German institutionals’ hands tied on risk increases, survey shows

first_imgMany German institutional investors are keen to increase risk in their portfolios but feel their hands are tied, according to a recent survey by Feri.While German insurers and banks have held their bond exposure – both government and corporate debt – at roughly the same level over the last two years, pension funds have decreased theirs from 68.3% to 56.1%.This is well below the average for the institutions surveyed by Feri for this year’s biannual securities survey of nearly 140 institutional investors, including 24 insurers, 47 Pensionskassen, Versorgungswerke or company pension funds, 55 banks and 12 foundations.Overall, 78% of the respondents’ €770bn in combined assets remained invested in bonds. Christian Michel, who heads the funds team at Feri, told IPE that German insurers and banks wanted to reduce their bond exposure but felt “confined” by current regulations.He noted that, while overall equity exposure in the 2013 survey dropped slightly compared with 2011, from 6.6% to 5.8%, pension funds increased theirs from 8.9% to 14.3%.Similarly, pension funds increased their exposure to alternatives slightly from 3% to 4.3%, but Michel denied this represented a major shift in absolute terms, as pension funds account for just €1.5bn of the assets in the survey, compared with the €23.4bn managed by insurers.“Those institutions that went out of [Portugal, Ireland, Italy, Greece, Great Britain and Spain] after the crisis have mostly undertaken a larger portfolio restructuring to include corporates and infrastructure and increase their equities allocation,” he added.Over the next two years, survey respondents are planning to reduce their exposure to government bonds by another 0.6%, which would amount to a shift of about €1bn.Further, real estate is to be increased by 5.3% to around 10%. Exposure currently stands at around 6% on average.“There is further restructuring ongoing,” Michel said, adding that, with the shift away from bonds, some investors are also looking for new risk-management tools similar to those used by their peers in the UK and the US.However, 60% of respondents, when asked whether they were using risk budget or risk-parity models, said the models still had “no relevance” for their portfolios.But Michel pointed out that the rest were already using them, or about to introduce such models – which he said represented a much larger share than in previous surveys.The survey also showed that German institutions are looking increasingly for specialisation in a manager, and that smaller boutiques are in high demand.Some large asset managers such as Deutsche Asset & Wealth Management or Credit Suisse failed to make it into the Top 10 for “corporate quality”, as ranked by the surveyed institutions. The Top 10, according to Feri, mainly comprised smaller providers, apart from Pimco.In the portfolio management category, UBS AM and Fidelity made the top ranks as large players, Michel said.last_img read more

LAPFF challenges bus operator over human rights

first_img“Employees who feel their rights are respected, and are offered a good deal by their employer, are more likely to stick by the company and do a good job,” he added.“We’re not convinced National Express is getting this right currently, and we are filing this resolution so shareholders can give the board a clear mandate to address these risks to the value of the company and its sustainability.”His views were shared by Ken Hall, general secretary of the union.“The problems at National Express in North America are systemic and longstanding, and the board’s inaction has gone on long enough,” he said.Hall said “poor morale” was festering among board members and increasing safety risks “in an industry where safety is most critical”.The three LAPFF members backing the motion jointly hold 3m shares in National Express. A group of UK local authority funds has backed a call for transport group National Express to address “systemic and longstanding” issues with its human capital management procedures.Three of the Local Authority Pension Fund Forum’s (LAPFF) members – the £12.4bn (€14.6bn) Greater Manchester Pension Fund, the London Borough of Islington scheme and the fund of Nottinghamshire County Council – are co-sponsoring a resolution drawn up by the US-based International Brotherhood of Teamsters that calls for changes to the UK-listed firm’s policies.It calls for the company’s board to “expand the role and responsibilities of its Safety and Environment Committee” and adopt what a joint statement by the union and LAPFF deems a “meaningful and enforceable” human rights policy.Kieran Quinn, chairman of the Greater Manchester Pension Fund and a councillor in Tameside, said: “LAPFF members are long-term investors and believe that effective management of human capital is crucial to delivering sustainable returns.last_img read more

