Month: September 2020

Romanian regulator to expand pension fund corporate investment

Romanian regulator to expand pension fund corporate investment

first_imgBobocea told IPE the association had been discussing potential changes with the AFS for some months.These include reviewing the risk coefficients of the asset classes pension funds can currently invest in.“This would ultimately lead to more direct investment in stock,” he said.For example, while the limits state that funds can invest between 0% and 70% in government bonds, in practice, the numerous valuations force medium-risk funds into investing 60-65% into state securities.The APAPR has also proposed the possibility of buying and trading corporate bonds, currently restricted to “regulated stock markets”, on the OTC market, and allowing interest rate risk hedging and other uses of derivatives.“The current legislation is restrictive and only allows for some forex hedges,” said Bobocea.The AFS’s announcement follows on from prime minister Victor Ponta’s statements to the Romanian press in July that appeared to rule out either a Hungarian-style nationalisation of the second-pillar funds or a Polish-style expropriation of their government bond assets.These spectres were raised last year following rumours the government intended to review the second pillar’s performance with the IMF.Ponta has since stated that he wanted to find, along with the European Commission and IMF, a solution enabling the funds to expand their investments beyond government bonds in ways that would benefit the real economy.He told the Romanian financial weekly Capital that while the Hungarian solution produced good results in the short term, in the medium term, it would prove a mistake. Romania’s financial supervisory authority (AFS) has announced it intends to review the regulations for private pension funds to increase their direct investment in the real economy, primarily via listed equities and corporate bonds.According to the authority, the second and third-pillar fund investments in Bucharest Stock Exchange (BSE) listed companies totalled RON2.73bn (€617m).The funds are large shareholders in the recent major state-owned company IPOs on the BSE, with 20.6% in nuclear power plant Nuclearelectrica, 22.8% in natural gas producer Romgaz and 18.6% in electricity distributor Electrica, as well as holding significant stakes in other strategically important companies.Mihai Bobocea, adviser to the board of the Romanian Pension Funds’ Association (APAPR), added that, according to the association’s estimates, pension funds now account for 10% of the BSE’s trading volume.last_img read more

UK roundup: NAPF, PMI, Newton IM, Cambridge, State Street

UK roundup: NAPF, PMI, Newton IM, Cambridge, State Street

first_imgThe National Association of Pension Funds (NAPF) and the Pensions Management Institute (PMI) have announced the two organisations are exploring the possibility of a merger. The NAPF is a representative group for pension schemes, while the PMI is an accreditation and standards body for the pensions management and consultancy industry.The pair said discussions over a merger were initiated after a raft of changes in the UK legislation on pensions.PMI chairman Paul Couchman said the pooling of resources and knowledge of the two organisations made sense. “An organisation combining our complementary areas of expertise would provide all our members with access to a single organisation that could offer comprehensive training and qualifications while effectively representing their interests to government and regulators,” Counchman said.Ruston Smith, chairman at the NAPF, said the merged entity could provide a stronger voice and better education for the industry.The pair will now spend 6-9 months assessing the details of any potential merger but will operate separately until a final decision has been made.In other news, Newton Investment Management and the University of Cambridge have agreed a five-year partnership allowing the university to expand its research into long-horizon investing.The partnership will lead to the rebranding of the university’s Centre for Endowment Asset Management to include Newton’s sponsorship at the start. It will continue to produce its annual three-day forum on the topic and publish academic and practitioner journals.The centre’s chairman, professor Elroy Dimson, said: “The partnership with Newton will reinforce Cambridge University’s ongoing collaboration with practitioners, academics and organisations that take a long-term view of investment.”Helena Morrissey, chief executive at Newton, added: “We share the Centre’s commitment to helping long-horizon investors make appropriate investment decisions. “We look forward to collaborating and furthering the understanding of investment decisions and their impact on institutional returns.”Finally, State Street Global Advisors’ (SSgA) latest research into the attitudes and plans of defined contribution (DC) savers highlighted further uncertainty around set retirement ages. This comes as the company makes amendments to its range of target date funds in the wake of the changes to DC legislation announced in the UK Budget.The research revealed only 25% of 1,034 respondents know when they will retire. In response, SSgA head of DC in the UK, Nigel Aston, said its target date offering, Timewise, was originally designed to provide 25% cash free at retirement and an annuity purchase. However, it now addresses new legislation by adding drawdown flexibility, he said.last_img read more

