The Funds Management sector in Ghana closed 2024 on a historic high, with pension funds leading a remarkable surge in Assets Under Management (AUM).
According to the 2024 Financial Stability Review, total AUM in the sector soared by 31% year-on-year, reaching GH₵71.97 billion, up from GH₵55.05 billion in 2023. A staggering 72% of this growth came from pension funds, which climbed to an unprecedented GH₵51.96 billion, cementing their role as the dominant force in the investment landscape.
The report revealed that pension assets grew by an impressive 32% compared to the previous year, reflecting resilience and investor confidence in the pension system despite broader economic uncertainties. Valued on a marked-to-market basis and adjusted with custodian data, the GH₵51.96 billion in pension assets represents the highest level ever recorded in Ghana’s funds management industry.
Analysts attribute this upward trajectory to sustained contributions under the three-tier pension scheme, prudent investment strategies, and regulatory oversight by the National Pensions Regulatory Authority (NPRA). This growth, they note, not only strengthens retirement security for workers but also reinforces the long-term capital base needed for national development.
Collective Investment Schemes Bounce Back
While pension funds dominated the market, the year also marked a remarkable turnaround for Collective Investment Schemes (CIS). After suffering a 1% decline in 2023, CIS rebounded strongly with a 25% year-on-year increase, closing 2024 at GH₵6.58 billion. The revival was fueled by improving investor sentiment, better-performing asset classes, and enhanced distribution channels that made investment products more accessible to retail investors.
Market watchers believe this recovery signals a growing appetite for diversified investment options among Ghanaians, particularly in the face of inflationary pressures and currency volatility.
Discretionary funds, which are managed on behalf of institutional and high-net-worth clients, also recorded robust performance. Assets in this segment expanded by 24% year-on-year to settle at GH₵12.08 billion. Industry experts link this growth to a combination of improved market conditions and targeted portfolio management strategies that prioritized risk-adjusted returns.
This expansion demonstrates the sector’s ability to cater to sophisticated investor needs while maintaining a healthy balance between risk and reward.
New Market Segments Gain Traction
The year also saw encouraging developments in relatively new segments of the funds management sector. Real Estate Investment Trusts (REITs), introduced as part of Ghana’s evolving investment landscape, ended 2024 with a marked-to-market value of GH₵545.56 million. Industry players view REITs as a strategic vehicle for channeling investment into the real estate sector while providing investors with a stable income stream and portfolio diversification.
Similarly, private funds experienced modest but steady growth, posting a 5.9% gain to close at GH₵802.94 million in AUM. While their share of the total market remains small, the segment is attracting interest from investors seeking alternative investment opportunities with potentially higher returns.
The impressive growth across segments, particularly in pension assets, comes against the backdrop of a challenging economic environment. Persistent inflation, exchange rate volatility, and tight fiscal conditions have put pressure on household and corporate finances. Yet, the funds management sector has demonstrated remarkable resilience, underpinned by effective regulation, diversified investment strategies, and a growing culture of savings and investment.
The strong performance of pension funds, in particular, underscores the importance of long-term savings vehicles in safeguarding financial security while providing a stable source of funding for economic projects. With their long investment horizons, pension funds are well-positioned to support infrastructure development, housing, and other growth-oriented sectors.
Outlook for 2025 and Beyond
Looking ahead, stakeholders in the funds management industry remain optimistic about sustaining the growth momentum. Regulatory reforms, technological innovation in fund distribution, and greater investor education are expected to deepen market participation and strengthen asset growth.
However, analysts caution that maintaining this trajectory will require vigilance in risk management, diversification across asset classes, and continued policy stability. They stress that the dominance of pension funds, while positive, also underscores the need to broaden the investment base to reduce overreliance on a single segment.
If the 2024 performance is any indication, Ghana’s funds management sector is poised to play an even greater role in mobilizing domestic capital for national development, with pension funds leading the charge.
READ ALSO: Global Cocoa Prices Soar — But Ghana’s Cocoa Sector Staggers Under Debt Burden
