Public Investment Corporation (PIC) pension fund is the largest pension fund in Africa. It is wholly owned by the South African government and invests funds on behalf of public sector entities. The PIC manages assets exceeding $150 billion, and it provides retirement benefits to over 2 million South African government employees. This article will analyze the investment strategies, performance and shareholders of the PIC pension fund.
The PIC pension fund invests locally and internationally
The PIC pension fund has a diversified investment portfolio across various asset classes. Locally, it invests in listed equities, money market instruments, bonds and real estate. Internationally, the fund invests in listed equities and bonds in developed and emerging markets. This diversified approach allows the fund to generate stable long-term returns while managing risks. The PIC is moving towards increasing foreign asset exposure to 30%, to boost returns and mitigate South Africa-specific economic risks.
The fund’s major shareholders are government entities
The PIC’s largest clients are South African government entities. The Government Employees Pension Fund holds 85% of the PIC’s assets under management. Other major shareholders include the Unemployment Insurance Fund, Associated Institutions Pension Fund, Compensation Commissioner Pension Fund and Compensation Commissioner Pension Fund. By investing retirement funds on behalf of these public sector entities, the PIC provides financial security to millions of government employees.
The PIC aims to drive transformation via investing
Beyond financial returns, the PIC pension fund aims to drive transformation and development in South Africa. The fund targets investments that empower disadvantaged groups and drive job creation. For example, the Isibaya Fund provides growth capital to black-empowered companies and projects. The PIC also requires companies it invests in to meet BEE criteria and high governance standards. Overall, the fund leverages its massive size to foster inclusive economic growth.
The fund’s performance has been volatile in recent years
The PIC’s investment performance has been volatile in recent years. It generated strong returns from 2013 to 2015, outperforming its benchmark. However, performances dropped in 2016 and 2017 due to challenging local and global markets. The fund was also implicated in governance controversies around questionable investment processes and executive misconduct. To improve governance, the PIC appointed a new CEO, brought in independent board members and strengthened operating procedures.
In summary, the PIC is the largest pension fund in Africa, managing over $150 billion in assets for South African government entities. It has a diversified investment portfolio and aims to drive economic transformation through its investments. The fund’s governance and performance have faced challenges but are improving through recent reforms.