Welsh LGPS tender £2.6bn worth of passive mandates

Welsh LGPS tender £2.6bn worth of passive mandates

first_imgAround the time of the decision to procure a joint manager, their passive equity and bond holdings were said to amount to approximately £3bn and were run by three managers across 18 mandates.The three managers are BlackRock, Legal & General Investment Management (LGIM) and State Street Global Advisors (SSGA). Welsh LGPS passive mandates breakdown. Source: Invitation to TenderMandateBenchmark£m Iboxx Sterling Non Gilts All Maturities8.3 The eight local government pension schemes (LGPS) in Wales are looking for a joint manager of their passive equity and bond holdings, a mandate initially expected to be for some £2.6bn (€3.4bn).As previously reported, the decision to procure a joint manager was taken by the Welsh LGPS last year in the context of long-standing discussions about collaborating to cut costs and increase efficiency.The central government then intervened with the instruction for the 89 LGPS in England and Wales to pool assets, with eight asset pools having emerged so far ahead of a 19 February deadline for submission of consultation responses to the Department of Communities and Local Government (DCLG).The eight* Welsh schemes have more than £11bn (€14.4bn) in combined assets. European EquityFTSE All World Dev Europe ex UK69.2 US EquityFTSE North America163 FTSE All World90.8 Japanese EquityFTSE All World Japan28 FTSE All Stocks UK Gilts4.5 Global EquityGlobal Equity438 MSCI Global Emg Mkts32.1 FTSE All World Dev Japan ex UK 95% GBP  Hedged11.3 IFC Investible Comp ex Malaysia8.8 Asia Pacific EquityFTSE All World Dev Asia Pac ex Jap53.2 Emerging Market EquityMSCI Emg Mkts75.7 UK EquityFTSE All Share1,224.50 FTSE All Stocks UK Gilts3.1 FTSE All World USA258.3 IFC Investible Comp ex Malaysia44.8 GiltsFTSE All Stocks IL Gilts61 FTSE All World Canada8.8 The collaborating Welsh funds are now seeking to appoint a single manager jointly. Aon Hewitt is running the procurement exercise.The joint management of the funds’ aggregated passive investments is expected to be cheaper than if each fund separately ran its holdings.According to tender documents, the new provider would ideally be able to provide funds that meet each of the existing passive benchmarks, of which there are 21 (see table).The largest holdings to be managed are in UK equity, amounting to £1.2bn, with the FTSE All Share the benchmark.  The next largest existing mandate is for global equity, for £528.8m, followed by North American equities.The Welsh funds also have investments in European, Asia Pacific, Japanese and emerging market equities plus “alternative equity”. Some £77m is in Gilts.The deadline for tender submissions is 4 March. The outcome of the procurement process is currently scheduled to be communicated the week of 28 March.The most “economically advantageous” tender will win the mandate, according to an EU tender document.In England, a consortium of seven local authority funds recently awarded LGIM £6.5bn worth of passive mandates, reducing management fees by more than 50%. *The eight schemes (and their administering authorities) are: Cardiff and Vale of Glamorgan Pension Fund (Cardiff), City and County of Swansea Pension Fund, Clwyd Pension Fund (Flintshire), Dyfed Pension Fund (Carmarthenshire), Greater Gwent Pension Fund (Torfaen), Gwynedd Pension Fund, Powys Pension Fund and Rhondda Cynon Taf Pension Fund. Alternative EquityFTSE RAFI Developed 1000 QSR TR93.5 FTSE All World Dev Asia Pac Jap24last_img read more

