Institutional tenders $200m Asian ex Japan equity mandate using IPE-Quest

first_imgTo tender, managers should have a minimum $2bn is assets under management for the mandate and a minimum of $5bn for the firm itself.Managers should also have a minimum track record of three years, preferably 10.Interested parties should supply performance data, gross of fees, to the end of 2013.The closing date for applications is 14 February.Meanwhile, in another search (QN1385), an undisclosed public sector pension fund in Switzerland tendered a CHF50m-75m (€41m-61m) global convertible bonds mandate.The investor requests an active strategy with a high gamma focus using the UBS Convertibles Global Focus as a benchmark.The manager should have a minimum of CHF1bn of AUM in convertibles, with a minimum fund AUM of CHF150m.Managers should have a minimum five-year track record, and performance data should be supplied, net of fees, to the end of 2013.The closing date for applications is 2 February. An undisclosed institutional investors has tendered a $200m (€146m) large-cap Asian ex Japan equity mandate using IPE-Quest.In search QN1384, the investor said it was looking for an active investment strategy and that it was agnostic towards style biases.It said strategies should not be quantitative driven and should explicitly focus on Asia ex Japan. Asia Pacific strategies will not qualify.The mandate requests the manager employ the MSCI AC Asia ex Japan index as a benchmark.last_img read more

Friday people roundup

first_imgLyxor Asset Management, Morgan Stanley Alternative Investment Partners, Burges SalmonLyxor Asset Management – Lionel Paquin has been appointed chief executive, replacing Inès de Dinechin, who will leave the group. Paquin has been head of the Lyxor Managed Accounts Platform since 2011. He has also held the position of chief risk officer and head of internal control at the firm, and has been a member of executive committee since 2007. Before then, he served as managing director and principal inspector for Inspection Générale at the Société Générale Group. He began his career in 1995 in the French Ministry of Finance.Morgan Stanley Alternative Investment Partners – Chris Morser and Peter Vasiliadis, who work in the hedge funds group, and Jonathan Costello, who works in the private equity group, have been promoted to managing directors. Andrew Malek, Adam Piro and John Zaleski, who work in hedge funds; Edward Goldstein and Andrew Murray, who work in private equity; and Andrew Robinson, who works in real estate, have been promoted to executive directors. Brian Ksenak and Pennapa Tantiyakul (hedge funds); Silva Sevdalian and Pamela Fung (private equity); and Daniel Spear (real estate) have been promoted to vice-president.Burges Salmon – The UK law firm has appointed Caroline Harwood as director of Incentives in its Pensions and Incentives practice group. She joins from Grant Thornton, where her role was director and head of equity reward.last_img read more

PenSam hit by deeper-than-expected 2013 loss

first_imgThis is why the 2013 result fell short of expectations expressed in an interim report published at the half-year stage, the fund said.It said last year’s exercise, whereby many customers in the old PMF-Pension switched to the non-guaranteed Fleksion product, delivered a DKK132.2m blow to profits.PMF-Pension – the labour-market pension fund for childcare assistants, which PenSam took over from Sampension in 2006 – was merged into PenSam in 2012.Customers with old-style PMF-Pension plans, which included guarantees, were given the option last year to accept a bonus for changing their plans to Fleksion.PenSam said 38% of the 30,000 customers asked did opt to switch.PenSam Liv’s overall investment return for 2013 was 3.2%, and the Fleksion pension product generated a 7.7% return, the fund said.Helen Kobæk, PenSam’s managing director, said PenSam Liv had produced good investment returns in all asset classes.Equities returned 27%, while private equity and infrastructure generated a return of 8-9%, she said.Last year’s investment return was the result of the more active investment strategy put in place in 2010, which aimed to balance assets actively and manage risk effectively, PenSam said.Developments on the financial markets in the wake of the financial crisis had thrown up good investment opportunities, it said.As part of this, PenSam said it made active investments in construction projects in the Copenhagen harbour, in addition to buying up a mortgage bond portfolio from the state liquidator Finansiel Stabilitet. Contibutions for the year were broadly unchanged from the year before at DKK5bn.Assets under management rose to DKK84.5bn at the end of 2013 from DKK77.6bn a year before. Denmark’s PenSam reported an unexpectedly large loss for 2013 after it paid bonuses to customers switching to non-guaranteed pension plans.PenSam Liv – the part of the PenSam group that runs its core labour-market pension schemes – made a loss of DKK85m (€11m) in 2013 before tax, down from 2012’s profit of DKK186m.In its annual report, PenSam said: “The year’s result is not satisfactory but should be seen in the light of the product changeover that was carried out and developments on the financial markets.”The return on capital in the second half of the year failed to offset the effect on results of the product changeover, it said.last_img read more

