How Do Investments in Financial Assets Affect the Financial Performance of Pension Firms? Evidence from Nigeria
Pension Fund Administrators (PFAs) play an essential part in the management of pension funds that guarantee retirees’ comfortability and welfare after life of active service years. The PFAs constantly encounter problems associated with investment decision making and optimization of financial perform...
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Universidad Francisco de Paula Santander
2025
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| Acceso en línea: | https://revistas.ufps.edu.co/index.php/profundidad/article/view/4857 |
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| author | LINUS, Ginika Nnewogo ABDULRAUF, Lukman Adebayo-Oke GBADEBO, Adedeji Daniel AKANDE, Joseph Olorunfemi |
| author_browse | ABDULRAUF, Lukman Adebayo-Oke AKANDE, Joseph Olorunfemi GBADEBO, Adedeji Daniel LINUS, Ginika Nnewogo |
| author_facet | LINUS, Ginika Nnewogo ABDULRAUF, Lukman Adebayo-Oke GBADEBO, Adedeji Daniel AKANDE, Joseph Olorunfemi |
| author_sort | LINUS, Ginika Nnewogo |
| collection | DSPACE IDEP |
| description | Pension Fund Administrators (PFAs) play an essential part in the management of pension funds that guarantee retirees’ comfortability and welfare after life of active service years. The PFAs constantly encounter problems associated with investment decision making and optimization of financial performance of their invested assets classes to provide good returns for the payment of pension benefits. This paper analyses the impact of investment securities on the financial performance of pension funds in Nigeria. We considered a theoretical construct that demonstrate how assets holding drives the financial performance of pension funds. We examine each security invested in the portfolio of the PFAs – money market securities (MMS), federal government securities (FGS), mutual funds (MTF) and private equity fund (PEF) – incentivize return on investment (ROI) of the PFAs. We applied the autoregressive distributive lag (ARDL) on published information of National Pension Commission (PENCOM) covering 2007 to 2021. The findings revealed that investment in money market securities have a positive impact on short-term ROI (10.223, p value < 0.01) but a negative impact in the long run (-10.798, p < 0.01). Investment in FG security does not significantly affect ROI in either the short run or long term. Private equity fund investments exhibit no significant short-term impact but positively influence long-term ROI (1.460, p< 0.01). The mutual fund investments negatively impact short-term returns (-1.054, p< 0.01) but have a positive effect on long-term ROI (1.463, p< 0.01). This suggest that the money market securities yield short-term gains, while the private equity and mutual funds indicates a potent long-term investment tool for long-term growth. However, the FG securities appear not to show a significant influence on financial performance. This outcome, evidently, underscores the need for policy and regulations to investment make the PFAs more strategically position to improve retirees’ welfare. We offer that the PFAs should ensure more investment in money market assets with effective switching strategies, to target potential short-term gains, manage long-term risks by promoting mutual funds and private equity funds investments for improved long-term performance and ensure portfolio diversification to include securities may guarantee sustainable long-term returns.
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| first_indexed | 2026-06-19T15:28:42Z |
| format | Online |
| id | oai:revistas.ufps.edu.co:article-4857 |
| institution | IDEP |
| language | spa |
| last_indexed | 2026-06-19T15:28:42Z |
| publishDate | 2025 |
| publishDateRange | 2025 |
| publishDateSort | 2025 |
| publisher | Universidad Francisco de Paula Santander |
| publisherStr | Universidad Francisco de Paula Santander |
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| spelling | oai:revistas.ufps.edu.co:article-48572025-05-13T14:48:47Z How Do Investments in Financial Assets Affect the Financial Performance of Pension Firms? Evidence from Nigeria ¿Cómo afectan las inversiones en activos financieros al rendimiento financiero de las empresas de pensiones? Evidencia de Nigeria LINUS, Ginika Nnewogo ABDULRAUF, Lukman Adebayo-Oke GBADEBO, Adedeji Daniel AKANDE, Joseph Olorunfemi Administradoras de Fondos de Pensiones Activos del mercado monetario Seguridad del gobierno federal Fondos de inversión Fondo de capital privado Rendimiento de la inversión. Pension Fund Administrators Money market assets Federal government security Mutual funds Private equity fund Return on investment Pension Fund Administrators (PFAs) play an essential part in the management of pension funds that guarantee retirees’ comfortability and welfare after life of active service years. The PFAs constantly encounter problems associated with investment decision making and optimization of financial performance of their invested assets classes to provide good returns for the payment of pension benefits. This paper analyses the impact of investment securities on the financial performance of pension funds in Nigeria. We considered a theoretical construct that demonstrate how assets holding drives the financial performance of pension funds. We examine each security invested in the portfolio of the PFAs – money market securities (MMS), federal government securities (FGS), mutual funds (MTF) and private equity fund (PEF) – incentivize return on investment (ROI) of the PFAs. We applied the autoregressive distributive lag (ARDL) on published information of National Pension Commission (PENCOM) covering 2007 to 2021. The findings revealed that investment in money market securities have a positive impact on short-term ROI (10.223, p value < 0.01) but a negative impact in the long run (-10.798, p < 0.01). Investment in FG security does not significantly affect ROI in either the short run or long term. Private equity fund investments exhibit no significant