Institutional investors to cut risk exposure with shift into value

first_imgInstitutional investors will look to reduce their exposure to risk assets throughout 2015 with shifts towards value investments and real estate strategies, research shows.A survey of 642 global institutional investors by Natixis Global Asset Management, including 345 pension funds, estimated that approximately 38% would reduce allocations to riskier assets, while 41% would move towards value products.However, net investment towards to asset classes showed income-generation strategies and real estate were most popular, despite the outlook for equities being the most positive.Respondents’ outlook on equities was very optimistic, with global, US, emerging market and private equity all tipped to be the top performing asset class by more than one-tenth of respondents. However, investors are expected to seek value strategies over growth, with net investment into these strategies at 22% and 13%, respectively.Investors also grew in confidence over meeting their total-return objectives, as 22% said this would not be difficult, compared with 12% in 2013.Some 42% of respondents also said inflation would not be a difficult challenge in 2015 compared with 35% a year previous.Despite expected interest-rate increases in the US and UK economies over 2015, and the scaling back of quantitative easing in fixed income markets, only 18% said they expected significant difficulty.Some 61% said they would reduce bond duration in portfolios to mitigate any increase in interest rates, while 46% said they would reduce overall fixed income exposure. One-fifth of respondents said they would hold on to large cash positions.Natixis said: “Given that today’s low-interest-rate environment comes at the culmination of a 30-year period of declining interest rates, it would appear institutions have had a long time to prepare for a reversal of course.”Eighty-seven percent of investors said they would meet long-term obligations, yet more than half (52%) said they did not believe their rivals would be capable of doing the same.While 43% expected equities to lead the way in 2015, some 28% said alternative asset classes would perform best.Euan MacLaren, head of UK/Ireland institutional business at Natixis, said: “Institutional investors clearly forecast a strong 2015 for the stock market, but, to make the most of this expected growth, they should be looking at smarter ways to access the asset class.”last_img read more

Hedging, return-seeking portfolios boost returns at France’s FRR

first_img“[The 8.2% return] resulted from a renewed fall in interest rates, and was not expected after the marked fall in interest rates and corresponding increase in the market value of bonds observed in 2011 and 2012,” FRR said.More than four years since FRR began annually contributing €2.1bn to Cades, a French government organisation to manage social debt, the fund has returned 6.1% on an annualised basis.The fund said it also continued its strong commitment to the French economy and, over 2014, a further €300m into small and medium French equities, and an additional €120m in loans, taking the total to €300m.By the end of the year, it held more than €2.2bn in French listed equities, €170m in private equity and €1.3bn in French corporate bonds.It also increased its allocations to low-carbon indices to more than €1bn and reaffirmed its commitment by making regular assessments of its carbon footprint with the equity portfolios.In September, the fund announced it, alongside Swedish buffer fund AP4, worked with index provider MSCI to develop a new low-carbon equity index.The MSCI Global Low Carbon Leaders index is based on the firm’s existing All Country World index and seeks to take into consideration carbon emissions and fossil fuel reserves.It also concluded a nine-month search for asset managers in a slight overhaul of its strategy, appointing nine companies across a range of asset classes. Fonds de Réserve pour les Retraites (FRR) achieved a 8.75% return over 2014 with strong performance in its return-seeking and hedging portfolios.The French pension system reserve fund now has around €37bn in assets, an increase of €900m over the year despite paying out around €2.1bn in commitments.The €3bn return, it said, was driven largely by the 9.8% generated by its return-seeking assets, which account for roughly 44.2% of the fund and are mainly invested in European and global equities.FRR’s hedging assets, accounting for majority of the fund, returned 8.2% – with a third of total assets invested in French government bonds.last_img read more

Swiss pension fund tenders corporate bond mandate using IPE Quest

first_imgAn undisclosed pension fund based in Switzerland has tendered a CHF40m (€36.4m) corporate bond mandate using IPE Quest.According to search QN-2185, managers of the active mandate should measure performance against the Swiss Bond Index SBI Total A-BBB, although there are no tracking-error guidelines.Neither does the client have any requirements for minimum assets under management.The client will accept both Swiss and foreign public and private issuers. Asset managers should have a track record of at least one year – and preferably three years.Interested parties should state performance, gross of fees, to the end of March.The deadline for submitting questions is 10 May, while the final closing date is 13 May.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]last_img read more

