Month: September 2020

  • New PRI signatory Raiffeisen ‘remains committed’ despite defections

    first_imgAustrian asset manager Raiffeisen Capital Management (RCM), one of the most recent signatories to the UN’s Principles for Responsible Investment (UN PRI), still “believes” in the concept of the project despite the recent defections of ATP and five other Danish pension funds.RCM, a subsidiary of Austrian banking giant Raiffeisen, recently began implementing a sustainable investment strategy, for which it poached socially responsible investing (SRI) expert Wolfgang Pinner from competitor Erste Group, making him CIO of SRI from November.He previously worked at Erste’s sustainable investment subsidiary Vinis, which had joined the PRI in 2009.Pinner told IPE he was convinced the principles underpinning the PRI “make a lot of sense”, and that “it helps when a whole company commits to them”. But he also acknowledged that the principles had seen “major restructuring” in recent years, after changes were made to the PRI’s methods of assessing whether a company has complied with its criteria or not.“These changes were not ideal, perhaps” Pinner said. “Everything has to get back on track.”However, he stressed that RCM “remains committed” to the principles and pointed out that “there are not that many opportunities for a company to show this commitment”.In a statement on the signing, RCM chairman Mathias Bauer explained why his company had chosen to step up its ESG efforts.“We see increasing interest from clients – especially severance pay funds (Vorsorgekassen) and Pensionskassen – in such products,” he said.Pinner confirmed that, in many tenders, investors were looking specifically for managers that had signed the UN PRI, adding that, among his clients, the PRI had not suffered a loss of reputation.Bauer added that RCM’s move was part of a ‘corporate social responsibility’ focus within the overall group that had “grown in importance” in recent years.As a next step, RCM will be looking to launch funds – for individuals as well as institutions – investing according to ESG criteria.Pinner said his sustainability team was also aiming to incorporate the concept of sustainable investment “a bit more within all of RCM”.last_img read more

  • Dissatisfied MEPs give Jonathan Hill ‘second chance to convince’

    first_img“He failed to provide concrete answers on specific issues such as the capital markets union, shadow banking or the European deposit guarantee scheme, which is the last remaining component of the banking union. These issues are of the utmost importance for the Socialists and Democrats.“We will ask him to provide clarifications during an exchange of views with members of the economic and monetary affairs in the European Parliament.”German MEP Sven Giegold, a member of the Green Party, tweeted yesterday evening saying Hill would be invited to a new exchange with MEPs.In German, the MEP said Hill had received “nachsitzen”, the German word for school detention.During his confirmation, Dutch and UK parliamentarians urged Hill not to let the revised IORP Directive “become the next Solvency II”.The British commissioner-designate was repeatedly challenged over his links to the financial lobby and asked to clarify his view on regulation and how it could be perceived as hindering growth.Hill – handed the prestigious financial stability, financial services and capital markets union brief by European Commission president Jean-Claude Juncker – repeatedly stressed the need for transparency and said he would follow the example set by outgoing internal markets commissioner Michel Barnier in disclosing his meetings.Fielding a question by Giegold, who had previously criticised Hill’s nomination due to his past links to the financial services lobby, Hill insisted he was not a “representative of the City of London”.One parliamentarian from the UK later challenged Hill to guarantee the revised IORP Directive would not “become the next Solvency II”, while a Dutch MEP said her countrymen needed reassurance their pension system would not be subject to “far-reaching harmonisation” stemming from a belief that ‘one size fits all’ regulation should be applied to the financial industry.Hill said he believed the Commission was “taking a different approach” as far as IORPs were concerned, and was “very conscious” on the work needed to devise solutions that worked “in the interest of the greatest number of players”.On the matter of sustainability, a brief now handed to Justice commissioner-designate Vĕra Jourová, Hill nonetheless said that if companies were not acting in the long-term interests of shareholders “you end up with problems”.Other lawmakers voiced concerns that Hill’s remit to promote growth and investment would come at the expense of regulation.The former leader of the UK’s House of Lords, the country’s upper chamber, assured MEPs there would not be a “mindless bonfire of everything” and said it was a “false dichotomy” to see it as a matter of growth versus regulation.However, he insisted part of his role would be to identity any obstacles “standing in the way of the free flow of capital”, a matter that would be addressed through the proposed creation of the Capital Markets Union.The proposal for a more unified capital market, one of Juncker’s core pledges, has yet to be fleshed out, with Hill saying he did not yet have a “grand vision”, just weeks after his appointment.But he acknowledged it was a “project for all 28 [member states]”.The commissioner-designate did stand by Juncker’s proposed timeline for the launch of the union, by 2019, and said elements of it would be in place much sooner.He also said the European Long-Term Investment Fund (ELTIF) could potentially allow the Commission to incentivise investments in projects tackling climate change. Incoming financial markets commissioner Jonathan Hill has been called back to the European Parliament for a second hearing, in an unprecedented move and a potential blow to the UK government’s nominee.Hill, who endured a three-hour hearing yesterday in front of the European Parliament’s Economic and Monetary Affairs Committee (ECON), was criticised by MEPs for not providing enough detail in his answers.As a result, the UK Conservative Party peer will return to face the committee for another grilling.The Socialist and Democrat Party confirmed Hill would have to return and said while the party believed he could be a good commissioner, he was not convincing over the “content and priorities” of his portfolio.last_img read more

