“This should create a more fertile environment for macro and long-short investors, in particular,” she said.Institutional investors needed to expand their opportunity set because of the limited opportunities available, and consider having less constrained mandates, Mercer said.Manager skill would be increasingly important as investors hunted for scarce returns, the analysis concluded.Clarke said institutional investors should also set up a robust risk management framework that drew on scenario and stress test analysis as well as the more traditional ‘Value at Risk’ analysis.“Considered manager selection also remains critical in identifying strategies that are capable of providing a diversifying and sustainable source of return,” she said.The consultancy said the low level of yields available across a wide range of asset classes would make it hard to be sure of generating a decent level of return.”Private markets may offer a richer opportunity set than many listed markets given that much of the central bank stimulus has been absorbed by the listed bond and equity markets,” the report noted.However, this did not mean financial assets were now in a bubble and set to fall, it said“Indeed, the supply and demand dynamics of financial markets — that is, the large and increasing monetary base seeking a home in yield-producing financial assets — suggest that markets could continue to rise for some time,” the report added. Institutional investors will need to re-think investment strategies and consider growing their private market exposure they are less familiar with if they are to generate adequate returns in future, according to an analysis by Mercer.Central banks internationally have worked together to stimulate economic growth since 2008, but this synchronised action was expected to gradually come to an end in 2015, the consultancy said.There was now a growing disparity between the improving economic performance of the US and the UK and weakness in the eurozone and Japan, it explained.Deb Clarke, head of investment research at Mercer, said: “As central bank policy starts to diverge we expect to see more volatility and higher dispersion in markets.
The company’s global strategist Salman Ahmed noted that, unless the creditors comprising the IMF, European Central Bank and EU reassess their previous negotiating position, it increased the risk of Greece’s leaving the single currency.“At the top level, the EU will now have to decide if allowing Greece to lurch out of the European project makes sense, given the strong question mark such a development can raise on the irreversibility of the union,” he said. “After all, let us not forget Greece makes up less than 2% of euro-zone GDP and has an economy that is smaller than the size of Milan.”However, according to the €189bn Dutch asset manager PGGM, the referendum outcome has hardly changed its view.The manager said a dedicated ‘Greece team’ was closely monitoring developments, and that clients were briefed on a daily basis.“Uncertainty remains the key issue,” it said. Uncertainty surrounding Greece’s ability to service its debts was also an area highlighted by Columbia Threadneedle’s head of asset allocation Toby Nagle, who questioned whether the ECB would be able to continue offering emergency liquidity assistance (ELA) to Greek banks. “As things stand today, our base case is that the Greek government will be unable to service its ECB debt on 20 July and the ELA will at that time be cut off, requiring the circulation of a secondary currency and reducing exponentially the prospect that Greece will continue to be a full member of the euro-zone,” he said.“Indeed, even ahead of 20 July, there remains a risk the banks run out of cash under the ECB umbrella, speeding up the process further.”Stephanie Flanders, chief market strategist for Europe at JP Morgan Asset Management, said Greece’s departure from the euro-zone would be costly for tax payers, not least because of the losses suffered by the ECB.But she also warned it would re-shape the universe for institutional investors.“It would have important long-term consequences for the euro-system and the future risk premium on euro-zone assets,” she said. However, like others, Flanders believes the contagion from Greece’s exit could be contained.“In theory, at least, the ECB also has much more effective tools available now to deal with any tightening of financial conditions that results from the Greek vote,” she said. The fallout of the vote has nevertheless impacted the funding of Dutch pension funds. Dennis van Ek, actuary at Mercer, said that, around lunchtime, the 30-year swap rates had dropped by 4 basis points to 1.72% since Friday-end, and that European equity markets had dropped 1-1.5%.As a result, the average coverage ratio has fallen by approximately 1 percentage point since Friday and would currently stand at 109%, he estimated.He placed the official ‘policy funding’ – the criterion for indexation and rights cuts – at approximately 107%. The decisive rejection of Greece’s bailout conditions spells uncertainty and could see the introduction of a parallel currency in the country, the asset management industry has warned.Hours after the Greek electorate voted ‘No’, backing the stance of Alexis Tsipras’s government, some of Europe’s largest asset managers refused to be drawn on the market risks.APG’s CIO Eduard van Gelderen said, through spokesman Harmen Geers, that, as a long-term investor, it was “not appropriate to comment on short-term developments”.Lombard Odier Investment Managers questioned whether Greece’s exit from the European Union could be possible.
