Staff Writer
FBC Securities, a stockbroking and equities research firm says fewer pension funds have taken advantage of the permission by IPEC to invest in offshore assets as a way of mitigating local economic risks and improve returns for pensioners.
In 2022, the Insurance and Pensions Commission (IPEC) of Zimbabwe introduced a regulation permitting pension funds to invest up to 15% of their portfolios in offshore assets.
This move was aimed at enhancing diversification, mitigate local economic risks, and potentially improve returns for pensioners.
“Ever since this investment window was availed few institutions have taken advantage, for various reasons,” FBC said.
It noted that over the past few years, Zimbabwean institutions have increasingly shifted their focus towards offshore investments, a trend fueled by economic, regulatory, and political considerations.
“This move reflects both the challenges faced in the local market and the potential benefits offered by foreign financial environments.”
FBC said Zimbabwe’s economy has faced persistent challenges, including high inflation, currency volatility, and low levels of industrial productivity.
In addition, frequent changes in policies, such as restrictions on foreign currency usage and abrupt shifts in banking regulations, have created uncertainties for local investors.
“Offshore investments grant institutions access to a broad range of financial instruments and markets that are not available locally.
“These include equities, bonds, mutual funds, and alternative assets in global financial hubs. This diversification not only mitigates risk but also enhances potential returns compared to the limited and often underperforming options within Zimbabwe,” FBC said.
It noted that foreign financial markets typically offer greater liquidity, allowing investors to buy and sell assets with ease.
Local markets, on the other hand, often suffer from low trading volumes and limited access to capital while offshore investments provide institutions with the ability to mobilize funds quickly and efficiently when needed.