Pension funds to transform governance for speedy end to deficits – report

Pension funds to transform governance for speedy end to deficits – report

first_imgState Street said these moves came against the background of increasing overall scrutiny of pension funds in an operating environment that was more complex. Pension funds taking a “more advanced approach to governance” expect to eliminate their deficits more quickly than the rest of the industry, it said.They will also increase their exposure to alternatives, it said, adding that six out of 10 of this group of pension funds think they will put more into hedge fund strategies over the next year, compared with 34% of all respondents.State Street said these governance changes would happen at the same time as plans to cut costs and diversify portfolios. As an example, it said 80% planned to merge assets and liabilities from multiple pension plans.Respondents cited cost cuts and more effective operation as two key benefits of this consolidation.Ian Hamilton, managing director for Asset Owner Solutions at State Street, said consolidation was set to increase, with economies of scale the most obvious hoped-for gains but other motivations also in play, such as risk management and an eagerness to leverage in-house talent. He also said larger schemes were bringing more and more expertise in-house and that this trend was set to continue, although it would not be limited to big schemes.The research showed that only 38% of respondents considered the general investment literacy of their governing fiduciaries was very strong, while only 36% rated their ability to understand the risks their pension funds were facing as very strong, State Street said. Some 92% of pension funds internationally are planning to make at least one major change to their governance models, with many expecting their action to help them get rid of their deficits more quickly than others, according to new research.State Street Corporation said its poll of 400 pension staff in 20 countries also showed that 68% of the funds they work for are planning to make at least three changes to governance.Many of the improvements they are looking to make involve the transparency and frequency of reporting and giving out information, it said.State Street said 41% of respondents planned to increase the detail or frequency of their reporting to the board in 2016, while about the same proportion aimed to be more transparent to their members about the fund’s governance and investment performance.last_img read more

Deutsche Bank confirms asset management IPO plan

Deutsche Bank confirms asset management IPO plan

first_imgDeutsche Bank intends to proceed with the planned partial flotation of DWS, it confirmed today.The listing would happen “in the earliest available window, subject to market conditions”, the bank said in a statement.It did not specify a size or date for the listing but IPE understands that the transaction is being lined up for mid-March. The bank is planning to float a minority stake via a sale of 25% of its existing shares for about €1.5bn-€2bn.Deutsche Asset Management, as the asset management arm is still officially called pending the final rebranding as DWS, has €700bn of assets under management. It was ranked just inside the top 20 in IPE’s 2017 Top 400 global managers and the eighth largest European institutional manager.   The listed asset manager will take the form of a KGaA legal structure. This is a German form of master limited partnership that will allow Deutsche Bank to exercise control over the entity even if its eventual stake were to fall below 75%.Nicolas Moreau, chief executive officer of DWS, said: “The planned IPO will give us the opportunity to unlock the full potential of DWS for clients and employees, while targeting attractive returns for our shareholders.”Deutsche identified several benefits of listing its asset manager.It would enhance the external profile of DWS through greater visibility and brand recognition. It would also allow the asset manager to set a new compensation framework “that better aligns remuneration to the needs and performance of the asset management business and that will provide DWS with increased capacity to attract and retain talent”.The world’s largest pension fund, Japan’s Government Pension Investment Fund, has become increasingly vocal about asset managers’ compensation schemes, arguing that these need to be aligned with a focus on increasing long-term returns.Deutsche also said the minority initial public offering of DWS would provide the company with greater operational flexibility to control costs and enable it to capture future growth opportunities and select “bolt-on” acquisitions.Medium targets for the asset manager include net inflows of 3-5% per annum of assets under management as at the start of each financial year, and a management fee margin greater than or equal to 30 basis points.DWS plans to distribute 65-75% of its reported net income as dividend, it said.Its supervisory board is to comprise 12 members. Expected are five independent members, four employee representatives and three Deutsche Bank representatives.As previously announced, Karl von Rohr, chief administrative officer of Deutsche Bank, will become chairman of the DWS supervisory board.Deutsche Asset Management’s established RREEF real estate and Xtrackers passive brands will be retained.The rebranding as DWS is expected to be finalised in late March.See the next edition of IPE magazine for ‘Strategically Speaking’ with Roelfien Kuijpers, Deutsche Asset Management’s head of responsible investment and strategic relationshipslast_img read more