  • Mandate roundup: IPE-Quest, Sutton, M&G, Berkshire, RWC

    first_imgA German corporate investor is looking for an asset manager to oversee a $100m (€79m) bond mandate using IPE-Quest.According to search QN1462, the German client would appoint the best submission as a standby manager for one its current existing managers.The $100m high-yield US corporate bond mandate would be benchmarked against the Bank of America Merrill Lynch US non-financially constrained high-yield BB-B index, with investments hedged against euro currency risk.Interested managers should have at least $1bn in similar mandates and six years’ experience in managing portfolios, although a track record of 10 years would be preferred. Applications are welcome until 7 November, submitting performance data to the end of September.Meanwhile, M&G Investment Management has been hired by the London Borough of Sutton Pension Fund to manage an active bond mandate.The manager has replaced Aberdeen Asset Management.The divestment was completed by the end of the second quarter, according to minutes from Sutton’s pensions committee.The local authority scheme chose to invest 40% of the £74m (€92.3m) former Aberdeen mandate in M&G’s index-linked fund and the remaining 60% in its alpha opportunities fund.The mandate accounts for a significant chunk of the London council’s £431m in pension assets.Finally, the Royal County of Berkshire Pension Fund has appointed RWC to a new equity income mandate.The £100m award aims for the portfolio’s dividend growth to outstrip the UK rate of inflation.For any questions regarding the IPE-Quest search, please email [email protected] Queries will not be accepted after 16 October. For full information, please go to IPE-Quest.last_img read more

  • Technology company Philips warns of funding shortfall at pension scheme

    first_imgThe Philips scheme has, therefore, ruled out the possibility of indexation next year. Earlier this year, the pension fund announced that it would reduce its matching portfolio from 70% to 60% in favour of its return portfolio.Its new strategic liabilities portfolio is now 35% euro-denominated government bonds, with allocations of 5% each for global government paper (including UK and US bonds), global credit, mortgages, high-yield credit and emerging market debt.The Philips scheme’s new strategic allocation in the return portfolio consists of holdings in equity (28%), property (10%), commodities (1%) and cash (1%).Last summer, the pension fund’s matching portfolio was 62.5% euro-denominated bonds and 15% global bonds, credit and mortgages.The Philips scheme fell 0.2 percentage points short of its benchmark with its quarterly return.It attributed the underperformance to the fact it failed to adjust the benchmark on a daily basis when rebuilding its investment portfolio.It also pointed out that the combined effect of its interest and inflation hedges had shaved 0.1% from the previous quarter’s return.The pension fund did not provide specific return figures for the individual asset classes, saying only that its commodity investments produced a loss.Philips Pensioenfonds has 102,640 participants in total, of which 57,320 are pensioners and 14,175 are active members. The €17bn pension fund of Dutch technology company Philips has warned of an expected funding shortfall, due to the combined effects of a riskier investment mix, low interest rates and stricter accounting rules within the new financial assessment framework (FTK). Despite generating a 4% return over the last quarter, the scheme saw its funding fall by 4 percentage points to 113% in September, following further drops in interest rates, which are used for discounting liabilities.The scheme’s required funding level increased from 107% to 109%, and the pension fund said it expected further increases once it completed the restructuring of its portfolio. It also said it expected that the stricter rules of the new FTK – which will come into force on 1 January 2015 – would lead to an additional increase in the required funding, which could rise to 117%, it said.last_img read more