UniCredit considers Pioneer IPO after Santander merger cancelled

first_imgPioneer Investments and Santander Asset Management are no longer set to merge, after Pioneer’s parent UniCredit ended talks with the Spanish banking group.The merger plans – first revealed in late 2014 – were abandoned despite an agreement’s being signed last November.In a statement to the Milan stock exchange, UniCredit said: “The parties held detailed discussions to identify viable solutions to meet all regulatory requirements to complete the transaction, but, in the absence of any workable solution within a reasonable time horizon, the parties have concluded that ending the talks was the most appropriate course of action.”The statement went on to say that, as part of a group-wide strategic review announced earlier this month by new chief executive Jean-Pierre Mustier, Pioneer’s future would also be considered. It added that a listing of the asset manager was now possible.Explaining its thinking for listing Pioneer, UniCredit said: “This is to ensure the company has the adequate resources to accelerate growth and continue to further develop best-in-class solutions and products to offer its clients and partners.”This is not the first time UniCredit has failed to sell Pioneer, which had €224bn in assets as of the end of last year.It saw the collapse of a sale to French asset manager Amundi during the euro-zone crisis.A number of other bidders were said to be interested in the manager before UniCredit began exclusive talks with Baco Santander, the asset manager’s parent.The other bidders were reportedly from the private equity space, including Advent International and a group including CVC Capital Partners and Singapore sovereign fund GIC.last_img read more

Lawyers: Pension funds must increase efforts to reclaim damages

first_imgHe also contended that the largest companies usually only listened “when they become aware that it is not only a matter of barking”.As an example, the lawyer cited the emissions scandal at Volkswagen. G&E represents more than 600 investors in a class action in the US, including more than 40 Dutch pension funds, asset managers, and insurers.He said investors were unfamiliar with the legal options for reclaiming damages and suggested that pension funds draw up a policy to be ready when a new case arises.Referring to a similar emissions scandal at Mitsubishi, Warringa said that Japan would be also a good place to bring a case, adding that he expected more “diesel cases”.According to the lawyer, pharmaceutical firms that suddenly multiply the price of products could also be subject to claims by shareholders who lost out.G&E is also active in the case against Brazilian state-owned oil company Petrobras, engulfed in a large corruption scandal.In Warringa’s opinion, while there were 10-15 Dutch pension funds currently participating in legal action, the number could be much higher.“Schemes that have incurred damage should look at it,” he said.Also during the congress, Jeremy Lieberman, co-managing director of US law firm Pomerantz, echoed that pension funds should have a procedure in place for analysing potential claims, deciding what the trigger level would be, and how they will take action.He said that more than $5bn (€4.5bn) of class action settlements had become available in the US last year and that the amount had totalled “dozens of billions” over the past decades.According to Lieberman, reclaiming damages is also becoming more important in Europe “as investors notice that it is effective”. His company has set up a European office in Paris recently. Pension funds must become more assertive in reclaiming damages caused by companies in which they are invested behaving improperly, legal experts have argued.During the annual congress of IPE’s Dutch sister publication PensioenPro in Amsterdam, Guus Warringa of US law firm Grant & Eisenhofer (G&E) said schemes could earn “decent money” from reclaiming damages.“The money is available, and if you don’t grab it, somebody else will,” he said. “Moreover, it is good for the implementation of the ESG principles.”Warringa emphasised that ESG criteria was becoming increasingly important, with new generations of investors more focused on sustainability and climate issues.last_img read more