ECB quantitative easing: Question everything

first_imgAmazingly, it has taken us more than four years to get here. Perhaps even more amazingly, the QE has arrived long after the apparent crisis point for the euro-zone has passed – the hair-raising weeks of 2012 when Greece looked to be on its way out of the single currency and peripheral bond yields were rocketing skywards. Today, Spain’s 10-year bonds barely yield 1.5%, and the euro has weakened enough to generate a healthy current account balance.The ultimate and most politically controversial of emergency monetary measures comes not in response to impending crisis but in pursuit of the central bank’s core mandate of price stability. Some have said today’s decision is the logical conclusion of current president Mario Draghi’s promise, at the height of the crisis, to do “whatever it takes” to preserve the single currency’s integrity. But, in fact, it is simply the logical and possibly the only way the ECB can pursue its core mandate as deflation takes hold and its interest rates bump up against the zero bound. (While the Swiss National Bank has recently shown a possible way forward into the strange world of deeply negative rates, it is notable the ECB kept all of its rates unchanged today).Does deflation represent a threat to the integrity of the single currency? Given the indebtedness of some members, it certainly could, if left to fester, Japan-like, for a long time. Does the market anticipate such an outcome? Looking at the way it has been pricing things over recent weeks, one would have to conclude that it does.Not only have bond yields and inflation breakevens been plummeting – while the oil price has halved, gold has been getting a bid for the first time in ages, which suggests investors have started thinking about it as a currency without a counterparty again, rather than just another commodity, and are no longer turned off by the thought of holding an asset that generates zero income.This is why the way markets responded to today’s news is so important. The central bank came out with a slightly stronger package than expected, and all of the pro-QE plays that had been selling-off over the last couple of days caught a bid: yields were back down, slightly, and the euro sold off modestly. Gold headed back through $1,300/oz. It was looking like we would get a classic case of buying the rumour and selling the news – which, by the way, is precisely what we saw around the QE decisions from the Bank of England and the US Federal Reserve. That would have been a comforting sign that a lot of the positioning taken up over the past month or so has been technically rather than fundamentally driven: speculators on the margins making sure they caught the up-draught into the increasingly inevitable ECB QE decision, rather than hunkering down for a long haul of falling consumer prices and stagnating growth.Should we revisit that thesis in the light of today’s moves? Not necessarily. The modestness of those moves suggests they are not reflective of market disappointment but rather of appreciation that the central bank really is serious this time. The open-ended nature of the programme Draghi described in the press conference was notable, for example. The response of stock markets back this interpretation up.It’s early days, but if this more optimistic take on things sticks over the next days and weeks, we could be seeing the beginnings of what could be a powerful bull market in European risk assets – but perhaps not the long-overdue and much-needed correction in safe-haven rates. IPE’s Martin Steward analyses today’s long-awaited European Central Bank announcement“We are not running money printing presses,” said the president of the ECB.That was in the early summer of 2010, the man in charge was Jean-Claude Trichet, and he was reassuring French radio listeners that the recent decision to begin sterilised secondary-market purchases of private and government bonds was not the prelude to US and UK-style QE. He needed to do so because the central bank was running desperately low on credibility. Days earlier, Trichet had insisted this big step had not even been discussed; and the ECB had previously broken its promise that “no state can expect special treatment” on collateral eligibility requirements in order to try and get on top of the worsening Greek debt crisis.In my opinion column for IPE at the time, I made the fairly unsophisticated argument that the losses of the financial crisis were in the process of being socialised through the ECB, and that this would happen either through defaults on debts that were now held at the ECB, or through the soft default of “runaway inflation” as the euro was trashed with a massive programme of all-out QE.last_img read more

