In an update to members, the country’s second-largest pension fund noted that assets in the fourth quarter grew by 5.2 percent, driven by global property, global equities, global bonds, emerging market bonds and emerging market equities.
The fund’s positive performance was largely contributed by six of the Magnificent Seven, a group that includes the tech giants Microsoft, Apple, Nvidia, Amazon, Alphabet, and Meta. Tesla was the only detractor of performance due to production hurdles, slowing growth, increased competition, and decreasing profit margins.
“Positive returns were recorded across a majority of the asset classes,” the DPF said in an update on the fourth quarter performance.
“Global Equities led the surge driven by shifting interest rate expectations, sector rotation, lower inflation levels, improved economic data, and positive market sentiment. “Mega-cap growth stocks regained their footing after losing some steam in the previous quarter, and generated significant performance.”
During the fourth quarter, the top-performing asset class for the fund was Global Property while China was the worst-performing asset as it fell by 4.6 percent. Returns in Global Property grew by 15.7%, followed by Global Equities which rose 8.3 percent and Global Bonds which advanced by 6.5 percent.
“Global fixed income rebounded and generated tremendous positive performance in the quarter. “Strong performance of global bonds was primarily due to the shifting interest rate expectations,” the fund said.
Emerging market bonds, emerging market equities, Botswana bonds and Botswana equities additionally provided positive performance in the quarter advancing by 6.37 percent, 5.24 percent, 4.48 percent, and 4.01 percent respectively. Botswana property and cash were generally flat for the quarter.
During the period, the domestic market witnessed positive shoots from Botswana equities and Botswana bonds.
“Local equities had a stellar performance for the quarter driven by the property, financials, consumer staples, and agriculture sectors. “The Domestic bond market similarly generated positive results spurred by increased government auctions and a rise in the yield curve,” the update said.
On the flip side, African Equities, African Private Equity, Global Cash, and China were all in negative territory for the quarter declining three percent, 2.8 percent, 1.74 percent, and 4.7 percent respectively.
The DPF’s performance in 2023 is a sharp turnaround from 2022 when its assets dropped to P9.67 billion from P10.1 billion in 2021. At the time, DPF CEO, Gosego January, attributed the weaker performance to the offshore market.
“The main detractor to performance was the negative performance from the fund’s offshore investments,” she said. “Global equities declined by 11.53% as companies and investors struggled to optimally navigate the highly volatile market environment.”
For 2024, the DPF said it will continue to implement its prudent investment strategy to navigate the different risks and take advantage of emerging opportunities.