UK government sets out rules for DC master trusts

first_imgThe rules would apply to major master trusts such as The People’s Pension, the National Employment Savings Trust, TPT Retirement Solutions and others run by several financial services giants including Legal & General and Willis Towers Watson.New entrants after the act comes into force in October 2018 would be subject to a one-off authorisation fee of up to £24,000, payable to TPR, the consultation document said. Defined contribution (DC) master trusts could have to pay up to £67,000 (€76,000) to become authorised under a new UK regulatory framework set out by the government this week.The Department for Work and Pensions (DWP) yesterday published its draft regulations for the burgeoning master trust sector, as part of the Pension Schemes Act 2017. The new rules would grant the Pensions Regulator (TPR) the authority to authorise and de-authorise master trusts.Master trusts have grown in popularity since the introduction of auto-enrolment. The requirement for all employers of all sizes to provide a pension scheme has meant thousands of small businesses outsourcing their pension provision to such trusts.The rules for master trusts have been designed to ensure the individuals operating such schemes are “fit and proper” and that the schemes themselves are financially sustainable, effectively run and with an “adequate continuity strategy”. Guy Opperman speaks at the PLSA conference in October 2017Guy Opperman, government minister for pensions and financial inclusion, wrote in his introduction to the consultation: “Anyone who has heard me speak will know that I am passionate about automatic enrolment and that, in my view, auto enrolment must work for savers and employers alike. To support this, there must be trust and confidence in the pensions system.“The authorisation and supervisory regime introduced by the Pension Schemes Act 2017 will ensure that the over 7m people saving for their pensions through master trust schemes will have equivalent protection to members of other pension schemes.”What the industry saidMark Baker, pensions legal director at law firm Pinsent Masons, said it was “essential” the DWP got the regulation of master trusts correct, but highlighted that TPR had not so far dealt with a “detailed supervisory regime”.“From a political perspective, it would be an own goal if a lower bar for review were set for new entrants”Darren Philp, The People’s Pension“It’s much more like the [Financial Conduct Authority] style of regulation, hard-hitting when something goes wrong,” Baker said. “It will take a lot of work for the Pensions Regulator to get to know the providers and trusts it’s supervising.”Tim Gosling, policy lead for DC at the Pensions and Lifetime Savings Association, said: “We and our master trust members have been working closely with DWP over the last year on the development of the regulations. Over the coming weeks we will work further with the department to help ensure that the final rules are workable and proportionate.”Darren Philp, director of policy at The People’s Pension, raised concerns about the cost of authorisation.“The regulation states that the principle for charging is cost-recovery,” he said. “If this is the case then why do we need two different caps, since there is nothing to stop the regulator charging a new entrant the actual costs of authorisation?“We would argue that the same rigour and assessment needs to be in place on existing and new master trusts. We might also expect initial supervisory costs of new master trusts to be higher as they should be required to demonstrate to the regulator that they are implementing systems that actually work.“From a political perspective, it would be an own goal if a lower bar for review were set for new entrants, as the political impetus behind the Pension Schemes Act was driven by the entrance of low-quality, under-capitalised and potentially fraudulent schemes.”center_img The proposed authorisation fee for existing schemes could be more than twice this figure: the DWP has proposed an upper limit of £67,000.The exact maximums are yet to be agreed, the DWP said.“Two fees have been chosen because it is expected that, on average, the work involved in processing an existing master trust application will be substantially higher than processing a new application, requiring a higher fee,” the consultation stated.“The reasoning for this includes, for example, the regulator’s intention to have higher engagement with existing master trust schemes, reflecting market risk, known issues and the greater likelihood of additional information being required during the processing window.”Strategists and trustees working on master trusts will be subject to suitability tests to judge individuals’ knowledge, understanding and experience.Scheme providers will also be required to have sufficient resources to cover the costs of setting up and running a master trust and to resolve events that “could have a significant impact on a master trust scheme’s ability to operate”.The consultation is open until 12 January 2018. The full document is available here.In July NOW: Pensions, one of the largest master trust providers in the UK, withdrew itself from TPR’s “assurance list” of auto-enrolment providers because of problems relating to processing contributions for some of its clients. TPR had been reviewing the provider’s inclusion on the list due to concerns about the governance and administration of the scheme.TPR said in a statement that it had “long called for much stricter regulatory controls” for master trusts as there were “very low” barriers to entry for new providers.Nicola Parish, executive director for frontline supervision at TPR, said the regulator would consult on a code of practice early in 2018 to outline how authorisation would work.last_img read more