An undisclosed pension fund based in Switzerland has tendered a $50m (€46m) global developed market private debt mandate using IPE Quest.The mandate is for a long-only multi-credit strategy, to include US/European leveraged loans, structured credit (ABS, CLOs, CMBS/RMBS) and US/European special situations (corporate and private real estate and stressed/distressed).According to search QN-2141, the client requires managers to use a value style, with an active investment process.The target return is more than 8% in US dollars. There is no benchmark.Applicants should have a track record of at least one year, and preferably three years.Interested parties should state performance, net of fees, to 31 December.However, there is no required minimum for assets under management – either for the asset class itself or the asset management company as a whole.The deadline for applications is 8 January 2016.The IPE news team is unable to answer any further questions about IPE Quest tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email [email protected]
Switzerland’s largest public pension fund, Publica, is making its first foray into international real estate, a strategic move it intends to inaugurate with the first investments in 2017. David Engel, portfolio manager and strategist at the CHF37bn (€34bn) pension fund, told IPE Publica’s board of directors approved a 4% strategic weighting to foreign real estate in early 2016.Publica is a collective institution that counts 20 affiliated pension plans, seven of which are closed to new entrants and 13 of which have active members. The new international real estate strategy only applies to the portfolio managed on behalf of the open schemes. According to Engel, the Pensionskasse has a relatively small – by Swiss standards – domestic real estate portfolio of direct investments but had yet to turn to the international markets despite having considered such a move for some time.“Back in 2011, we looked into foreign real estate, but at the time we felt it was not sufficiently developed and that we didn’t have the capacity or capabilities to invest,” said Engel.“Above all, it seemed very hard to us to reach the strategic goals we were after for that asset class. Since then, there have been some changes.”Publica now feels better able to handle the complexities involved in investing in real estate abroad, and that the product range is now good enough to do so, according to Engel.“Real estate is also attractive from an asset-liability management perspective, and we have room for illiquidity,” he added.“With our size and internal resources, we can harvest what we call a ‘complexity premium’ in the area of international real estate.”The first investments are planned for 2017.The pension fund intends to proceed at “a slow and measured pace”, however, given the large increase in asset prices on the back of “the glut of money” pumped into the market by central banks.Publica intends to invest in core assets for the most part but will consider allocating as much as 10% in value-added, according to Engel.It will be open to investing across a range of structures but take its time to “grow into the market”.Specifically, this means Publica will initially concentrate on open-ended funds, with a broad investor base.The next step will be to act as sole investor in a segregated mandate or alongside a larger investor in a co-investment vehicle.“In a final phase, we would maybe consider closed-end funds, club deals or joint ventures,” said Engel.Geographically, half of the pension fund’s allocation is to North America, with 30% reserved for Europe and the remainder for Asia.“Asia has high growth potential but few established products,” said Engel.“There’s a lot happening there though, so, if at some point in the future we were to go further into foreign real estate, that could very well happen in Asia, although it’s much too early to say now.”The rolling out of its strategy is roughly split into two phases, the first being to build a broad, diversified foundation of holdings in North America and Asia via core, open-ended funds.This will complement Publica’s portfolio of Swiss assets, which will count towards the pension fund’s Europe allocation, according to Engel.In a second phase, the pension fund will look to make more tailored investments – for example by way of a segregated mandate with a very specific strategic focus.This could be on a particular sector, such as logistics, for example.This, however, has yet to be decided. Until then, the sector exposure of Publica’s international real estate investment will largely be guided by what is available in open-ended funds, said Engel.Asked about the pension fund’s policy on taking into account environmental, social and governance matters as part of its real estate investment, Engel said energy efficiency had become an integral part of the economics weighed by any prospective buyer.Overall, Publica is looking to implement its policy over a 4-6 year time horizon, according to Engel.
