FOLLOWING a strong performance last year, resulting in a 12.5 per cent crediting rate, the Comrade Trustees Services (CTSL) is restructuring its investment portfolio, says chief executive officer Charlie Gilichibi.
Gilichibi said the restructuring was needed to match market conditions and to be in a better position to generate sound returns for members.
He said the CTSL had been delivering less than average returns – as low as two per cent.
He said that it was on the verge of insolvency from 2019 to 2021.
“The fund was nearly insolvent. Assets were not performing,” he said.
The CTSL came up with three strategies to fix the problem: by exiting underperforming assets, taking impairments on overvalued investments and increasing overseas exposure to improve returns.
Gilichibi explained that CTSL’s property investments had been dragging performance.
A lot was spent on maintenance than what was earned from rent payments.
This resulted in negative returns for CTSL from the property portfolio.
“Our strategy is to exit the properties portfolio. There will be new opportunities coming up,” he said.
“That we can get into because the current stock of property assets, the returns are negative.”
Proceeds from the sale of properties will be redirected into assets to generate good returns.
Gilichibi noted that the turnaround from a two per cent return to returns exceeding inflation represented a shift to real returns, ensuring that every Kina of members’ savings retains and enhances its purchasing power.
The fund undertook prudent impairments in 2024 and 2025 to address the overvaluation of assets from prior periods.
With its portfolio now more accurately valued, the fund is strategically positioning to increase its exposure to international investments from 12 to 20 per cent or more of net asset value.
With the Bank of PNG capping overseas investments at 35 per cent, other larger superfunds were ahead of them with more offshore investments.