  • IPE Views: In praise of EIOPA

    first_imgIf an EU-wide HBS-based supervisory regime sought to drive capital requirements substantially in excess of those currently applicable through EU member states’ implementation of the 2003 IORP Directive, the natural result would be (even) fewer sponsors willing to provide DB pensions altogether. Not only would this kill off any cross-border activity, it would also reduce existing domestic provision. Incidentally, it would almost certainly crush the life out of any nascent “shared risk” arrangements in the UK, in much the same way as the mere “threat” of increased capital requirements has spurred sponsors to call into question the level of their existing promises.By contrast, if use of the HBS were confined to a risk management tool for those managing IORPs and/or national supervisors, then EIOPA envisages that the “fully funded requirement” will remain. In this case, the HBS would not help grow cross-border schemes. The best that can be said is that it would be no worse than at present.EIOPA: The listening supervisorSeasoned followers of EIOPA’s activities – not just for pension funds but also Solvency II for insurers – may, like me, find themselves struggling to equate Bernardino’s “we have listened, engaged and compromised” statements with past experience. Rarely have so many traditionally disparate voices been united in calling for an end to the project of seeking to impose an EU-wide solvency standard on pensions. In 2012-13, Business Europe, the European Trade Union Congress, PensionsEurope and other industry groups stated that solvency “harmonisation plans would have negative effects on the existence and adequacy of occupational pensions and the resources available for company investments in growth and jobs”. Yet EIOPA continues to push for just such an objective.As mentioned above, insurers have also experienced EIOPA’s ‘listening’ ways. In 2013, EIOPA undertook public consultations on proposals for “guidelines on the system of governance” and the “forward looking assessment of own risks”. In its final reports, EIOPA wrote: “The … regular stress-testing is another issue that respondents object to” but concluded that “stress tests and scenario analyses do, in EIOPA’s view, … determine how exposed the undertaking is to certain risks”. Similarly, despite the development of an “own set of key risk indicators” being “among the most opposed requirements”, EIOPA decided that “key risk indicators are an important monitoring tool”. Evidence of cases where EIOPA has listened, engaged and compromised is, in my view, rather more difficult to find.In praise of EIOPAIn light of the above, you may be puzzled by the title of this article. Well, despite the foregoing, EIOPA’s work on the first quantitative impact study and the proposal for the HBS has been a useful contribution to the debate on suitable risk-management and governance tools for pension funds providing defined benefits. My praise is in anticipation of EIOPA truly listening to stakeholders in future and deciding that its contribution to the debate is sufficient and that national supervisors and individual member states can decide how best to take matters from here.Mark Dowsey is senior consultant at Towers Watson in its UK office, focusing on pension regulatory issues across the EU Towers Watson’s Mark Dowsey offers some rather qualified praise for EIOPA’s efforts to dateI’ve read recent IPE articles quoting the European Insurance and Occupational Pensions Authority (EIOPA) chairman, Gabriel Bernardino, with great interest. Two leapt out at me, as the titles did not seem to accord with my experience – HBS best way to grow cross-border schemes, says EIOPA and Interview, Gabriel Bernardino: We are listening.I have not heard anyone argue, with the exception of some within the European Commission, that the introduction of the holistic balance sheet (HBS) will lead to an increase in the number of cross-border pension funds. Moreover, in a speech in June 2012, Bernardino presented a slide that showed stakeholders’ views as to the obstacles to cross-border activity. The ‘full funding’ requirement ranked only fourth – with social and labour law, tax regimes and even lack of demand outweighing the full funding issue.I would not deny that the inclusion of “fully funded at all times” in the first IORP Directive is a hindrance to the consolidation of defined benefit (DB) pension funds. Such consolidation is attractive, in particular to multi-national companies. However, the conclusion that this would be solved by introducing the HBS is wrong for the reason set out below.last_img read more