UK watchdog proposes reforms to at-retirement market

first_img“The market is still evolving, and it will be some years before most people are primarily reliant on a DC pot for their retirement income. We have identified harms and emerging issues that we are keen to address promptly, so the market is on a good footing for the future.”Flexible drawdown options have become significantly more popular in the UK following the introduction of pension freedoms in 2014, which removed the requirement for DC savers to buy an annuity at retirement.Drawdown products allow pensioners to remain invested post-retirement, but the FCA said weak competition and a lack of product innovation had led to expensive and complex charging structures. It also expressed concern that a third of those who opted for drawdown without taking advice were invested entirely in cash.“Holding funds in cash may be suited to consumers planning to drawdown their entire pot over a short period,” it said, “but it is highly unlikely to be suited for someone planning to draw down their pot over a longer period. We estimate that over half of these consumers are likely to be losing out on income in retirement by holding cash.”The FCA has proposed the introduction of “wake up” packs to be sent to DC savers at age 50, and again every five years until DC pots are withdrawn. These packs would include details of the options open to retirees, as well as risk warnings and fee information.It also proposed offering all UK savers three investment “pathways” to help them choose how to access their savings. These would be based on whether an individual wanted to remain invested for a long period, to access cash over a short period, or to have a steady income in retirement.The FCA’s full report is here, and its consultation paper regarding its proposals is available here. The consultation is open until 6 September.‘A step in the right direction’ Chris Knight, CEO of Legal & General’s retail retirement arm, said the regulator’s findings “raise the question of whether we’re all prepared to make hard choices about how we access our pension pots”.“A growing number of people are reaching later life without taking advice or even guidance to help them make informed decisions, and many are continuing to take what the FCA describes as the ‘path of least resistance’,” he said.Knight added that savers would also be supported by the government’s proposed pension dashboard, while providers needed to support the UK’s advice market for individuals, including improving the provision of retirement guidance.Lee Hollingworth, partner at consultancy Hymans Robertson, said: “The industry needs to start viewing drawdown as a service, not a product. We need personalised solutions that work towards an individual’s goals.“The FCA’s proposal of investment pathways to get people into appropriate funds based on duration of investment is a great step in the right direction. Investments should be aligned to goals and provided at low cost.”Hollingworth expressed disappointment that the FCA had not introduced a charge cap for drawdown products, similar to the 0.75% annual limit imposed on workplace DC pensions.In its report, the FCA said charge caps remained “an option”, but admitted that it did not know what the appropriate price limit for drawdown would be. It has advised firms to use 0.75% as a “point of reference” and said it would review charges one year after implementing its “pathways”.Andy Tarrant, head of policy at The People’s Pension, one of the UK’s largest workplace DC providers, said: “Deciding what to do with your pension savings remains one the most important financial decisions that people will ever make, and the FCA’s report is a welcome and considered look at how to protect savers and support them to make better choices.” The UK regulator has proposed reforms to the at-retirement market to help consumers decide how to use their pension savings.The Financial Conduct Authority’s (FCA) Retirement Outcomes Review, published today, found that a third of retirees that had chosen drawdown instead of an annuity for their pension income did not know where their money was invested.Retirees also failed to shop around for different options for withdrawing their defined contribution (DC) pension savings, meaning many had defaulted into products that were more expensive or less suitable, the FCA said.The regulator stated: “Preventing poor outcomes in the pensions and retirement income market is an important priority for the FCA.last_img read more

AP2 dumps tobacco and nuclear firms in fresh ESG approach

first_imgSweden’s AP2 has blacklisted around 60 tobacco companies and all firms involved with the modernisation and maintenance of nuclear weapon systems.The SEK334.8bn (€31.5bn) fund – the second of Sweden’s four main state pension buffer funds – announced the changes to its portfolio as part of a decision re-evaluate its approach to the “underlying purpose” of international conventions.The fund said in a statement: “AP2’s sustainability work is based on the conviction that it leads to an improved management return, thereby making a positive contribution to the Swedish income pension system and for pensioners.”The fund said that, in line with the requirements of new investment rules regarding sustainable asset management that came into effect on 1 January, it had analysed the conventions aimed at restricting the use, scope or distribution of certain products or businesses over time. “The fund has evaluated the need for a changed approach based on the underlying purpose of the international conventions,” it said.AP2 said its divestment from tobacco companies was in line with the World Health Organisation Framework Convention on Tobacco Control, which targets a sharp reduction in tobacco consumption and the harmful effects of tobacco smoke.“Divestments from companies that are involved both in the maintenance and modernisation of nuclear weapons systems are aligned with the intention of long-term disarmament of nuclear weapons in all countries as expressed in the Non-Proliferation Treaty (NPT),” the Gothenburg-based pension fund said.AP2 said it had previously excluded nuclear weapons companies operating in countries that are not allowed to have them, according to the NPT.According to the new legislation, the buffer funds must manage their assets “in an exemplary way” through responsible investments and responsible ownership.last_img read more

