Pension Fund Investments in Nigerian Equities Surge 27% Amid Stock Market Rally
Nigeria’s pension fund industry recorded a sharp increase in exposure to domestic equities in the first quarter of 2026, as Pension Fund Administrators (PFAs) capitalized on a strong rally in the Nigerian stock market. According to the National Pension Commission (PenCom), total investments in domestic ordinary shares rose to N5.46 trillion in March 2026, up from N4.29 trillion in January, representing a 27.03% year-to-date increase.
The surge highlights one of the strongest expansions in equity allocation in recent years, reflecting growing confidence in local market opportunities. On a year-on-year basis, pension investments in domestic equities more than doubled, rising by 112.44% from N2.57 trillion in March 2025. Analysts say this shift underscores a broader repositioning by PFAs toward higher-yielding, naira-denominated assets.
In contrast, foreign equity allocations continued to decline. Investments in foreign ordinary shares fell by 6.25% year-to-date to N246.56 billion, down from N262.99 billion in January 2026. The year-on-year comparison also shows a 6.39% drop, signaling reduced appetite for offshore exposure amid exchange rate pressures and global market uncertainty.
The growing preference for domestic equities has been driven by strong corporate earnings across key sectors such as banking, telecoms, industrial goods, and consumer goods. Banking sector recapitalization activities and improved liquidity in the Nigerian Exchange also boosted investor sentiment, while rising dividend yields made equities more attractive compared to fixed-income instruments.
Despite the equity rally, pension funds remain largely conservative in structure. Total pension assets stood at N29.52 trillion as of March 2026, with government securities still dominating at 58.07%. Domestic equities now account for 18.50% of total assets, while foreign equities remain below 1%. However, recent regulatory reforms by PenCom, which increased equity investment limits across RSA funds, are expected to further unlock institutional participation and strengthen long-term capital formation in Nigeria’s financial markets.
source: nairametrics