The Government Institutions Pension Fund (GIPF) has made strong progress in enhancing its internal investment capability, with its Treasury Unit’s assets under management reaching N$40 billion in 2024, up from N$38.5 billion the previous year.
This growth, demonstrates GIPF’s dedication to efficiently overseeing its pension assets.
“For the past six years, GIPF has strategically focused on internalising investment management, a critical initiative for safeguarding and growing the Fund. By enhancing the investment function’s role and scope, GIPF has equipped its Trustees to better protect and enhance the Fund for the benefit of its members,” said Saltiel Shino, Manager Treasury at the GIPF.
The aim is to deepen Namibian investment management while achieving a balanced mix of in- house and outsourced services. Key objectives include bolstering internal capacity, making informed investment decisions, minimising management fees, and adhering to the Fund’s broader mandate.
“By having a knowledgeable and experienced internal workforce, GIPF is able to actively participate in its investments and make better decisions. Attracting and retaining top investment talent is crucial for successful management of funds. GIPF collaborates with external investment consultants to enhance its internal capabilities, ensuring its investment decisions are well- informed and strategically sound,” he said.
The Fund’s internally managed portfolios, which are supervised by the Treasury Unit, were valued at N$21.5 billion as of March 31, 2024, up from N$20.7 billion the year before.
A substantial portion of this portfolio is allocated to fixed-income securities, including both short-term money market instruments and long-term bonds, representing 25% and 66% of the internally managed funds, respectively.
“The Treasury Unit plays a vital role in developing Namibia’s financial markets. By investing directly in listed debt instruments issued by the Namibian Government, State-Owned Enterprises, local authorities, and corporations, GIPF not only secures returns for its members but also contributes to the country’s economic growth. Money market investments are primarily conducted through domestic commercial banks and financial intermediaries,” Shino said.
In addition to fixed-income securities, the Treasury is tasked with investing in strategic equities. As of March 31, 2024, these equities, managed internally through a passive buy-and-hold strategy, accounted for 9% of the internally managed funds, totaling N$1.8 billion.
“The Treasury Division also oversees the swapped portfolios valued at N$18.5 billion, culminating in a total of N$40 billion in assets under management. This innovative approach involves exchanging Rand-denominated assets with a local entity, which issues Namibian dollar- denominated corporate paper in return,” he said.
The overall strong growth of GIPF’s assets from N$151 billion to N$168 billion is evidence of the Fund’s stability and soundness. In 2024, GIPF generated N$18 billion in net investment income, which, when reinvested, supports the Fund’s long-term growth objectives. The portfolio’s performance was 13.2%, surpassing the benchmark of 11.7% by about 1.5%.
“GIPF is committed to making sure that pensions and associated benefits are paid on time while responsibly deploying member contributions to produce long-term profits. Maintaining sufficient assets to cover future liabilities is essential for defined benefit pension funds. The Fund uses a Liability-Driven Investment (LDI) approach with an emphasis on Asset Liability Modelling (ALM) to accomplish these goals,” Shino said.
The Fund’s Risk and Return Strategy is shaped by this framework, which enables it to adjust to changing market conditions while deploying prudent investment strategies to strike a balance between asset protection and growth.
The Fund constantly makes sure that its risk reserves and assets are adequate to meet obligations as they arise. A dynamic approach to asset allocation guarantees that GIPF will continue to adjust to shifts in the economy.
The Fund’s fixed-income investments total N$67.2 billion, with 29% managed internally by the Treasury Unit, making it the largest fixed-income asset manager within GIPF portfolios. As of March 2024, GIPF owned 24% of Namibia’s outstanding government debt (N$115 billion), making it the country’s largest buyer of government bonds. Investments in nominal and inflation-linked bonds, as well as Treasury Bills for liquidity, are all part of the Fund’s diverse portfolio.
With N$9 billion in unlisted investments, including significant commitments to social infrastructure, affordable housing, and renewable energy projects, GIPF’s dedication to the Namibian economy is undeniable. These initiatives show GIPF’s commitment to social responsibility in addition to supporting economic growth.
The Fund’s overall asset allocation for the year under review reflects a strong geographical split, with significant investments in Namibia (48%), Global Developed Markets (28%), South Africa (14%), Global Emerging Markets (5%), Africa (3%), and China (2%).
According to the asset class allocation, our largest exposure is in listed shares which make up 43% of the total, followed by government bonds (14%), corporate bonds (13%) and foreign bonds (7%). The former form part of our substantive current asset allocation.