​AMF demands overhaul of Swedish pension rulebook

​AMF demands overhaul of Swedish pension rulebook

first_imgThere was much debate on both sides of the political spectrum about tax reform, he added, so it should also be discussed how much of that went to the public pension.“Otherwise, the link between a long working life and a reasonable pension risks being reduced for large groups with relatively low wages,” he said.In its report, AMF outlined five specific proposals for regulatory change, including safeguarding the lifelong income principle of the public pension, harmonising public pensions and occupational pensions, and the introduction of a single occupational pension for individuals regardless of the number of employers they have over their careers.Adolphson Björck also warned about possible consequences of the trend for Swedes to withdraw their pensions early on in retirement, rather than opting for a lifelong payout stream.“Taking part of your occupational pension in a short period is undramatic,” he said. “But taking out entire occupational pensions in a few years leads to a large loss of income when one has to manage on the public pension and any private savings alone.” Information about the benefits of lifelong payments had to be better, he said, particularly with payment rules set to become more flexible in the future. Sweden should overhaul its pension legislation to ensure the state pension can keep pace with inflation, according to one of the country’s biggest pension providers.In a new report, the SEK590bn (€55.9bn) pension fund AMF – which is jointly owned by the Swedish Trade Union Confederation and the Confederation of Swedish Enterprise – also said the trend towards members withdrawing their occupational pensions early in retirement must be halted.AMF said that, while next year was expected to bring legislation to raise the default retirement age and boost basic financial protection, politicians also needed to safeguard the income protection element of the state pension.Dan Adolphson Björck, economist at AMF, said: “A higher retirement age is not for everyone, and it is possible to strengthen the public pension without sending the bill to employees or employers. Today, one third of employers’ contributions do not go to pensions and social insurance, but to the state’s budget.”last_img read more