Asset managers look to boost headcounts despite weighing competition

first_imgAlmost two-thirds of asset management chief executives are expecting to increase headcount within firms despite weighing concerns over competition and regulation, research shows.Over 150 asset management chief executives responded to PwC’s annual survey of global CEOs, which showed a significant majority expecting growth in revenues over the next year.Additionally, 28% of respondents said they would be leading their firms into new industries, away from pure asset management, and 18% considering such an expansion in order to protect revenue growth.New tactics saw managers entering markets vacated by banks, providing real estate loans and corporate lending. One-fifth plan to grow business through cross-border mergers, with a further 29% opting for domestic tie-ups, PwC said, a higher proportion than other financial services.Despite short and long-term optimism about business growth, chief executives said fees had come under pressure from cheaper alternatives such as exchange-traded funds (ETFs).Almost half aimed to cut costs this year and 28% plan to outsource segments of their business in order to reduce the cost base.“Anxiety about competition disrupting their business models isn’t surprising at a time when active managers are losing market share,” the report added.Although looking to increase headcount, PwC reported 68% of asset management heads were ‘extremely’ or ‘somewhat’ concerned about the availability of key skills with over three-quarters planning to expand headcount in technology and risk management.“[Chief executives] are adapting to a changing world,” the report said.“They’re optimistic about growth in assets and revenues. Yet with competition mounting and regulatory disruption set to intensify, they’re looking to redefine their businesses, moving into new growth areas and leveraging digital technology.”Mark Pugh, UK asset management leader at PwC, said the market would be volatile over the next three years.“Future success in this sector will depend on attracting not only the most skilled investment professionals, but also talented people,” he added.“Compared with three years ago, asset management chief executives see both greater opportunities (65%) and greater threats (56%).”Optimism about revenue growth could stem from previous PwC research that showed global assets under management to exceed $100trn (€88trn) by 2020.The research said market share between institutional investors, retail and high-net worth individuals would not change dramatically, but growth from emerging and frontier economies would add to assets.,WebsitesWe are not responsible for the content of external sitesLink to PwC 2015 annual CEO surveylast_img read more

AP2 creates standalone green bond portfolio citing market’s ‘maturity’

first_img“We are therefore breaking out our holdings in green bonds from the fixed income portfolio, to manage them in accordance with a dedicated investment strategy,” he said.The new approach will see AP2 use the Barclays MSCI Green Bond index, launched in late 2014, to benchmark its performance.“This strategic move offers the Fund a clear means of combining solid returns with an allocation of resources to the global sustainability challenge,” Lindblom said.Lindblom told IPE that, while much of AP2’s green bond exposure to date had come from supranational issuers and national development banks, the consistency of the Barclays MSCI index was “a little bit different”, leading to a gradual shift in allocation through the acquisition of corporate green bonds.Since 2014, there has been steady growth in the number and volume of green bond issuances.The first three months of 2016 has already seen $15.6bn (€13.9bn) in green bonds issued, according to the Climate Bonds Initiative, including a $600m issuance by Kommuninvest, Sweden’s local government debt office, and a $1.5bn issuance by Apple.This compares to more than $36bn in 2014 and nearly $42bn in 2015.German development bank KfW was responsible for the largest single issuance last year, a €1.5bn bond that attracted interest from AP2 and Dutch pension manager APG, signatories to the Paris Green Bond Statement.AP2’s decision to establish a standalone portfolio comes after fellow buffer fund AP3 pledged to treble its green bond holdings to SEK15bn by 2018, while AP4 grew its green bond holdings by SEK2.9bn in 2015, ending the year with nearly SEK4bn. Sweden’s AP2 is to establish a standalone green bond portfolio, arguing the market has matured enough to warrant classifying its holdings as a distinct asset class.The buffer fund, which has invested in green bonds since 2008 when the World Bank first entered the market, said it would implement a strategic allocation of 1%, or SEK3bn (€327m), despite having already exceeded the target through its current holdings worth SEK4.2bn.It said the decision to establish a standalone portfolio was “strategically important”, as it would enhance the fund’s sustainable investment efforts.Lars Lindblom, fixed income portfolio manager, said AP2 felt the green bond market had now “achieved a maturity and size” to justify the fund’s implementing a separate investment strategy and declaring it an asset class.last_img read more

