposed to the developed markets of USA, Europe and Asia.
Currently, the fund’s assets sit at P25.4 billion for active and deferred members and P4.6 billion for two pensioner portfolios as of February 2011.
Clair Mathe, General Manager, Investment Management at BPOPF, added that as ‘equities did not perform well, our managers shifted to other asset classes’.
“Our loss was much lower,” added Mathe praising globalisation as they were able to move money to other destinations.
Since its inception, the fund’s declaration has been positive. In 2002, it declared 7.5 percent, 2003 the declaration was -14.75 percent, 2004 it was 17.1 percent, 13.2 percent in 2005 and in 2006 BPOPF declared 29.6 percent.
The fund made a declaration of 33 percent in 2007, the highest in its history, then 11.25 percent in 2008.
The fund was hit again in 2009 when it declared a -14 percent at the height of the credit crunch, which was the same loss as 2003 during the dot com era.
Letebele remains bullish that in 2011, a declaration of 7.7 percent would be made.
BPOPF’s investments are managed on a fully discretionary mandate for both onshore and offshore investments to obtain a long term return of 5 percent per annum in excess of inflation as measured by the CPI.
The fund’s membership by March 31 2010 was 99, 940 active and deferred members and 5, 470 pensioners.