EFFECT OF LONG-TERM ASSETS ALLOCATION STRATEGIES ON THE FINANCIAL PERFORMANCE OF SOCIAL SECURITY FUNDS

This study examines the effect of long-term asset allocation strategies on the financial performance of the Rwanda Social Security Board (RSSB). The research is motivated by the critical role of strategic asset allocation in ensuring the financial sustainability of social security funds, particularly in meeting long-term obligations such as pensions and healthcare benefits. The study addresses gaps in existing literature by focusing on Rwanda’s unique economic context and providing empirical evidence on the effectiveness of RSSB’s investment strategies. Findings reveal that RSSB’s asset allocation is diversified across equities, fixed income, real estate, and alternative investments, with respondents expressing strong agreement on the effectiveness of these strategies (mean scores ranging from 4.60 to 4.80 on a 5-point scale). Financial performance indicators, such as Return on Investment (ROI), Fund Solvency Ratio (FSR), and Liquidity Ratio (LR), show variability over the study period. Notably, ROI peaked at 14.22% in 2023, while the FSR declined from 32.9 in 2021 to 24.93 in 2023, signaling potential liquidity challenges. Regression analysis confirms a significant positive relationship between asset allocation strategies and financial performance (R² = 0.625, p < 0.05), with alternative investments emerging as the most influential driver (β = 0.641). The study concludes that RSSB’s diversified asset allocation strategies enhance financial performance but highlights the need for improved risk management frameworks and stakeholder communication. Recommendations include strengthening risk assessment practices, expanding alternative investments, and fostering transparency to ensure long-term sustainability. This research contributes to the academic discourse on asset allocation in emerging markets and provides actionable insights into policymakers and fund managers to optimize RSSB’s investment strategies. By aligning asset allocation with long-term goals, RSSB can better safeguard the financial security of its beneficiaries.