ISIF’s Irish portfolio beats global fund on returns in H1

first_imgSince inception in 2014, the overall return was 2.3% at the end of June 2018, it reported.Rather than aiming solely for wealth creation, ISIF has a “double bottom line” objective, whereby it targets investment returns as well as economic impact.By the end of June 2018, ISIF reported a total of €3.8bn of committed capital, which it said had unlocked an additional €6.6bn from co-investors, leading to a total of €10.4bn in capital commitments.The ISIF welcomed the finalisation of its investment strategy review, which it said “takes account of the risks that may be posed by economic overheating and the appropriateness of ISIF’s investment mandate given our current economic performance”.The fund’s double bottom line mandate is not being changed in the review, but in the light of strong economic conditions, it is now to focus on priorities to support “Project Ireland 2040” — a national development plan unveiled in February.This new focus is directed at five key themes: housing, indigenous industry, regional development, Brexit, and climate change.ISIF’s total fund value was €8.7bn at the end of 2017. The Ireland Strategic Investment Fund (ISIF) suffered a 1.3% loss on its global portfolio of investments between January and June, while its Irish portfolio made a positive 2.7% return in the period, according to its update for the first half of the year. The sovereign development fund also detailed plans for a strategy rejig in the report, which will see the ISIF shifting its domestic focus to five key themes from now on, away from its hitherto general cross-sectoral approach to investment in Ireland.Overall, ISIF, which was born out of the former National Pensions Reserve Fund, made a 0.3% loss on investments in the first half of this year when returns from the global portfolio and Irish portfolio are combined.In the full year 2017, the fund made a 4.3% overall investment return, composed of a 4.1% gain on its global portfolio and 4.5% on the Irish portfolio. last_img read more

Geneva’s €11.2bn pension fund pleads for ‘double Yes’ in funding vote

first_imgThe CHF12.6bn (€11.2bn) public pension fund for the Swiss canton of Geneva has called for the public to help it secure crucial funding by voting in favour of two competing proposals in a regional referendum next month. CPEG is the public pension fund with the weakest funding in Switzerland. At the end of December its coverage ratio stood at 58%, compared with 75% on average for Swiss public pension funds.Unlike most of its peers, when CPEG was established in 2014 it did not receive enough financing from the canton. Under federal law, it must have a coverage ratio of 80% by 2052, but it faces falling foul of its legal obligations. Cantonal law specifies the trajectory to the 2052 target, setting targets for 2020 (coverage ratio of 60%), 2030 (66%), 2040 (72%), and beyond.  Over the years CPEG’s liabilities have increased by CHF2bn as a result of cuts in the discount rate it uses. According to Michèle Devaud, deputy director general of CPEG, the need to recapitalise the fund by a substantial amount – the figures given ranging between CHF4.4bn and CHF5.4bn – was recognised by all the political parties in Geneva.“The problem is what system to put in place,” she added.Competing solutionsIn December the regional parliament passed two “contradictory” laws in the same session, Devaud said. Both targeted a coverage ratio of 75%, largely via recapitalisation in 2020 via a loan, but disagreed about potential structural reform of the pension fund.According to Devaud, the cantonal government’s proposal was for CPEG to switch to a defined contribution system, which would lead to benefits falling by a maximum of 5%. The proposal also foresaw a shift in the distribution of contributions, with members to contribute a greater share and employers a smaller share.The current contribution rate is 27%, two-thirds of which comes from employers and one-third from employees.  The funding proposals will go to a ballot next monthThe second proposal, on the other hand, involved sticking with the current defined benefit system without any changes to benefit or contribution levels. There were some differences relating to the repayment of the loan used to provide the financing.According to Devaud, the second option involved the loan mainly being repaid in the form of land being transferred to CPEG, on which it could build accommodation for the local population. CPEG allocates around 30% of its assets to real estate and owns 10,000 housing units, making it the canton’s biggest landlord.The cantonal government’s plan, meanwhile, allows for the transfer of land but does not prioritise it in the same way as the second proposal.‘Vote for both’Both options are the subject of a referendum to be held on 19 May, after the respective camps collected sufficient signatures against the other’s proposal.CPEG wants to avert an outcome in which both proposals end up being rejected by voters. It has therefore issued a statement calling for them to vote in favour of both, regardless of the preference they then indicate in follow-up questions on the ballot.“The board of CPEG isn’t taking a position on the proposals but we’re saying that the pension fund has to be recapitalised. That’s the main message,” Devaud told IPE.“It would be catastrophic if there were a double ‘No’ because then we would have to cut benefits substantially.”CPEG also emphasised that such an outcome would mean that the pension fund’s “financial balance” would remain very fragile and that recapitalisation at a later date would probably be necessary, with this costing more than the measures linked to the proposals scheduled for the May referendum. Since CPEG’s creation, active members’ future benefits have been cut by 17%. The pension fund said that if the measures it had already announced came into effect in January next year, the total reduction of benefits could go up to 27% depending on the type of member.last_img read more

