Africa’s top retirement fund in foreign investment push

SINGAPORE – South Africa’s Government Employees Pension Fund (GEPF) is considering investing around US$22 billion outside the country to diversify its risks and some of that may go to other African countries and emerging markets.

Africa’s largest retirement fund, with a portfolio of about US$150 billion, traditionally has had most of its investment centred within South Africa, but it now sees a window of opportunity of investing about 14-15 per cent of its portfolio in Africa and global markets, John Oliphant, Head of Investment and Actuarial at the GEPF, said yesterday.’We are starting to expand our Africa portfolio and our global portfolio with a bias towards emerging markets…in limited capacity,’ Oliphant told Reuters on the sidelines of an industry conference in Singapore.’In fact we have moved some of the money already.’Oliphant said he was looking at increasing the retirement fund’s exposure to Africa to five per cent, excluding South Africa.’In terms of the exposure…now we want to have about nine per cent exposure to global markets with a bias towards emerging markets,’ he said, without giving details.The South African pension fund, which already has an estimated 15 per cent exposure to resources via its equity investments, is now looking at possibly direct commodity investments, said Oliphant.’The GEPF asset allocation to equities is about 50 per cent, and if you assume that the resource sector is about 30 per cent of the Johannesburg Stock Exchange, one would argue that resources form about 15 per cent of the GEPF portfolio,’ Oliphant said.Strong infrastructure growth globally is likely to make industrial metals like iron ore and copper a more attractive direct commodity investment for the retirement fund, Oliphant said.’So we view at the back of that demand you should have a bit of price inflation for commodities which is good for investors,’ Oliphant said. But any eventual move towards investing directly into commodities will have to be followed by a decision to lower the fund’s exposure to resources through equities.’This is quite a large exposure to resource companies and that has always ascertained the impact on our thinking about having direct exposure to resources, because you don’t want to have an over-concentration of one sector in relation to the overall portfolio,’ Oliphant said. – Nampa-Reuters