Dynamics in the real estate investment sector for the period of five years (2006-2011): a case of NSSF and PPF

The objective of the study was to examine the benefits brought about by real estate investment to the mixed-asset portfolios in pension funds. The study examined both risk-return characteristics and the diversification benefits to the overall investment portfolio. Quota sampling design was used to interview 13 respondents from each fund. Quantitative data was analyzed using excel spread sheet to make summations, averages, trends and to produce graphs. While SPSS software was used to analyze qualitative data that was coded from the interviews and questionnaires. The study employed four main survey instruments to capture both quantitative and qualitative data from selected pension funds i.e. National Social Security Fund (NSSF) and Parastatal Pension Fund (PPF) and the regulatory authority Social Security Regulatory Authority (SSRA) in the sample. The instruments used were interviews, questionnaires, field observations and documentary reviews. Findings from this study support the fact that there is diversification benefits brought by real estate investment to the mixed-asset portfolio, this is evidenced through examining the correlation of returns between real estate against returns from other investments. On the other hand, there is no doubt that risk-return characteristic is one of the major feature whereby real estate experienced low returns with low deviation from the average mean which implies less risk as compared to other investments. It is recommended that Pension Funds should continue investing in a diversified portfolio; this is due to the risk-reduction characteristics revealed by the relationship of returns between investments in a mixed-asset portfolio.