European scheme tenders three mandates worth €120m, using IPE-Quest

first_imgAn Eastern European pension is tendering three equity and multi-asset fund mandates worth up to €120m, using IPE-Quest.The three searches are asking managers with funds based in OECD member states to apply for the three mandates worth €10m-40m each.Any submitted funds should be open-ended pooled vehicles with assets under management of at least €800m, according to the search.The fund further asks that all vehicles have at least a five-year track record and do not submit any back-tested data. For search QN1353, investing into an equity fund basing returns around a dividend yield strategy, managers should either only invest in euro-denominated assets or hedge all exposure into the single currency.The mandate could be managed either actively or passively, according to the search, with both open-ended funds or ETFs permissible.The second search, QN1354, should also be invested in euro assets or hedged accordingly “with an investment approach aimed at achieving absolute or stable returns”.The fund asks that a particular emphasis be paid to risk management or risk-targeting strategies in an effort to reduce the portfolio’s investment risk, with a minimum two-thirds of the fund’s assets invested in equities.Search QN1355, for a multi-asset, absolute return vehicle, can be invested across a variety of assets, again aiming to reducing the portfolio’s risk – with derivatives used to a “limited” extent as a hedging tool.The fund adds that derivatives should not play a dominant role in the fund’s investment strategy.At this stage, IPE-Quest is creating a long list of managers for the pension fund, which will then send out a more detailed questionnaire to managers.Applicants have until 3 December to apply for all three searches.The IPE.com 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 direct from IPE-Quest, please contact Jayna Vishram on +44 (0) 20 7261 4630 or email jayna.vishram@ipe-quest.com.,WebsitesWe are not responsible for the content of external sitesLink to IPE-Questlast_img read more

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Central and Eastern Europe: Beyond the Roundtable of Babel

first_imgIn Biblical times, people were punished with the loss of their common language and understanding because of their attempt to build a tower as tall as Heaven – the Tower of Babel. Today, people are encouraged to gather together on equal terms. However, equality requires roundtables so large there is no chance to hear one’s counterpart, let alone understand them. This is becoming the modern paradox of the Roundtable of Babel.What is Bulgaria’s place at the EU roundtable of supplementary retirement provision? The Bulgarian local supplementary retirement vehicles include a mandatory and voluntary element. The mandatory are MUPFs (mandatory universal pension funds, for those born in 1960 onwards) and MOPFs (mandatory occupational pension funds), which cover the early retirement of those working in hazardous occupations.The mandatory vehicles have the benefit of automatic affiliation (in case employees have not made their choice in due time), membership switching options, universal coverage and portability. The voluntary vehicles are the VPFs (voluntary pension funds) and the VPF-OPS (voluntary pension funds with occupational pension schemes). The VPF-OPS allow for the IORP Directive occupational provision.According to the latest data of the Bulgarian Financial Supervision Commission (as at 30 September 2013), assets under management in the mandatory and voluntary funds are at €3.3bn, an increase of 18.45% compared with 30 Sep 2012. They have 4.2m members out of a total population of 7.4m. Almost 80% of the assets are managed in the MUPFs; MOPFs account for 9.77% and VPFs account for 10.15% of the total. The most recent vehicles – the VPF-OPS – have an insignificant share of 0.1% of the AUM. How can one explain the striking lack of market interest in the typical occupational schemes in Bulgaria? Since the 1990s, supplementary pension funds in Bulgaria, as in other Central and Eastern European (CEE) countries, have developed as fully funded and portable, individual defined contribution (DC) vehicles, which are sometimes labelled non-European. Have individual DC schemes flourished as a result of some non-European, overseas infatuation characteristic of the CEE region in the 1990s?Having lived in a totally controlled society with almost no risks, Bulgarians and other CEE citizens showed strong risk appetite, desire for job mobility and great interest in financial independence in the 1990s after the Communist regime collapsed. Eastern Europeans opted for an opportunity at retirement; Western Europeans have welcomed a retirement promise.So supplementary pension schemes in Bulgaria have been individual in nature rather than employer-based since their re-establishment in 1994. This has proved wise in a period of economic restructuring and change of ownership of the enterprises. It protected members from unreasonable and unsustainable promises by changing employers during privatisation. And above all, it appealed to CEE citizens’ renewed trust in their individual financial independence.UK pension experts sometimes explain the development of occupational schemes in the UK by the statement that their citizens do not trust their government but their employers. In view of the profound transformation from a totalitarian to a democratic society with deep economic restructuring and change of ownership of the major enterprises, Bulgarians cannot be blamed for their mistrust in both their government and employers.A first warning bell sounded at the end of 2010. A national legal amendment required MOPFs to transfer certain assets to the National Social Security Institute. Those were the assets of the members who were expected to opt for early retirement within the next three years. The actual transfer of €55m took place in March 2011. The Bulgarian Constitutional Court Ruling of 31 May 2011 declared the said transfer unconstitutional. Individual accounts with MOPFs were reopened for new contributions from 18 June 2011. The contribution to the other supplementary mandatory vehicle (MUPFs) is scheduled to increase from the current 5% to 7%.There was a further reminder – this time coming from outside Bulgaria. Misunderstandings about the allegedly improper transposition of the EU law regarding the occupational schemes sometimes become the reason for the admonition to Bulgaria to mind its step towards the common EU pensions market.At its accession to the EU in 2007, Bulgaria fully transposed Directive 2003/41/EC providing for the necessary legal framework for IORP cross-border activities. The national law allows undertakings located within Bulgaria to sponsor IORPs authorised in other member states. It also allows IORPs authorised in Bulgaria to accept sponsorship by undertakings located within the territories of other member states.Trying to convince Bulgarians to favour supplementary retirement solutions that are not consistent with the historically dependent pension fund members’ expectations will definitely add to the Table of Babel. The ongoing EU mapping of the various national systems should not turn (for the obvious financial reporting reasons) into a complete ‘mopping-up’ of diversity in national pension systems, which is at the heart of market innovation and competition. CEE citizens would rather opt for a revival of the forces of market competition, with mobile employees as a cross-border carrier of change and harmony in the EU.A member of a Bulgarian supplementary retirement provision fund is not interested in the bipolar model of definition – DB or DC. What the member wants is a clear and unequivocal advance definition of both the benefit they are to obtain in the form of a secure pension amount, as well as a clear and unequivocal advance definition of the contribution required. Is it possible to have both variables defined in advance in compliance with the members’ individual preferences at the different stages of their lifecycle? The solution to this dilemma is key to the pension problem.Facing the demographic, financial and economic challenges of the 21st century, the EU is set to make a giant step towards adequate, sustainable and safe pensions – a step that requires efforts commensurate with the ones made by our predecessors. And this time it is to be a common step forward.To watch a video associated with this article, go to www.nixartspear.eu/mindyourstepSvobodka Kostadinova is an author with an interest in the social aspects of new EU accession societies. Nickolai Slavchev is a pensions analyst.last_img read more