​NBIM brings Rio Tinto, Walmart back into sovereign fund’s universe

first_imgRio Tinto’s exclusion, made in 2008, was based on an assessment of the risk of severe environmental damage related to the company’s Grasberg mine in Indonesia, but the company has now agreed to sell its interest in the mine, NBIM said.Mexican company Grupo Carso was blacklisted for tobacco production in 2011, but has since made it clear to the council that it is no longer involved with this activityGeneral Dynamics was excluded from the GPFG’s investment universe in 2005 because of its production of cluster munitions, which, NBIM said, has since been terminated.The Canadian fertiliser company Nutrien, formerly named the Potash Corporation of Saskatchewan, was added to the blacklist in 2011 following an assessment of the risk of violations of fundamental ethical norms linked to the company’s operations in Western Sahara. These activities had now ceased, NBIM said.NBIM said the revocation of these exclusions meant that the GPFG was now allowed to invest in the companies, and the Ministry of Finance would decide when the securities would be re-introduced into the fund’s benchmark index. However, it was up to the fund manager to decide if and when to purchase shares in the companies, NBIM said. The manager of Norway’s NOK9.1trn (€938bn) sovereign wealth fund has brought a number of blacklisted companies back into its investment universe.Norges Bank Investment Management (NBIM), which manages the Government Pension Fund Global (GPFG), revoked exclusions applied to a range of companies including US retailer Walmart, mining company Rio Tinto, aerospace firm General Dynamics and Canadian fertiliser specialist Nutrien.NBIM said in a statement: “The executive board’s decisions to revoke the exclusions were made on the basis of recommendations from the Council on Ethics, which regularly shall assess whether the basis for observation or exclusion still exists.”The sovereign wealth fund said Walmart and its Mexican subsidiary Walmart de Mexico were originally blacklisted in 2006 based on an assessment finding serious or systematic violations of human rights. However, the grounds for this exclusion no longer existed, according to NBIM.last_img read more

Chart of the Week: Sterling’s troubled path since the Brexit vote

first_imgSource: SchrodersHowever, while the currency’s weakness may have made travelling overseas more expensive for UK holidaymakers, it has provided a boost to many UK companies. More than two thirds of the revenues generated by FTSE All Share companies are generated overseas, according to Schroders.The UK-listed asset manager said the FTSE All Share index rose by 28.1% between 23 June 2016 and 15 June 2019. UK equity returns outstripped those of Japan, Europe and emerging markets indices in that period, Schroders’ data showed, but lagged behind the US and China.“The relatively stable global economic backdrop has been helpful,” Schroders stated in a commentary published earlier this week. “Global investors have bought into the so-called Goldilocks scenario: a ‘not too hot, not too cold’ combination of stable growth, benign inflation and low interest rates.“Support for the UK market and the economy came from the Bank of England, which has kept monetary policy loose, ensuring businesses and markets have access to funding.”How global markets have performed since the Brexit voteChart MakerHowever, with Brexit itself still unresolved, Schroders’ senior European economist Azad Zangana warned of “real risks” to the UK economy ahead.Economic growth “remains sluggish”, he said, and could be hampered further when companies seek to reduce the inventories they have built up in preparation for a ‘no-deal’ Brexit. Sunday 23 June marked three years since the UK voted to leave the European Union.While the method of exit is still uncertain, the impact on the UK’s currency is clear. In the space of those three years, sterling has fallen 14% against the dollar and 13% against the euro, according to Schroders.As of this morning, £1 is worth €1.12 and $1.27. On 24 June 2016, the day the referendum’s result was confirmed, these values stood at €1.23 and $1.37, according to Bloomberg data.This is marginally higher than the pound’s post-Brexit low point of €1.08 on 25 August 2017, shortly before the third round of negotiations between the UK and the EU began. Source: US State DepartmentBoris Johnson, the frontrunner for the next UK prime minister“The resignation of prime minister Theresa May has raised the risk of a no-deal Brexit,” Zangana added. “If the bookmakers’ favourite… Boris Johnson becomes the new prime minister, then the hard-line Brexiteer could take the UK out of the EU without a deal.“If this were to happen, we would anticipate the economy to slow and fall into recession around the turn of the year. While the Bank of England would probably cut interest rates eventually, the expected depreciation in the pound would cause inflation to spike.“The household sector has already run down its safety buffer in the form of its savings rate, therefore a contraction in demand is very likely.”last_img read more