short-term impact but positively influence long-term ROI (1.460, p< 0.01). The mutual fund investments negatively impact short-term returns (-1.054, p< 0.01) but have a positive effect on long-term ROI (1.463, p< 0.01). This suggest that the money market securities yield short-term gains, while the private equity and mutual funds indicates a potent long-term investment tool for long-term growth. However, the FG securities appear not to show a significant influence on financial performance. This outcome, evidently, underscores the need for policy and regulations to investment make the PFAs more strategically position to improve retirees’ welfare. We offer that the PFAs should ensure more investment in money market assets with effective switching strategies, to target potential short-term gains, manage long-term risks by promoting mutual funds and private equity funds investments for improved long-term performance and ensure portfolio diversification to include securities may guarantee sustainable long-term returns. Las Administradoras de Fondos de Pensiones (AFP) son esenciales para la gestión de los fondos de pensiones que «garantizan la comodidad y el bienestar de los jubilados tras años de servicio activo». Las AFP se enfrentan constantemente a problemas relacionados con la toma de decisiones de inversión y la optimización del rendimiento financiero de sus clases de activos invertidos para proporcionar buenos rendimientos para el pago de las prestaciones de pensiones. Este trabajo analiza el impacto de los valores de inversión en el rendimiento financiero de los fondos de pensiones en Nigeria. Consideramos un constructo teórico que demuestra cómo la tenencia de activos impulsa el rendimiento financiero de los fondos de pensiones. Examinamos cada valor invertido en la cartera de las AFP - valores del mercado monetario (MMS), valores del gobierno federal (FGS), fondos de inversión (MTF) y fondo de capital privado (PEF) - incentivan el rendimiento de la inversión (ROI) de las AFP. Aplicamos el rezago distributivo autorregresivo sobre información publicada de la Comisión Nacional de Pensiones que abarca de 2007 a 2021.Los resultados revelaron que la inversión en valores del mercado monetario tiene un impacto positivo en el ROI a corto plazo (10,223, valor p < 0,01), pero un impacto negativo a largo plazo (-10,798, valor p < 0,01). La inversión en valores FG no afecta significativamente al ROI ni a corto ni a largo plazo. Las inversiones en fondos de capital riesgo no muestran un impacto significativo a corto plazo, pero influyen positivamente en el ROI a largo plazo (1,460, p < 0,01). Las inversiones en fondos de inversión afectan negativamente a la rentabilidad a corto plazo (-1,054, p< 0,01), pero tienen un efecto positivo en la rentabilidad a largo plazo (1,463, p< 0,01). Esto sugiere que los valores del mercado monetario producen ganancias a corto plazo, mientras que los valores privados y los fondos de inversión indican una potente herramienta de inversión a largo plazo para el crecimiento a largo plazo. Sin embargo, los valores de FG no parecen mostrar una influencia significativa en el rendimiento financiero. Este resultado, evidentemente, subraya la necesidad de políticas y normativas de inversión que sitúen a las AFP en una posición más estratégica para mejorar el bienestar de los jubilados. Proponemos que las AFP garanticen una mayor inversión en activos del mercado monetario con estrategias de cambio efectivas, para apuntar a posibles ganancias a corto plazo, gestionen los riesgos a largo plazo promoviendo las inversiones en fondos mutuos y fondos de capital privado para mejorar el rendimiento a largo plazo y« garanticen la diversificación de la cartera para incluir valores que puedan garantizar rendimientos sostenibles a largo plazo». 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| spellingShingle | Administradoras de Fondos de Pensiones Activos del mercado monetario Seguridad del gobierno federal Fondos de inversión Fondo de capital privado Rendimiento de la inversión. Pension Fund Administrators Money market assets Federal government security Mutual funds Private equity fund Return on investment LINUS, Ginika Nnewogo ABDULRAUF, Lukman Adebayo-Oke GBADEBO, Adedeji Daniel AKANDE, Joseph Olorunfemi How Do Investments in Financial Assets Affect the Financial Performance of Pension Firms? Evidence from Nigeria |
| title | How Do Investments in Financial Assets Affect the Financial Performance of Pension Firms? Evidence from Nigeria |
| title_alt | ¿Cómo afectan las inversiones en activos financieros al rendimiento financiero de las empresas de pensiones? Evidencia de Nigeria |
| title_full | How Do Investments in Financial Assets Affect the Financial Performance of Pension Firms? Evidence from Nigeria |
| title_fullStr | How Do Investments in Financial Assets Affect the Financial Performance of Pension Firms? Evidence from Nigeria |
| title_full_unstemmed | How Do Investments in Financial Assets Affect the Financial Performance of Pension Firms? Evidence from Nigeria |
| title_short | How Do Investments in Financial Assets Affect the Financial Performance of Pension Firms? Evidence from Nigeria |
| title_sort | how do investments in financial assets affect the financial performance of pension firms evidence from nigeria |
| topic | Administradoras de Fondos de Pensiones Activos del mercado monetario Seguridad del gobierno federal Fondos de inversión Fondo de capital privado Rendimiento de la inversión. Pension Fund Administrators Money market assets Federal government security Mutual funds Private equity fund Return on investment |
| topic_facet | Administradoras de Fondos de Pensiones Activos del mercado monetario Seguridad del gobierno federal Fondos de inversión Fondo de capital privado Rendimiento de la inversión. Pension Fund Administrators Money market assets Federal government security Mutual funds Private equity fund Return on investment |
| url | https://revistas.ufps.edu.co/index.php/profundidad/article/view/4857 |
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