Hit by the NSE bear run, pension schemes managers reduced their exposure in stocks soaking funds in bonds in the last quarter of 2015 to pare their losses.
The funds which are mainly invested in equities at the NSE, fixed income, property and offshore were hurt by high inflation and a bear run at the Nairobi bourse.
The Alexander Forbes Consulting Actuaries Schemes Survey shows that fund managers shifted focus to fixed income securities increasing their portfolios from 65.5 per cent in September 2015 to 67.9 per cent at the end of the year.
“The Survey indicates that the average schemes investment in equity, property and offshore decreased while investment in fixed income increased when compared to the previous quarter,” the report read.
Positions at the equity markets were reduced from a third to a quarter of the investment portfolios for the schemes.
The move saved the schemes whose earnings had fallen to -0.8 per cent in September to record a modest growth of 0.5 per cent for the year ending December 2015.
Assets gained by Sh25.5 billion between September 2015 and December putting the value held by the schemes at 535.8 billion.
Equities recovered by 0.4 per cent while fixed returns gained 3.1 per cent more than it did by September.
However, the average return on the schemes was still down from 15.5 per cent in 2014 as investments in the NSE remained in negative territory returning -11 per cent for the year ending December 2015.
The other two investment vehicles, fixed income (7.8 per cent) and offshore (10.2 per cent) recorded lower growth in 2015 than the previous year.
Forbes noted that with an average inflation of 8.0 per cent the 380 schemes polled suffered a major downturn earning less than one per cent since 2011 when return on earnings hit -9.9 per cent.
“We see how the nominal returns compared with inflation over the one-year period where overall inflation was higher as at 31 December 2008, 2011 and 2015,” the survey noted.
Large pension schemes are growing in market share and control 86 per cent of the assets at Sh459.6 billion while small schemes accounted for Sh14.7 billion (2.7 per cent) and medium schemes controlled Sh61.5 billion which is 11.5 per cent of the Assets under Management (AuM).