Croatian roundup: ‘more professional’ UMFO, highways monetisation

first_imgCroatia’s Association of Pension Fund Management Companies and Pension Insurance Companies (UMFO) has re-launched on what it describes as a more professional footing, including permanent staffing.The association, a member of PensionsEurope, has hired Dijana Markoja, formerly of Erste Bank in Zagreb, as director.The current president is Dubravko Štimac, president of the management board of the PBZ Croatia Osiguranje Mandatory Pension Fund.At a press briefing, Markoja cited market research that showed a relatively high (41.7%) level of dissatisfaction with the current pension system. Attitudes towards the second pillar vary, with a significant 30.7% wanting the contribution rate (currently 5%) increased at the expense of the 15% first-pillar rate, while 17.3% want the reverse, and a further 6.8% would abolish the second pillar altogether.Those with higher education, professional jobs and high incomes are more favourably disposed to the second pillar than the less-well educated, elderly and low waged.Given that many workers do not consider retirement planning, the UMFO will shortly be launching a marketing awareness campaign.Its case for the second pillar will be boosted by good results – an average nominal 11.36% in 2014, and an average real return of 3.75% since the start of the system in 2002.In other news, Siniša Hajdaš Dončić, Croatia’s minister of Maritime Affairs, Transport and Infrastructure, has confirmed, in an interview with news daily Jutarnji list, an alternative plan should the Constitutional Court allow a referendum opposing the monetisation of the debts of Hrvatske Autoceste (HAC), the national motorway authority, and Autocesta Rijeka-Zagreb (ARZ), the state-owned company that operates the Rijeka-Zagreb motorway to go ahead, and the referendum succeeds.Under the ministry’s ‘Plan B’, the government would instead raise funds through an IPO of 51% of Croatian Motorways Maintenance and Tolling (HAC-ONC), the agency jointly owned by HAC and ARZ.Croatia’s four mandatory pension funds, which are among the consortium participants bidding for the monetisation concession, are expected to participate, alongside employees and other citizens.The minister said the IPO could raise €1.2bn, still well short of HAC and ARZ’s combined debts of €4.2bn.last_img read more

Friday people roundup

first_imgKoopvaardij, APG, TELA, DNB, Towers Watson, BlackRock, Schroder Investment ManagementKoopvaardij – Ernst Hagen has been named a member of the supervisory board of Koopvaardij, the pension fund for the merchant navy. He is also head of fiduciary management at F&C Netherlands, and was until 2010 head of asset management at the pension fund for the hospitality industry Horeca & Catering.APG – Gerben De Zwart has been appointed head of quant equities at the asset manager. Previously, De Zwart was head of quantitative equity research as well as senior portfolio manager at APG. He has also worked as a quantitave analyst at ING Investment Management and Robeco.TELA – Timo Ritakallio has been elected chairman of the Finnish Pensions Alliance (TELA). Ritakallio, who was named as pension mutual Ilmarinen’s new chief executive in September last year, replaces former chairman Harri Sailas. Sailas was was chief executive of Ilmarinen for eight years, and served as TELA’s chairman from 2006 until his retirement.  De Nederlandsche Bank – Wim Kuijken has been appointed chairman of the Dutch regulator’s supervisory board. Kuiken is to succeed Alexander Rinnooy Kan, who stepping down to run for the Dutch Senate. Towers Watson – Harm Blaak has been promoted to leader, risk consulting & software for Northen, Central and Eastern Europe as of 1 July. He is to combine this task with his current position as leader risk consulting & software for the Benelux. As of 1 July, he will be responsible for the entire service provision for insurers in both regions.BlackRock – Marc van Heel has decided to step down from his current position as country manager for the Benelux, but will continue to serve as a non-executive director for BlackRock Netherlands. Meanwhile, Peter Nielsen, BlackRock’s country manager for the Nordics and head of BlackRock’s continental European institutional business, will temporarily take over as country manager for the Benelux, while keeping his current responsibilities. Leen Meijaard, previously head of iShares EMEA Sales, has been appointed as chairman of Benelux. In this new position, Meijaard will play a critical role in strategic account leadership for key current and prospective accounts in the Benelux.Schroder Investment Management – Daniel Lösche has joined Schroders market and competition analysis team in Frankfurt. In his new role, he will work on capital market strategy, reporting to head of insurance Charles Neus.last_img read more

