Returns for the Nigeria Sovereign Investment Authority (NSIA), lagged peers in Africa, Europe, Asia and North America in 2022, perhaps necessitating a change in strategy by the fund managers.
The NSIA which manages Nigeria’s Sovereign Wealth Fund (SWF) with assets of $2.3 billion, returned -33.3% in 2022, and had the worst relative returns among the funds looked at by MoneyCentral (see chart below).
The performance compares to Alaska Permanent Fund Corporation (North America), managing $77.8billion whose returns fell by -1.32%, Temasek Sovereign Wealth Fund in Singapore (Asia) which manages $492 billion, with returns of -5.07%, Ireland Strategic Investment Fund (Europe), which manages $15.69 billion, with returns of -6.7% and Ghana’s Heritage Fund (Africa) with assets of $644 million which returned -9.63% in 2022.
Other SWF looked at include: Mubadala Investment Company of Abu Dhabi (Middle East) with assets of $287billion and returns of -13.8%, and Norways (Europe) SWF with assets of $1.37 trillion, that returned -14%.
Exposure to Domestic Equities could help diversify earnings for NSIA
Nigerian stocks appreciated by 19.98% in 2022 as investors increased their buying pressure, especially on blue-chip stocks. While most other SWF invest in their local stocks the NSIA currently has zero exposure to domestic equities.
This means it has missed big moves in large cap stocks such as Dangote Cement, MTN and Geregu Power.
There is also a massive rally in Nigerian Financials which the NSIA is missing out on. Nigerian stocks are up 22.4% so far in 2023.
Analysts say more exposure to domestic equities as well as foreign stocks that are investing in innovation and artificial intelligence like NVIDIA, will help position the NSIA for much better returns in the future.