​LD turns to active quant for first time, launches tender worth €134m initially

first_imgThe quantitative process must be “an active, systematic stock selection process based on multiple proprietary signals that forecast equity returns,” LD Pensions said in the notice.The intention was to generate alpha, it said, adjusted for academically-tested factors such as value, size, momentum, low-volatility and quality.The product had to be provided as a segregated mandate, it said, and be tailored to the needs of LD Pensions by incorporating its exclusion list, tracking error and other restrictions.It either had to be run as a global all-country product, or as a combination of a global developed markets product and a global emerging markets product, LD Pensions said, using the same quantitative model and investment process, with a close to neutral weighting of the two products versus the MSCI All Country benchmark.The mandate is long-only, with a four-year duration and the ability for it to be renewed for one year up to three times, according to the tender notice.LD Pensions is looking for just one manager, with the deadline for requests to participate set at 3 March.Fabricius Birch also said: “We have invested in a smart beta fund a couple of years ago and are close to announcing the manager for our smart beta mandate to replace that fund.” Danish pension fund manager LD Pensions has launched a tender process for a global active quantitative equities mandate for an initial amount of around DKK1bn (€134m), to be invested actively in both developed and emerging markets.In an EU tender notice, the Copenhagen-based firm said it was important the product offered had at least €500m of available capacity at the time of signing the deal, even though it was unable to say in advance how much the mandate would be for.LD Pensions – which runs an older scheme based on cost-of-living allowances granted to workers in the late 1970s while preparing to manage a holiday allowances fund of up to DKK100bn – told IPE this was the first time it had allocated money to active quant equity.Kristoffer Fabricius Birch, LD Pensions’ head of equities, told IPE: “The allocation will likely be around DKK1bn from our old fund but it will increase once we get the new holiday allowance fund inflow.”last_img read more

Inner City interiors transformed and heirlooms live again

first_imgVirginia De Luca, interior designer at home in her favourite room at West End 15th May 2018. My Favourite Room. Photo AAP/ Ric FrearsonHomes and apartments in Brisbane’s inner blue-chip suburbs are being transformed into modern masterpieces with the use of trendy architecture and design influences. Newstead Interiors’ Tennyson apartment project.Husband and wife duo, architect Ric De Luca and Virginia, an interior designer, said more homeowners were keen to modernise their living spaces with the use of patterned wallpaper and antique furniture, with heirlooms being brought back to life.Many of their projects include heritage homes in need of a facelift. Newstead Interiors’ Teneriffe apartment project.With no job too big or too small for the De Lucas, they had a crane deliver a smoky green granite stone top from Brazil, measuring 2.4m x 1.5m, into the apartment.“The benchtop was the inspiration for the colour scheme in the living space,” he said. “A stunning custom-made rug which was 8.6m x 3.6m, created a foot plate for the living dining area. We used existing pieces, stripping back furniture to its original glory and rebuilding and incorporating them with new pieces which were classic and contemporary.”Mrs De Luca said heirlooms needing some TLC could be stripped back, rebuilt, repolished and reupholstered.Mrs De Luca worked for several years in Designer Guild’s London HQ and served clients such as Bob Geldof and Def Leppard’s guitarist Steve Clark. Newstead Interiors’ Teneriffe apartment project.Most of their clients are within Brisbane’s 5km radius, and the couple, who have more than 50 years’ combined experience in architecture and design, have worked on homes in suburbs including Ascot, West End and Hamilton, and apartments in Tennyson and Teneriffe. Newstead Interiors’ Tennyson apartment project.“We look at pieces they have had for years which have great sentimental value and see how we can incorporate some of these into their new home,” he said.“We have access to a team of artisans who we use to bring these pieces back to life and allow them to sit within a contemporary apartment along with the new furniture which we have made or sourced to complete the clients new home.”Mr De Luca said their latest inner-city project included revamping a large apartment’s kitchen and living area. He said the clients had lived there for a number of years and were ready for a change. center_img Virginia De Luca said wallpaper can transform a room, just like at this Hamilton project.Newstead Interiors is an agent for exclusive and exquisite fabric ranges including Designers Guild, Ralph Lauren, William Yeoward, Christian Lacroix and wallpapers from Cole & Son. Mr De Luca said many of their clients were moving from their family homes into inner-city apartments and looking to create a segue into the next stage of their lives. “You can use digitally printed wallpaper to create contemporary landscapes, themed areas right through to traditional archival prints which have been hand blocked in contemporary colours or classic tones.” Newstead Interiors’ Teneriffe apartment project.More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours agoMrs De Luca said together they bring a love of interiors and a great pride in delivering a space that reflects their clients’ individual personality.“Wallpaper can transform a room. It provides texture and pattern, colour and depth. There are endless possibilities with wallpaper,” she said. >>FOLLOW COURIER-MAIL REAL ESTATE ON FACEBOOK<< last_img read more