Belgium’s pension fund for the metal industry is backing an impact investment fund that aims to invest in unlisted Belgian companies with a view to generating sustainable employment, and ideally achieve a return in the process.The investment vehicle, Invest for Jobs, was created by the social partners in the metal and technology industry in Belgium, meaning it is a joint employer/labour initiative.A private company, it has €100m in capital, €40m of which comes from the pension fund for the metal industry (Pensioenfonds Metaal OFP) and the remainder from the metal industry’s subsistence protection fund (FBZMN or, by its French acronym, FSEFM). The focus will now be on deploying the €100m of capital it has raised, although the company may carry out another capital-raising round next year or after that, depending on investment opportunities, according to Eric Jonkers, one of the directors. The metal industry pension fund has some €1bn in assets under management.Freddy Willockx, president of the pension fund board (and former pensions minister), told IPE the pension fund decided to invest in Invest for Jobs because it felt it could contribute more directly to job creation. He noted that the investment was approved by FSMA, the pension fund’s regulator.According to a statement from Invest for Jobs, it is the only investment fund in Belgium to be run by the social partners of an industry.The fund aims to provide long-term financing of private Belgian companies that are capable of creating sustainable employment.The fund’s investment horizon is at least five years but goes out to 30 years.The minimum investment is €1m, while management fees are a maximum of 1% per annum.The fund can provide financing to companies in the form of equity, bonds or mezzanine debt.It aims to offer “a reasonable financial return for elevated social gain”, according to the statement.Marc Bolland, a director alongside Jonkers, told IPE it was not possible to give a precise figure for the targeted return, even though internally the fund has developed a target asset allocation.“Contrary to other funds, we are not looking to maximise financial profit,” he said. “Our policy is, above all, to have an impact, which is to support job creation. Financial return is, therefore, an integral part but not the priority.” He said the investment fund was targeting a stable long-term return “in the spirit” of the regulation on European long-term investment funds (ELTIFs).The social partners are heavily involved in the investment fund.They are represented equally on a non-executive board, alongside independent administrators/trustees.Nico Cué, secretary general of the trade union federation for the metal industry, CMB, is president of the non-executive board.Stephan Vanhaverbeke, director of social affairs at Agoria, the employers federation for the Belgian technology industry, is vice-president of the board.The presidency will rotate between the employer and employee representatives, who also appoint the members of the investment committee.Jonkers and Bolland are responsible for the day-to-day management of the fund, whose manager is called “General Partner to Investor for Jobs”, a private company.The vehicle is a regulated alternative investment fund, taking the form of a regulated alternative investment fund under the AIFM Directive.It is legally incorporated as a “société commandite par actions”, a limited stock partnership; any investor wanting to invest in the fund becomes a shareholder, with voting rights.
Hymans Robertson’s estimate exceeded all of these, at £790bn.However, Cooper argued that focusing too much on funding the deficit “clouds the issue of how best to secure members’ pensions”.“Discussions about technical matters like discount rates and inflation risk premiums perpetuate the deficit problem as it focuses time and effort in the wrong places, drowning out efforts to embed a fully integrated approach to strategy and risk,” Cooper said.The Financial Conduct Authority’s ongoing review of the asset management industry raised questions about whether trustees are able to challenge their advisers. Cooper said this suggested “dearth of inclusive, big picture advice and leadership” in pension funds, resulting in trustees “unwittingly putting members at risk”.Hymans Robertson’s survey showed that 21% of trustees reported having no specified timeframe for meeting goals, down from a third (33%) last year.Less than 10% “recognised cash-flow negativity was an issue affecting their scheme”, Cooper said. This is despite the consultancy’s estimate that more than half of FTSE350 schemes are or soon will be “materially cash-flow negative” as they begin to pay out more than they bring in.“Cash-flow risk is an issue that still isn’t getting the recognition it deserves,” Cooper said. “That’s despite the Pensions Regulator highlighting that cash-flow planning is vital to effective scheme management.”Henderson Global Investors cited the growing number of DB schemes turning cash-flow negative when it announced the launch of a new cash-flow driven investment strategy yesterday. UK pension trustees are focusing too much on funding shortfalls at the expense of being able to pay pensions sustainably, according to a survey.Consultancy firm Hymans Robertson said only 9% of the 100 trustees it surveyed for its “Trustee Barometer” report acknowledged the importance of their scheme’s cash-flow position.Calum Cooper, partner and head of trustee DB at Hymans Robertson, said: “Given the purpose of a pension scheme is to pay pensions, it is surprising that this is not the key strategic driver for 99% of trustees. This highlights that when it comes to strategy, the industry still relies on volatile balance sheet deficits and discount rates.”Estimates of the UK’s aggregate defined benefit (DB) pension deficit vary significantly. JLT Employee Benefits’ assessment across all DB schemes reported a shortfall of £434bn at the end of 2016, while PricewaterhouseCoopers put the figure at £470bn (€549bn). The Pension Protection Fund’s 7800 index of scheme funding gave an aggregate deficit of £224bn, and Mercer data on FTSE350 company pension schemes showed a gap of £137bn.