  • Vontobel makes inroads into UK with TwentyFour AM stake

    first_imgTogether, the pair now has £12bn (€16.3bn) in fixed income assets under management.TwentyFour, created in 2008, will still be managed by its existing partners, who retain full authority over investment decisions, as the brand also remains untouched.The founders, partners and key staff, Vontobel said, retain the remaining 40% share of the company, although this will gradually be passed over to the Swiss firm.Head of Vontobel AM Axel Schwarzer said: “The acquisition will set a strong foundation for Vontobel Asset Management’s further growth in the UK, which is one of the most important asset management markets.”Mark Holman, chief executive at TwentyFour, added: “This represents a significant step in the evolution of TwentyFour, providing a one-off opportunity to achieve our goals and vision, without compromising on our boutique approach.” Vontobel Asset Management has taken a 60% stake in London-based TwentyFour Asset Management as the Swiss firm begins its international expansion after being spun off from its parent last year.Multi-boutique Vontobel AM is the investment arm of the Swiss bank of the same name, which spun off the business into a separate entity in December to increase its international competitiveness.It has now boosted its UK presence by taking a majority stake in TwentyFour AM, an independent fixed income manager with both an institutional and retail presence.Vontobel said the all-cash deal strengthened its UK presence and added to its fixed income offerings, providing excellent opportunity to grow both companies.last_img read more

  • VER returns 7.4% over first quarter on back of listed equities

    first_imgVER, the Finnish State Pension Fund, returned 7.4% on its investment for the first quarter of 2015, thanks to the performance of listed equities.The asset class, which makes up 40.3% of the pension fund’s portfolio – valued at €18.7bn as at 31 March – returned 16.7% over the first three months of the year, compared with 1.4% for the same period in 2014, and 11.7% for calendar year 2014.The overall performance takes the average rate of return for the past 10 years to 5.9%.Maarit Säynevirta, acting managing director at VER, said: “In early 2015, the yields on investments grew considerably – the return on equities was particularly excellent. “Both in equities and fixed income instruments, the positive market developments were boosted by the reflationary monetary policies adopted by the central banks.”But he warned: “In the future, low general interest rates will pose major challenges in terms of investment returns.”Fixed income returned 1.8%, improving on the 1.5% returned in the first quarter of 2014.The return for 2014 as a whole was 4.9%.The asset class makes up 50% of the portfolio, virtually the same as at the end of 2014.The first-quarter return from alternatives – now 6.9% of the portfolio – was only 0.8%, compared with 1.1% for the same period in 2014.VER said: “The best returns were earned by private equity and real estate funds, which both yielded a positive result. The strong equity market contributes to earnings in private equity investments.“With the low interest rates stepping up investor interest in real property, the positive mood has continued to prevail in the real estate market during the first part of the current year.‘Other investments’, which make up 3% of the portfolio, returned 0.9%.VER said, within this asset class, the absolute return funds returned 3.3%.It added: “Of these funds, the best performance was put in by macro funds that benefited from trends that had already started in 2014, such as the strengthening US dollar.“Credit spreads were reduced further while the first few months were difficult, particularly for distressed funds.”last_img read more

  • Reforms risk ‘political micromanagement’ – AP funds

    first_imgThe article branded the proposed governance structure “unclear and bureaucratic”, warning that oversight of the funds would shift from Sweden’s Parliament to the government.“The proposals to establish a National Pension Fund Board and the ability for the government to have an influence will mean that power over the AP funds will shift from Parliament to the government and present the prospect of short-term political micromanagement,” they said. “The fact the current government does not plan to make use of this ability has no bearing on what future governments may do.”The funds also argued that savings of SEK50m identified in the cross-party reform proposal published by Pensionsgruppen would be overshadowed by the cost of reorganising the funds into three entities.This cost, they said, will take “several generations” to recoup.The potential two-year timeframe of the restructure also risks the funds “[losing] their focus on long-term asset management”, impacting returns.They noted that, even if returns are 0.1% lower than without the overhaul, it would come at a cost of SEK1.2bn.“Those of us who have been tasked with managing the AP funds’ capital responsibly for the benefit of current and future pensioners, with the pension system facing significant challenges over the next 15-20 years, believe the proposed new rules for the AP funds will not lead to better pensions – quite the contrary,” they said. The article, signed by Johan Magnusson, Eva Halvarsson, Kerstin Hessius and Mats Andersson, managing directors of AP1-4, as well as the the funds’ respective chairs (Urban Karlström, Marie Arwidson, Pär Nuder and Monica Caneman), concluded: “This proposal therefore cannot form the basis for a reform of the AP funds.”It is not the first time the AP funds have criticised the reform proposals.Mats Langensjö, chairman of the 2012 Buffer Fund Inquiry, previously warned that the government’s reforms would see the funds deploy a passive, index-tracking portfolio over time.The Confederation of Swedish Enterprise also warned that the reforms could be “seriously detrimental” to the stability of the system.,Supporting documents Click link to download and view these files English version of opinion piece on AP Fund reformPDF, Size 93.9 kb Proposed reform of Sweden’s SEK1.2trn (€126bn) buffer fund system increases the risk of political micromanagement and lower overall returns, and cannot form the basis of an overhaul of the funds, according to senior management at the four main AP funds.The proposed changes – which would see private equity fund AP6 merged with AP2, control over investment in unlisted assets transferred to a single fund, and the closure of a second, unnamed AP fund – could also undermine the remaining three funds’ authority to invest as they see fit.It was also alleged that the changes would see the funds shift towards a low-yield index-tracking investment strategy, in addition to the offloading of domestic Swedish holdings and a shift away from real estate and infrastructure due to the use of a reference portfolio to guide investment strategy.In a combative opinion piece for Swedish daily Dagens Nyheter, the chairs and managing directors of AP1, AP2, AP3 and AP4 argued that the current regulatory framework had worked well, allowing funds to achieve high returns at low cost while investing in long-term assets and considering ethical matters.last_img read more