Chart of the Week: How Europe’s pension funds performed in H1

Chart of the Week: How Europe’s pension funds performed in H1

first_imgKPASweden€17.8bn7.7Assets as of 31/3/19 How European pension funds performed in the first half of 2019Chart Maker The first half of 2019 proved a fruitful one for many of Europe’s biggest pension funds, despite ongoing market turmoil and political uncertainty.The Netherlands’ giant healthcare scheme PFZW and metal industry fund PMT led the way with gains of 12.7% each – although the strong returns have done little to improve the schemes’ funding levels and they both remain at risk of having to cut member benefits .Investors in Icelandic pension fund Frjalsi’s main risk profile had an even better first six months of 2019, however, with a return of 13.6%.Dutch construction fund BpfBouw and civil service scheme ABP also posted double-digit returns. Customers of Denmark’s Danica Pension experienced strong growth too, with those invested in the Danica Balance Mix fund with a medium risk profile and 20 years to retirement having gained 12.1%. PMTNetherlands€80.5bn12.7 FrjalsiIceland€1.7bn13.6Return is from main risk profile. Assets as of 31/12/18 PFZWNetherlands€225bn12.7 “The central bank is like a shark in the water, ready to attack any negative news, and it is difficult – and maybe stupid – to fight against it”Tine Choi Danielsen, PFA Pension“Returns offered by different asset classes and the compensation gained from additional risks are at an historically low level,” the fund said. “A low interest rate environment pushes investments towards riskier and less liquid investment objects, favouring [for example] the equity and real estate markets. The development of the equity markets is strongly conditional on the central banks’ expansionary monetary policies and on companies’ earnings growth remaining high.”Denmark’s PFA – which posted a 10% gain for investors in its “recommended” ‘C’ investment option – also highlighted the importance of central bank policy. On the eve of the US Federal Reserve’s decision this week to cut its key policy rate by 25bps to 2-2.25%, PFA chief strategist Tine Choi Danielsen said a safety net had been placed under the stock market.“The Fed has kicked the door wide open for interest rate cuts and has also left us investors with every reason to believe that if there is gravel in the machinery, whether it is from the US economy or something global, then they are ready to stimulate,” she said.“The central bank is like a shark in the water, ready to attack any negative news, and it is difficult – and maybe stupid – to fight against it.” Danica PensionDenmark€60.4bn12.1Return refers to Danica Balance Mix, medium risk, 20 years to retirement BpfBouwNetherlands€63.5bn12.5 ABPNetherlands€442bn10.9 Johan Sidenmark, chief executive of Sweden’s AMF, said his fund’s 8.1% return for the first half was aided by strong equity markets in particular.The S&P 500 gained 18.6% in euro terms in the first six months of 2019, while the MSCI Emerging Markets index rose by 11% and the MSCI Europe index gained 16.2%.Fixed income benchmarks also rose during the period, with the Bloomberg Barclays Global Aggregate index gaining 6%. IlmarinenFinland€47.8bn6 AMFSweden€13.1bn8.1 Alecta DBSweden€83.9bn8.5Assets include both DB and DC sections  Johan Sidenmark, AMFHowever, Sidenmark warned that “it should be borne in mind that the upturn is partly due to signs of a weaker global economy leading to expectations of a less tight monetary policy”.“Dark clouds in the form of an escalating trade war, Brexit and other turmoil continue to rise on the horizon,” he added. “That is why it feels good and important that during the spring we have taken important steps to be able to achieve a competitive return even in a tougher economic situation.”Finland’s Ilmarinen also highlighted “the state of Italy’s public finances and the development of the political situation between the US and Iran” as creating uncertainty for investors and the global economic growth outlook.In its interim report – which revealed a 6% investment return for the first half – the €47.8bn pension insurance company said monetary policy also remained a key influence on performance. FundCountryAssetsH1 return (%)Notes AP1Sweden€32.8bn9.7 IndustriensDenmark€24.1bn7.6 Alecta DCSweden€83.9bn11.8Assets include both DB and DC sectionslast_img read more

Nordic duo invests in World Bank’s €1bn COVID 19-linked bond issue

Nordic duo invests in World Bank’s €1bn COVID 19-linked bond issue

first_imgNordic pension funds PKA and Folksam have invested in a new SEK11.5bn (€1bn) 2022 issue of Swedish krona-denominated sustainable development bonds from the World Bank, some of whose proceeds will be used to fight the coronavirus pandemic in developing countries.Denmark’s PKA said it was the first investor to sign up, investing SEK4bn, with Swedish pension and insurance group Folksam also putting money into the issue.The World Bank said the bond was aimed at raising awareness about its health programme – in particular how it was working with member countries to back efforts to prevent, detect, and respond to the rapid spread of COVID-19.Ylva Wessén, Folksam group chief executive officer, said: “It feels very good to be able to make an investment that supports sustainable development projects including the fight against the negative consequences of the pandemic given our vision that our customers should feel secure in a sustainable world.” The World Bank – which comprises the International Bank for Reconstruction and Development and the International Development Association – said Swedish bank SEB was the sole lead manager for the transaction, which was the largest priced by any sovereign, supranational and agency (SSA) issuer to date in Swedish krona.Michael Nellemann Pedersen, PKA’s chief investment officer, said: “As a pension fund with members mainly working in social services and health care, we appreciate the opportunity to combine a good risk-adjusted return with a possibility to contribute to sustainable development including healthcare in developing countries.”The DKK330bn (€44bn) labour-market pensions firm said that though the bond was not created as a result of the coronavirus pandemic, its proceeds would now largely go towards preventing and responding to the rapid spread of the disease, in countries including India, Peru and Paraguay.Nellemann Pedersen said: “Right now we see how important a strong health system is for a well-functioning society.“Half of the world’s population does not have access to very basic healthcare, and we know that poor countries with weak health systems are hit extra hard by disease outbreaks and epidemics,” he added.The World Bank said every year about a billion people faced financial problems trying to afford healthcare, with 90 million pushed into extreme poverty. These investments would go to projects including those aimed at providing universal and inexpensive healthcare, it said.The bank said the bond issue attracted investors from Scandinavia and elsewhere in Europe and that asset managers, pension funds, and insurance funds made up 91.3% of investors.The security carries an annual coupon of 0.250% and a yield of 0.259%, has a settlement date of today and matures on 23 December 2022.last_img read more