Danica poaches joint heads of PFA’s asset management team

first_imgPoul Kobberup and Jesper Langmack, joint managing directors of the asset management arm of Denmark’s PFA, have been lured to rival Danica Pension and are due to take up their new roles there in November.Danica said the appointment of Kobberup and Langmack was part of Danica Pension’s implementation of its new investment strategy, conceived by its CFO Jacob Aarup-Andersen and approved by the Danica board in August 2014.At Danica, Kobberup will become head of rates, while Langmack will be head of risk assets.A spokesman for Danica told IPE: “The important part to Poul Kobberup and Jesper Langmack was the opportunity to become part of the new exciting investment setup Danica is in process of building up based on the new investment strategy.” Apart from this, the two men were thrilled by the opportunity to continue their partnership, he said.PFA, Denmark’s largest commercial pensions provider, is filling the management gap by putting group director Anders Damgaard in place to take over the daily management of PFA Asset Management.Damgaard will manage the asset management business alongside Henrik Henriksen and Christian Lindstrøm Lage.Danica announced last summer that it would refocus its investment process and strategy, moving towards alternatives, replacing some of its bond investments and making direct investments in companies.The rationale behind the new strategy was that, with bond yields so low and equities fully valued, the institution could find extra yield in private markets, where competition was less intense.Aarup-Andersen said at the time that Danica Pension was hiring specialists to build an in-house team.In December, Anders Svennesen – ATP’s former co-CIO – started at Danica Pension as CIO.last_img read more

Sweden threatens carbon-reporting law if pension funds fail to act

first_imgThe Swedish government has told the country’s commercial pensions and investment sector it must find a common way to report carbon footprints or it will force them to do so with legislation.Per Bolund, minister for financial markets and consumer affairs and Green Party member, yesterday met with 20 pension and investment funds and insurers including Alecta, AMF, Folksam and its subsidiary KPA Pension to discuss the issue.He said: “There is a strong commitment in the industry and a will to contribute to sustainable investment which I am happy about.”The companies agreed there should be a industry standard for reporting the carbon dioxide emissions their shareholdings were responsible for to increase the comparability for consumers. “I was very clear yesterday self-regulation is the best alternative,” Bolund said. “Of course, we are no strangers to legislation, but that is a last resort.”The meeting took place to focus on the issue ahead of the 2015 United Nations Climate Change Conference taking place in Paris from 30 November, which Bolund is to attend.Other pensions, investment and insurance providers present at yesterday’s meeting included SEB Investment Management, Storebrand/SPP, Svensk Försäkring, Länsförsäkringar and Skandia Fonder. Exactly when such last-resort legislation might be introduced depend on, among other things, the suggestions made around June or July 2016 by the investment funds commission (Fondutredningen), Bolund said.“One of the things the commission will look at,” he said, “is how information given to customers can be improved to facilitate comparisons about sustainability.”Meanwhile, Alecta, which manages SEK710bn (€76.6bn) in assets, has said its carbon footprint was one of the lowest so far reported.Using analysis company South Pole, Alecta said it measured the carbon footprint of its equities portfolio, with the greenhouse gas emissions of a shareholding calculated according to Alecta’s stake in that company.On 1 January 2015, its portfolio was responsible for 1.2kg of CO2 emissions per SEK100 invested, compared with the range of 1kg-2kg for other Swedish asset managers, it said.Alecta said there were still big differences in the way asset managers calculated and presented the carbon footprints of their portfolios.Skandia said it started disclosing the indirect effect of its equity funds by measuring their carbon emissions, also using South Pole.Annelie Enquist, chief executive of the fund management company, said: “We want to allow fund investors to start forming an idea about the indirect climate impact of their savings by highlighting the carbon footprint of equity funds.” Skandia said it signed the UN’s Montreal Carbon Pledge, which committed it to measuring and reporting such data annually.Earlier this week, Sweden’s national pension buffer funds agreed on a uniform method for reporting the carbon footprints of their portfolios based on three factors.last_img read more