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Swiss pensions reform ‘helps wrong people’, think tank warns

first_imgHe said not all people eligible to a first-pillar pension would be affected by the cut in the conversion rate.The others are either not insured in the second-pillar BVG because they earn too little or because they are self-employed and have not opted in, he said. When the reform takes effect, people over 50 years of age will be exempt from any changes to their pension promises thanks to a 15-year transition period – their share is redistributed among other active members.But, of the approximately 2.5m people possibly affected by the conversion rate change, only a fraction will actually feel it, Cosandey said.He said the majority of people in the BVG were actually in a Pensionskasse, which can already apply a conversion rate well below the proposed cut to 6%.This is possible because their employer makes above-mandatory contributions to which any conversion rate can be applied.Additionally, less than 50% of people are drawing a life-long pension from their Pensionskasse.The remainder is taking out the capital for which the conversion rate is irrelevant or opting for a mixed payout of pension and capital.“Eventually,” Cosandey said, “it is less than 15% of people eligible for an AHV pension that might potentially be affected from a reduction of the conversion rate from 2033.”He called for a solution that helped this minority in 18 years, rather than increase the AHV for everyone as soon as the reform comes into effect.The outcome of the reform talks will also depend on the outcome of the general elections scheduled for 18 October. The amended reform proposal on the major Swiss pension reform package Altersvorsorge 2020 includes an immediate hike in the first-pillar AHV to compensate a cut in the minimum conversion rate in the second pillar.But Swiss think-tank Avenir Suisse has criticised that more people will benefit from the AHV increase than suffer from the conversion rate cut.“Watering daisies with a fire hose” is the Swiss colloquialism Jérôme Cosandey, researcher at Avenir Suisse, used to describe changes to the bill proposed by the smaller chamber of the Swiss Parliament last week.He argued that the original government proposal already accounted for compensation for the cut in the conversion rate and that an immediate hike in the AHV would “help the wrong people”.last_img read more