Record Brisbane block of land sells for ‘Sydney price’ of mega millions

Record Brisbane block of land sells for ‘Sydney price’ of mega millions

first_img33 Moray Street, New Farm, QLDA VACANT block of land with one of the best views in Brisbane has blown price expectations out of the water selling for a massive multimillion-dollar price normally seen in Sydney.Patience has paid off the 63-year-old seller of a 1,103 sqm block of land that fetched an eye-watering $11.3 million in a deal sealed by Place Projects last week.A property search by The Courier-Mail revealed the 63-year-old bought the site over 30 years ago for over $11m less than it just sold for. A lone pine tree in the centre of the block.He said the site was a rare find in a highly desired area and interest had come “from far and wide”.“That a residential block of land can fetch such a price indicates how attractive Brisbane is for buyers, particularly those waterfront properties with stunning river views.” FOLLOW SOPHIE FOSTER ON FACEBOOK Looking back towards the river from the middle of the block. The 1,103 sqm site was on the market for over a year.The property, which had been on the market for over a year, fetched about $10,245 per square metre — a price tag that was extremely rare for Brisbane, according to Place Projects Director Syd Walker. “Those prices above $10 million are something we’d usually associate with larger cities like Sydney.”“The vendor purchased the block in 1986 for just (over) $200,000 — what a remarkable investment it has proven to be.”center_img More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours agoThe area is in high demand for luxury apartment developments. First home buyer delays expected State’s mega-millions sales the height of luxury Inside $5.4 million mansion The vacant block sits in the Brisbane inner city suburb of New Farm, looking across the river towards the city skyline with views over the iconic Storey Bridge. The price paid was double the previous land record for the area ($5.5m), he said. Riverfire’s going to be awesome from this spot.Mr Walker would not be drawn on the buyer’s identity.“They’re locals, not interstate, and in this sort of marketplace you’d would expect an FIRB buyer, but it’s not, they’re very much local hence the need for confidentiality.”He told the paper that “these people took six months to negotiate a position, it’s not a rushed decision”.last_img read more

Builder voted most trusted

Builder voted most trusted

first_imgThe GJ Gardener Coolum 262 display home at North Shore in Burdell.GJ Gardner Homes has been voted the most trusted builder by consumers three years in a row.The Townsville builder received a rating of 4.7 out of a possible 5-star rating from 214 reviews on ProductReview.com.au, making them the top-rated national builder among hundreds of builders that are tracked by the consumer opinion website.G.J. Gardner Homes Townsville owner Graham Chetland said they were proud to be part of a brand that has such a strong reputation among their clients. More from news01:21Buyer demand explodes in Townsville’s 2019 flood-affected suburbs12 Sep 202001:21‘Giant surge’ in new home sales lifts Townsville property market10 Sep 2020“Reputation is everything in the building game and these results show we’re doing the right thing by our clients,” he said.“We have built an environment of trust with new home builders, with a focus on delivering transparency, guaranteed build times, strong communication and fixed budgets.”Mr Chetland said G.J. Gardner Homes was constantly looking for new ways to make the design and building process easier for clients.“Last year we launched an Australian-first special immersive 3D tour experience for new home buyers, allowing them to virtually walk through homes and customise floor plans on screen. This has been a game changer, as it allows our clients to visualise what would be as close to the actual finish and build quality as possible.”ProductReview.com.au is Australia’s largest consumer opinion website and aims to help consumers make better purchasing decisions.The annual ProductReview.com.au Awards showcase the top performing products and services as rated by Australian consumers in the last 12 months. It receives approximately 35,000 reviews each month across 18 main categories and attracts over 4.5 million monthly visitors who are researching their next purchaselast_img read more