EFAMA – The European Fund and Asset Management Association (EFAMA) has elected William Nott as its president. He is currently vice-president. The appointment is for a two-year term until June 2019. Nott is the CEO of M&G Securities, the retail asset management arm of UK insurer Prudential, and is also chief strategy officer for the wider M&G business. He succeeds Union Investment’s Alexander Schindler.Nicolas Calcoen was elected vice-president, also for two years. He is currently chief financial officer at Amundi,and has held senior positions in France’s Economy, Finances and Industry Ministry and Budget, Public Accounts and Civil Administration Ministry. PFZW – Mariëtte Simons has been appointed as a board member, nominated by pensioners, of healthcare scheme PFZW. She succeeds Ria Vedder, an actuary and former senator for the Christian Democrats political party, who died last year. Simons was an executive board member and consolidation manager at the €45bn metal industry scheme PME between 2013 and 2017. Prior to this, she was director of the pension fund of insurer SNS Reaal since 2004. Simons is also board secretary at the pension fund for PostNL.Delta Lloyd AM – Jelle Ritzerveld, chief risk officer at Delta Lloyd Asset Management, will leave the company as of 1 August. Ridzerveld only joined Delta Lloyd – which was recently taken over by NN Group – in June 2016. Prior to this, Ritzerveld was director of risk management at Kempen Capital Management and risk manager at LeasePlan and ABN Amro.Complementa Investment-Controlling – Eberhard Schwarz is to join the Swiss consultancy on 1 July as its representative in Germany. He was previously at Jones Lang LaSalle, a real estate investment firm, where he was a senior relationship manager. He has also worked at BayernInvest and Siemens Financial Services.VIA Equity – The private equity manager has hired Sebastian Maciejewskiis as an investment director to open an office in Munich, Germany. VIA is based in Denmark and has raised private equity funds supported by PFA and ATP, the country’s two largest pension funds. Maciejewskiis has been tasked with increasing the company’s presence in Germany. He previously worked for German private equity firms Paragon Partners and PINOVACapital.Fulcrum Asset Management – Graham Neilson has joined the UK-headquartered fund manager as investment director. He joins from Cairn Capital where he was chief investment strategist working on the firm’s $7.4bn fixed income business. He has also worked in senior roles at CPM Advisors, ABN Amro, and Bear Stearns.Los Angeles Capital – The American global equity specialist has hired Edwina Acheson to its UK relationship management team as managing director. She is responsible for developing institutional client and consultant relationships across Europe. She was previously at equity manager Arrowstreet Capital, where she was a director of its European business. She has also worked for BNP Paribas Investment Partners, Fortis Investments, and ABN AMRO Asset Management. Church Commissioners, EFAMA, M&G, PFZW, PME, Delta Lloyd Asset Management, Complementa, VIA, Fulcrum, Intertrust, LA CapitalChurch Commissioners – Loretta Minghella will take over as chair of the Church Commissioners’ Asset Committee from 1 November. The committee oversees the strategic management of the £7.9bn (€9bn) investment portfolio that funds the work of the Church of England.Minghella succeeds Sir Andreas Whittam Smith, who announced his decision to step down as First Church Estates Commissioner – the official title of the role – in September after 15 years. Minghella was officially appointed by the Queen, having been nominated by prime minister Theresa May.She is currently chief executive of Christian Aid, a charity, and sits on Church Commissioners’ ethical investment advisory group. She is a former chief executive of the UK’s Financial Services Compensation Scheme, and has also worked for the Financial Services Authority, the predecessor of the UK’s current financial regulator.
ING’s headquarters in AmsterdamThe annual report of ING’s CDC said half of its return portfolio – 40% of the overall assets – was allocated to European and US equity.ING and NN, which declined to provide further details, did not announce changes to their ETF investments in emerging market equities or property.Their matching portfolios only consisted of investments in European countries and quasi-government institutions with at least an AA rating.The pension funds also indicated that they wanted to diversify their strategic asset allocation. As the managers of the ETFs were in control of the vehicles’ responsible investment policies, it was possible that they included allocations to firms that had been excluded from the pension funds’ investment universe, the schemes said. Two Dutch collective defined contribution (CDC) pension funds plan to decrease their allocations to index-tracking vehicles in order to avoid investing in companies excluded by their joint investment policy.The CDC schemes of ING and Nationale Nederlanden said in their annual reports that the plan would affect their investments in developed market equities.The ING CDC Pensioenfonds has €1.6bn of asset under management, while the NN CDC scheme has assets of €522m.Part of the return-seeking portfolios of both pension funds, which also includes emerging market equities and property, has been invested through exchange-traded funds (ETFs).