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Sweden’s AP7 cuts six companies from investment universe

first_imgAP7 has now blacklisted a total of 14 companies in 2017, it said. These include a number of firms linked to the controversial Dakota Access Pipeline project in the US.Two companies, alternative investments manager Brookfield Asset Management and Australian agriculture group Wesfarmers, have been reintroduced into AP7’s investment universe.As of 15 June, AP7 excluded 67 companies.The Ethical Council for Sweden’s AP funds system, which advises the six funds on ethical issues, said in its annual report for 2016 that engagement was a more sustainable and effective strategy than simply divesting from stocks.Peter Lundkvist, senior strategist and head of corporate governance at AP3 as well chairman of the Ethical Council, said in an interview with IPE earlier this year: “The Ethical Council has during the past 10 years worked with engagement as a means to solve problems and incidents that occur in business operations of investee companies. It is a sustainable strategy instead of selling the companies.”Norway’s Government Pension Fund Global, the world’s biggest sovereign wealth fund, reported in March that excluding companies by blacklisting them had cost it 1.1% of performance in 11 years. AP7 has followed through on plans to blacklist several companies on climate change grounds.Sweden’s SEK343bn (€35bn) national default fund announced yesterday it had dropped six companies from its investment universe, including oil giant Exxon and Russian gas company Gazprom.It has also blacklisted North American companies Entergy, Southern Corp, Transcanada Corp, and Westar. AP7 said the companies were all in breach of the Paris Agreement on climate change.In December, the pension fund said it was reviewing its stakes in the six companies, worth a collective €300m.last_img read more

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CMI longevity model could cut Swiss liabilities by up to 3.5%

first_imgApplying the continuous mortality investigation (CMI) model could slice between 2.5% and 3.5% off liabilities in Swiss Pensionskassen, according to consultancy group Libera.The CMI model incorporates regular adjustments to increases in longevity, whereas standard mortality tables currently project an unbroken upwards tendency.“Under the CMI model the life expectancy of a 65-year-old Swiss male is 3.5% lower than compared with the model used by the federal statistical office,” Libera noted.However, so far “no Swiss Pensionskassen are applying the CMI model”, Benno Ambrosini, board member at Libera, confirmed to IPE. “But there is no regulatory impediment to using a different model as long as it is adjusted to the Swiss population,” he added.Swiss law only states pension funds have to “calculate their annual reports based on accepted basic principles and openly accessible technical foundations”, Libera explained.In the UK the model has been discussed and applied more widely . Most recently actuaries have calculated that UK life expectancy improvements have stalled in recent years, which could reduce liabilities for many pension schemes.“What has still to be decided is the long-term adjustment rate to be used in the CMI model for Switzerland,” Ambrosini said.However, he criticised the rate used by many UK companies, saying the 1.25% widely used in the UK was based on “too little” substantial evidence.The CMI model is based on the assumption that current rates of mortality improvement converge to a single long-term rate, as noted by the UK’s Institute and Faculty of Actuaries.last_img read more

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People moves: L&G reshuffles pensions, direct investing leadership

