SSIF assets grow despite slow economy

AMMAN — With the Social Security Investment Fund's (SSIF) assets totalling JD8.3 billion at the end of 2016, the fund has become an anchor investor,  constantly exploring for new investment opportunities and feasible projects for the benefit of the Jordanian economy, its Executive Chairperson Suhair Al-Ali has said.

The fund's assets have been edging up over the past year, registering a 9 per cent or JD682 million increase towards the end of 2016, reaching JD8.3 billion, compared with JD7.6 billion at the end of 2015, Al-Ali said in an exclusive interview last week with The Jordan Times and Al Rai daily.

In the first two months of 2017, the total assets reached JD8.5 billion, Al-Ali said.

At the end of 2014, the assets had reached JD6.8 billion and JD6.1 billion in 2013. In 2012, they stood at JD5.6 billion compared with JD5.1 billion in 2011.

The fund’s assets totalled JD1.9 billion in 2003 when it started its activities. The fund’s investment portfolio was distributed in shares, bonds, real estate, tourism and money market instruments.

Stressing that the fund’s operations are managed based on good governance principles and in line with the best internationally-adopted practices, Al-Ali said: “The fund invests 50 to 55 per cent of its assets in Jordanian Treasury bonds with varying maturities,” she said, adding that “investment in Treasury bonds for some of the public pension funds across the world, which are usually conservative, reaches up to 100 per cent of their assets”.

“It is our duty to properly manage and invest the money of the Social Security Corporation’s [SSC] subscribers and pensioners and that is conducted in accordance with the principles of good governance,” Al-Ali added. 

She also said that all investment decisions are made based on adequate due diligence and based on economic feasibility and returns.

The income generated by the SSIF in 2016 amounted to JD315 million.

However, the comprehensive income dropped to JD138 million in 2016 due to a JD121-million decline in the reevaluation of the portfolio of shares after the market cap index in the Amman Stock Exchange declined by 3.8 per cent.

The fund also incurred JD56 million in losses after the Jordan Telecommunications Company reduced its capital by JD62.5 million to JD187.5 million from JD250 million. The fund has a 28.9 per cent stake in the telecom company.”

In the first two months of 2017, the fund registered an increase in the comprehensive income, which takes into account the valuation of the portfolio of shares. The January-February income reached JD103 million  in the first two months compared with a loss of JD88 million in the same period of last year, Al-Ali pointed out.

“The increase in comprehensive income is due to the improvement in the Amman bourse as the market cap index inched up by 2.8 per cent since the beginning of 2017,” she added, stressing that the fund’s performance “reflects that of the Jordanian economy and its various indicators, be it growth rate, interest rates, inflation, etc, as the fund invests all its assets in Jordan”.

The shortage in specialised human resources who enjoy solid experience is another challenge the fund is facing amidst competition and demand for such expertise in local and external markets.

“This shortage limits the fund’s ability to explore and study more investment opportunities,” she said, adding that recruitment at the fund became subject to the civil service bureau regulations in 2012.

“We are currently collaborating with the Civil Service Bureau to fill some vacancies by hiring individuals with short and mid-term experience including new graduates,” said Al-Ali.

The number of the fund’s employees declined to 87 in 2016 from 96 in 2006.

“It is necessary that the fund enjoys sufficient flexibility to be able to recruit individuals with long and solid specialised financial investment experience,” she said.

Al-Ali spoke about an important project that the fund started in 2016, by setting up and registering a wholy owned financial leasing company, called Daman for Financial Leasing. She said the Fund allocated JD400 million for the initiative. This company will be financing the Madona Customs Depot for JD95 million, and the Tafileh Hospital for JD40 million, amongst other vital projects that this company is studying currently. 

She said the Fund is open to review new investment opportunities and can be another local investor for new and viable projects.

With regard to the breakdown of the fund’s investment portfolio, she said the diversification is based on actuarial studies by the SSC and on the situation of the Jordanian economy.

As part of its strategic diversification scheme for the upcoming years, the fund aims at maintaining part of its investments in fixed income securities, in line with international pension funds practices.

SSIF will also focus on leasing and will maintain its investments in shares at current levels, while keeping the door open for any feasible opportunity.

The fund’s investment decisions are taken in accordance with clear and transparent rules following economic feasibility studies and study of ROI and risks, the official concluded.