AP Pension expands alternatives team as real estate deals pile up

first_img“We are involved in construction projects worth more than €250m, and the possible pipeline is of the same size.”Most of this current real estate investment is in the residential sector, located mainly in Copenhagen and Aarhus.“The key focus for the alternative strategy is to be close to the investment,” Dal Thomsen said.“With the current activity, and the future plan, we simply need more hands.”AP Pension said its strategy was to increase its investments in alternative investments – credit, real assets, private equities and opportunistic investments – over the coming year.In the job advertisement, the fund said it believed that, to implement this strategy successfully, it needed to be an active owner of these investments.For this reason, it said, it wants to increase resources in this area.AP Pension has also taken on a new CIO in the last few months.Ralf Magnussen was appointed by the pension fund at the beginning of September to become CIO, replacing Erik Hallarth, who had been hired by PFA Pension to become its chief portfolio manager.Magnussen came to AP Pension from Lægernes Pensionskasse, the Danish doctors’ pension fund. Denmark’s AP Pension, the DKK103bn (€13.8bn) mutually owned pensions provider, is expanding its investment team for alternatives to meet greater staffing needs for its current property investment activity, as well as future plans.The pension fund is searching for someone to fill the newly created role of senior portfolio manager for alternatives.Peter Olsson, previously AP Pension’s head of property investments, has now been promoted to the position of managing director of the pension fund’s property unit, AP Ejendomme, the pension fund said.Søren Dal Thomsen, chief executive of AP Pension, told IPE: “At AP Ejendomme, there are now a lot of projects either running or about to run, and therefore we need more hands.last_img read more

ATP, PFA join forces on DKK1bn private equity fund

first_imgDenmark’s ATP and PFA have jointly invested DKK1bn (€134m) in a new private equity fund targeting Nordic technology firms.The two pension providers, Denmark’s largest, have committed the money to a fund managed by Via Venture Partners.Henrik Nøhr Poulsen, CIO of PFA’s asset manager, said PFA had previously enjoyed positive results from joint ventures with ATP.“We have conducted the usually thorough, compulsory due-diligence investigations, and Via Venture Partners has – especially with its last fund – demonstrated extraordinary performance,” he said. “The foundation, therefore, is in place for us to invest.”Managing partner of ATP Private Equity Partners, Torben Vangstrup, said he hoped Via Ventures would continue to generate returns for both pension investors, while driving growth in companies in which it buys stakes.ATP contributed DKK2bn to the first two funds launched, which generated a profit of SKK556m.The previous two funds have invested in a range of businesses, targeting commitments of €10m-100m in Nordic companies since the first fund’s launch in 2006.Previous investments on behalf of ATP include a DKK500m stake in NEAS Energy, an energy trading and asset management company, which saw the statutory pension fund acquire a 30% stake in the company.last_img read more