  • Friday people roundup

    first_imgPenSam, Allianz, Prudential, Caisse de dépôt et placement du Québec, Invesco, Spence & Partners, JLT Employee Benefits, LawDeb Pension TrusteesPenSam – Torsten Fels, director and the other half of the two-person management team at PenSam Group, is to succeed Helen Kobæk as chief executive. Kobæk, the longstanding chief executive of the Danish labour-market pension provider, is to retire in July after almost 31 years leading the business. Benny Buchardt Anderson, PenSam’s investment director, is to succeed Fels as director.Allianz – Jacqueline Hunt is to take over responsibility for Allianz’s asset management and US life insurance businesses, succeeding Jay Ralph, who is leaving to devote more time to his family. Separately, Günther Thallinger will assume responsibility for investment management, as well as Global Life and Health, from Maximilian Zimmerer, who will retire. Thallinger currently serves as chief executive at Allianz Investment Management.Caisse de dépôt et placement du Québec – The Canadian pension fund is to open an office in Delhi, committing $150m (€136m) to renewable energy investments in India. Marangoly Anita George will head the Indian office. She was previously senior director of the World Bank Group’s global practice on energy and extractives. Before then, she was director of infrastructure and natural resources at the International Finance Corporation, a member of the World Bank Group and head of Siemens Financial Services in India. Invesco – Henning Stein has been appointed head of institutional marketing for the EMEA region. Henning, based in Zurich, joins from Deutsche Asset Management, where he headed up EMEA marketing for the Active business and the company’s academic foundation.Spence & Partners – Hugh Nolan has been appointed as director. He joins from JLT, where he was chief actuary. He also sits on the Council of the Society of Pension Professionals and is chair of the DC committee of the Association of Consulting Actuaries.JLT Employee Benefits – Phil Wadsworth has been appointed chief actuary. He previously held the role of chief actuary from 2003 to 2013. He takes over from Hugh Nolan, who has joined Spence & Partners as director. Separately, Andrien Meyers has been appointed as a senior investment consultant. He joins from the London Borough of Lambeth, where he was treasury and pensions manager.LawDeb Pension Trustees – David Curtis has joined the trustee director team, joining from Standard Chartered Bank, where he was pensions and benefits group head. Before then, he was responsible for pensions at Alstom and Siemens UK.last_img read more

  • Veolia trustees appoint Schroders to fiduciary management mandate

    first_imgSchroders has been appointed to a £880m (€1bn) fiduciary management mandate by Veolia UK Pension Trustees Limited.The mandate is for the company’s largest defined benefit pension schemes. Veolia is an energy, water, and waste management firm.Robert Hunt, chairman of Veolia UK Pension Trustees Limited, said: “The Veolia Trustees look forward to a rewarding partnership with Schroders in the management of the pension scheme assets and our overriding aim of reducing both risk and deficit in the schemes.“The professionalism demonstrated by the Schroders team has been a source of great encouragement for the Trustees.” Consultants LCP facilitated the tender process.Schroders will provide investment strategy advice and implementation. It transitioned the assets to the new investment arrangements during the first quarter of 2017.Peter Harrison, group chief executive at Schroders, said: “We are delighted to have been selected to manage the Veolia pension schemes’ investment strategies in a fiduciary management arrangement.“The trustees have adopted a new governance framework that enables swifter decision-making with a specific focus on managing pension fund deficit risk.”last_img read more