Trustfund Pensions: strong returns, but can it sustain the edge?
With the transfer window introduced by the National Pension Commission (PenCom), contributors have the flexibility to move their pension accounts. This column titled Inside PFAs by Omobola Tolu-Kusimo, is designed
With the transfer window introduced by the National Pension Commission (PenCom), contributors have the flexibility to move their pension accounts. This column titled Inside PFAs by Omobola Tolu-Kusimo, is designed to help workers and retirees make informed choices about who manages their Retirement Savings Accounts (RSAs), examines returns, risk management and overall performance to provide clearer insight into how PFAs are managing contributors’ funds.
Nigeria’s pension funds continue to post strong returns, but beneath the surface, differences in quality, consistency and institutional strength are becoming more visible.
This week, Inside PFAs reviews Trustfund Pensions Limited.
High returns across key funds
Trustfund Pensions has delivered some of the strongest headline returns in the industry, particularly in its more aggressive portfolios.
Recent data show that the PFA’s RSA Fund I earn about 24.4 per cent Returns on Investment (ROI); RSA Fund II earn around 18.5 per cent; RSA Fund III about 15 per cent; and RSA Fund IV around 14 per cent.
These figures place Trustfund among the top performers by raw returns, especially when compared with many peers operating within the 10 to 18 per cent range.
But returns come with uneven risk control
A closer look at risk-adjusted performance reveals a more mixed picture.
Sharpe ratio data shows that Fund I is positive but positive but moderate about 1.2; Fund II around 0.65; Fund III slightly negative at times; Fund IV weaker at about -1.19; and Fund V stronger at about 1.53.
Further findings show that the Sharpe ratio measures how well a pension fund rewards contributors for the risk it takes. A higher ratio means better-quality returns, not just higher returns.
Experts break it down simply as Rp to be Return of the pension fund; Rf as Risk-free return (like government treasury bills); sigma-p as Risk (how volatile or unstable the returns are).
Take two PFAs for instance, both give you 15 per cent return but one is steady and stable; the other is up and down, unpredictable. The stable one has a higher Sharpe ratio.
So, in other words Positive Sharpe ratio means Good as you are being rewarded as a RSA for the risk taken; High positive means 1 and above means Very good as your PFA has been efficient and managed your fund well.
Similarly, Around 0 Sharpe ratio means average as your risk and return are balanced while Negative Sharpe ratio means Bad as your PFA is taking risk but not being properly rewarded.
Bottom line is that returns tell you how much you made. In simple terms, some funds are delivering efficient returns, while others are taking on more risk than necessary.
This uneven pattern suggests that performance is not consistent across all portfolios.
Consistency: wide gaps across funds
However, Trustfund’s performance shows noticeable variation. It shows strong upside in aggressive funds; moderate performance in balanced funds; and weaker efficiency in more conservative portfolios.
This creates a wide spread between best and worst-performing funds, raising questions about how evenly investment strategies are applied.
Profit and business strength: smaller, more exposed
Beyond investment performance, Trustfund operates at a smaller scale compared to industry leaders.
While the company remains profitable, its earnings are more closely tied to market performance and asset growth, less diversified compared to bank-backed PFAs and more sensitive to swings in investment income.
Unlike larger operators with strong group backing, Trustfund relies more heavily on its core pension business. This means fewer scale advantages, more limited buffer during weaker market cycles and greater pressure to sustain strong investment performance.
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It is important to note that profitability does not directly determine returns to contributors. However, strong and stable earnings can support better systems, research and long-term resilience.
What this means for contributors
For RSA holders, it is worthy to note that high returns are attractive but consistency and risk control are just as important while institutional strength affects long-term stability.
Trustfund Pensions appears to offer higher return potential but less consistency and weaker structural backing compared to larger PFAs.
Inside PFAs Scorecard (Trustfund)
Bottom line
Trustfund Pensions stands out for its strong returns, but the quality of those returns is uneven across funds.
It is a high-return player, but with mixed efficiency and a smaller institutional base factors that could matter over the long term.
As Inside PFAs expands its coverage, the key question will be whether such performance can be sustained consistently and how it compares with larger, more structured operators.