“It is the opinion of the Danish FSA that AP Pension has under-implemented parts of the new legislation, which both the board of directors and the executive board of AP Pension agree with,” it said.Among other things, the Danish FSA had pointed out that its management system was inadequate, it said, adding that this meant the pension fund had to make a number of improvements.These included more and better ongoing controls and increased reporting partly between upper management and the executive board and partly between the executive board and the supervisory board.Other improvements that had been called for by the FSA were the allocation of more resources to certain areas and a clearer separation of functions in some areas, AP Pension said.Lægernes rectifies illiquid credit detailSeparately, the regulator put out another report on Lægernes Pension, the Danish doctors’ pension fund, regarding its illiquid credit investments – handing out six official orders to rectify certain issues.This report was part of the FSA’s ongoing focus on illiquid credit – for example investments in loan portfolios – in which it is examining the asset type at several life insurance companies and labour-market pension funds.The FSA said its inspection, carried out in February 2019, covered the pension fund’s organisation and processes for illiquid credit investments, including its investment decisions and compliance with the prudent person principle.Lægernes Pension responded to the report, saying the orders to rectify were mostly about the level of detail in illiquid credit policies and guidelines.“The rules on unlisted investments have been strengthened sharply in recent years,” it said, adding that because of this, the pension fund had hired external consultants to review its unlisted investments last year, before the inspection.“The consultants identified a number of focus areas. There is a great correlation between the consultants’ recommendations and the supervisory order,” the fund said.“We, therefore, expect to be able to implement the necessary measures quickly in cooperation with the Danish Financial Supervisory Authority,” it said. AP Pension has been ordered to shore up its management structures by the Danish FSA, in a post-inspection report in which the authority issued the commercial mutual pension fund with 35 separate official orders to remedy failings.The €15.8bn Copenhagen-based pension fund was told by the financial watchdog: “In the improvement of the management structure, the company should focus on strengthening the three lines of defence.”In the wide range of regulatory failures uncovered by the inspection which took place in January and February 2019, the FSA took aim at shortcomings in the company’s compliance, audit and actuarial functions in particular.AP Pension responded in a statement on its website, saying it took the report very seriously and has already righted more than half of the failings.
MORE NEWS: Gold Coast ‘party house’ changes hands 7 Birigun St, Mermaid Waters. 7 Birigun St, Mermaid Waters. Dave and Lea Taverner with their six children Courtney, Nikolas, Lochlan, Kieran, Jasmine and Amber are affectionately known as the Brady Bunch. They have sold their Gold Coast home, which was designed specifically for them, because half of the children have grown up and moved out.More from news02:37International architect Desmond Brooks selling luxury beach villa13 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days ago He said a new family keen to live closer to the beach snapped it up.“It sold to a family from Pacific Pines,” Mr Palmer said.“They bought it for the location.“It was a good Christmas present for them.”The six-bedroom Birigun St property was due to go under the hammer in November but was withdrawn the day before.“We had quite a bit of interest but it was conditional (interest), not everyone was able to meet auction terms,” Mr Palmer said.“I think we sold it in about eight weeks.“We knew it would sell before Christmas.” 7 Birigun St, Mermaid Waters. 7 Birigun St, Mermaid Waters. The Taverner family have a lot in common with the blended American family at the centre of the popular television sitcom, The Brady Bunch, which became a household name in the late 1960s and early 1970s.“We’ve got the whole Brady Bunch thing going on,” Mr Taverner told the Bulletin when their home hit the market in October.Mr and Mrs Taverner bought the original house in 2009, not long after they started dating. But as Mrs Taverner’s three daughters and Mr Taverner’s three sons grew older, they realised they desperately needed more space. For years the boys lived in a makeshift bedroom to ensure everyone had enough space. MORE NEWS: Inside titans Captain’s new Gold Coast house The Gold Coast’s very own “Brady Bunch” have sold the home that united them. Lea and Dave Taverner had their six children at the forefront of their minds when designing their Mermaid Waters house.THE new year will herald new beginnings for the Gold Coast’s very own Brady Bunch family.Lea and Dave Taverner will get the chance to downsize after selling the Mermaid Waters home that united the couple and their six children almost a decade ago.Ray White Mermaid Waters principal Mitch Palmer, who marketed the property, said the $1.125 million sale went unconditional last week. 7 Birigun St, Mermaid Waters. 7 Birigun St, Mermaid Waters. “We took what used to be the garage … and we turned it into a little bunk house at one end and a rumpus room at the other,” Mr Taverner said.“It worked for five years until they started getting a bit older and a bit bigger.”So they replaced the old home with a new two-storey building.“The brief with the building design was ‘give us as many rooms we can change the function of if required’,” Mr Taverner said.The home has multiple living spaces, an outdoor entertainment area as well as a Bali hut and pool.Mr Taverner said it gave them plenty of space to spend time together as a family and spread out when they needed time to themselves.“The back deck and the kitchen looking out onto the pool — they would be the two favourite areas,” he said.As most of the children have moved out, the couple have decided it is time to say goodbye to the family home.“The Brady Bunch are all going their separate ways so it’s time for us to downsize,” Mr Taverner said.