IMF paints bleak picture for DB funds

first_imgDefined benefit (DB) pension funds across the world may be forced to cut benefits “significantly” in the long term because of ultra-low interest rates, the International Monetary Fund (IMF) has warned.Shifting asset allocations to meet required returns “appears feasible only by taking potentially unacceptable levels of risk”, the fund said in a new report.The comments came as part of an analysis of the effects of low growth and interest rates on the global financial system, written by Gaston Gelos and Jay Surti for the IMF’s Global Financial Stability Report. They build on previous IMF statements about the pressures on pension funds’ business models.Under pressure from low rates, the authors said, “life insurers and pension funds would face a long-lasting transitional challenge to profitability and solvency, which is likely to require additional capital”. The authors added: “In the low-for-long scenario, life insurers and sponsors of defined benefit pension plans may have no choice but to significantly reduce benefits to policyholders and plan participants over the long term. With permanently low growth and interest rates, guaranteed rates of return are possible only if they are reset significantly lower.”Gelos and Surti ran a scenario analysis for an underfunded DB fund. The simulation indicated that such pension funds – and life insurers, which often have similar liabilities – would require a “very high” level of volatility risk to meet their funding goals.A combination of risk aversion and regulatory constraints was likely to deter the vast majority from taking this path, the authors said.“The analysis makes clear that asset allocation changes alone cannot adequately address the solvency challenge posed by negative cash flows on the current portfolio of liabilities,” Gelos and Surti wrote. “This means that, in the medium term, insurers and sponsors of defined benefit pensions must find a way to capitalise their losses… It seems likely that these institutions will have to make a fresh investment of equity capital to cover part of the loss.”However, the authors suggested the situation might work to the benefit of insurers backing buy-ins and buyouts. With investors increasingly scrutinising the size of DB obligations and the effects on company share prices, profits, and dividends, the IMF said offloading these liabilities to insurers “is an attractive option” and “may represent a market-efficient arrangement”.“Regulation could play an important role in this area by facilitating such transactions,” the IMF said.Elsewhere in their report, the authors said such pressures would reinforce the global trend away from DB towards defined contribution (DC) pension models. The flexibility of DC pensions was also an important aspect, the IMF said, particularly for younger people who generally change jobs more often than older generations.However, the IMF pointed out that large, hybrid, industry-wide schemes such as those in the Netherlands “will be more resilient” within the context of the DB to DC shift, as “they offer built-in portability to beneficiaries within industries”.The full analysis, which forms the second chapter of the IMF’s Global Financial Stability Report, is available here.last_img read more

European investors back hedge funds in low-return world

first_imgSource: Mercer European Asset Allocation Survey 2017Funds-of-funds and multi-strategy products dominate hedge fund allocationsDeb Wardle, alternatives portfolio manager at Mercer, said: “Over recent years, hedge funds have generated positive but muted returns, particularly when compared to traditional equity and fixed income asset classes.“The current outlook for traditional asset classes, however, appears more challenging, and hedge funds, with their absolute return focus, offer an attractive proposition on a relative-value basis.“In addition, we expect higher volatility and lower correlations across markets going forward, which should provide attractive opportunities for active management in general, and hedge funds in particular.”Research from data specialist Preqin published earlier this year showed hedge fund managers were becoming more willing to cut fees as competition for institutional assets increased. Mercer’s survey also showed a slight decrease in the proportion of investors with an allocation to private equity, which fell by 1.5%. This was in contrast to a survey of alternatives investors published by Coller Capital in December, which reported an increase in allocations to private equity at the expense of hedge fund holdings. Hedge funds saw a flurry of interest from European pension funds last year as investors braced for an expected low return environment, according to a survey from Mercer.The consulting giant found that the proportion of its 1,241 respondents with allocations to hedge funds grew by 4.6% year-on-year, the biggest growth of any alternative asset class.Despite hedge funds on average struggling to post competitive returns in recent years, as well as concerns over high management fees, Mercer said investors had “not lost faith”.The increase was “consistent with an environment where returns from traditional market betas will be hard to find”, the consultant said. More than a third (37%) of respondents had an allocation to hedge funds, the survey found. The average allocation was 6%.By far the most popular strategies were funds-of-funds, used by 23% of hedge fund investors, and multi-strategy vehicles, used by 12%.#*#*Show Fullscreen*#*#last_img read more