first_imgLegal & General, Mercer, SEI, Invesco, Columbia Threadneedle, Artemis, Northern Trust Asset Management, Nikko Asset Management, AMG, IdinvestLegal & General – The insurance and pensions giant has reshuffled its senior management team. Kerrigan Procter is moving from Legal & General Retirement (LGR), where he is CEO, to take the same role at Legal & General Capital (LGC). This arm of the company specialises in “early stage” investments in housing, infrastructure and smaller company financing.LGR’s leadership is to be split into retail and insitutional lines. Laura Mason has been promoted to CEO of LGR’s institutional business. She is currently managing director of LGC’s direct investment operations and head of infrastructure. In her new role she will sit on Legal & General’s board and report to Nigel Wilson, group CEO. Chris Knight has been promoted to CEO of LGR’s retail arm, having previously been managing director of that section of the business. The changes will take effect from the New Year.Mercer – Pensions adviser Mercer Netherlands has appointed Jacco Maters as its new leader for financial sector clients, as well as member of its management team. Maters joins from Delta Lloyd Asset Management where he was chief executive and group CIO since 2014. He left in October, after Delta Lloyd was taken over by Nationale Nederlanden Group earlier this year. Between 2002 and 2009, Maters was head of asset allocation for Benelux and northern Europe, as well as head of structured solutions, at Lombard Odier. In 2009, he became global head of equity and derivatives at Allianz. SEI – The fiduciary provider’s institutional business in the UK has appointed Steve Charlton to the newly created role of managing director for defined contribution (DC) pensions, for the Europe, Middle East and Africa (EMEA) region as well as Asia. He will report to Patrick Disney, managing director of SEI’s institutional business and will be part of the institutional leadership team in the UK. Charlton was previously at Vanguard, where he was European DC proposition manager. Before that he worked in consulting, most recently as principal within Mercer’s DC leadership team. Invesco – Mark Humphreys has joined as head of EMEA client solutions development, a newly created role. He joins from Schroders where he was head of the company’s fiduciary management team. Invesco’s client solutions team offers customised services including model portfolios, risk and portfolio analytics, and practical implementation.Columbia Threadneedle Investments – The asset management group has hired Lorenzo Garcia from BlackRock Investment Managers for the position as head of EMEA client investment solutions. At Columbia Threadneedle Garcia reports to Jeff Knight, global head of investment solutions, and Mark Burgess, deputy global CIO. Garcia was with BlackRock for 12 years, most recently as head of EMEA institutional and retail portfolio management. Artemis Investment Management – Jens Steen has joined the UK-based fund manager as head of sales for the Nordic region. He joins from BNY Mellon, where he was head of institutional business for that region. Northern Trust Asset Management – Martha Fee has been named chief operating officer for the EMEA and Asia-Pacific regions. She was previously at Northern Trust’s Global Fund Services business where she was responsible for the group’s service provision for global asset managers. Prior to joining Northern Trust in 2015, Fee spent 10 years at Janus Capital International.Nikko Asset Management – The Asian fund management group’s European business has appointed its chairman, John Howland-Jackson, CEO for the EMEA region. He succeeds Udo von Werne, who is leaving the company. The appointment is effective from 1 January and is subject to UK regulatory approval. Nikko AM has also appointed Ian Lewis as head of EMEA sales and global head of consultant relations. He was previously group head of consultant relations. This appointment will take effect from 1 December.Affiliated Managers Group – The US-listed multi-boutique asset management company has appointed Karen Yerburgh to its board, effective from 1 January. Most recently, Yerburgh was managing partner of Genesis Investment Management, an emerging markets specialist manager. She has also worked at Touche Remnant Investment Management and Lloyds Investment Management.Idinvest Partners – The €9bn European private equity firm has named Charles Daulon du Laurens as a partner and its global head of investor relations and marketing. He was previously global head of the client capital group within AXA Investment Managers’ real assets division.last_img read more

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Schroders: World still heading for 4.1°C rise as climate finance slows

first_imgThe world remains on course for a 4.1°C temperature rise as developments in the oil and gas industry have been offset by a slowdown in low-carbon investments, according to Schroders.Capital investment in the oil and gas industry fell sharply in the last quarter of 2017, the period covered by the asset manager’s update to its climate change tracking analysis. “The oil and gas industry could be starting to translate the growing pressure it is facing into a strategic response,” said Andrew Howard, head of sustainable research at Schroders.“There is further to go but the change is encouraging. Time will tell whether [capital] discipline holds with rising prices.” The asset manager considered that the changes in the oil and gas industry would translate into a projected temperature rise of 3.9°C, down from 5.3°C.However, a marked fall in investment in clean energy technologies offset this effect, according to Schroders.It cited data from Bloomberg New Energy Finance showing that, in late 2017, clean energy investment had fallen to 2010 levels. In October 2017 the Climate Policy Initiative (CPI) released analysis showing a 12% drop in global investment levels for 2016.Howard said: “The challenge of encouraging capital into climate solutions on the necessary scale has attracted a lot of attention from policymakers and environmental groups and, while plans are typically ambitious, tangible action remains more elusive.”Schroders’ ‘Climate Progress Dashboard’ primarily uses data from CPI, a not-for-profit think tank.Keeping the global temperature rise to a maximum of 2°C over pre-industrial levels is the target that governments from around the world set as part of the 2015 Paris Agreement. It is widely agreed by scientists to be the threshold beyond which climate change risks become unacceptable or the impacts too damaging. The text of the Paris Agreement itself refers to keeping temperature increases to a maximum of 2°C and ideally 1.5°C because “this would significantly reduce the risks and impacts of climate change”.Schroders’ previous analysis, which was based on various indicators as at the third quarter of last year, also pointed to a 4.1°C temperature increase.In a recent report consultancy firm McKinsey said CO2 emissions would plateau by 2030 and “remain far from a 2°C pathway”.BP’s recent energy outlook outlined the ‘most likely’ trajectory for global energy markets over the next 20 years which, like Schroders’ analysis, was based on various assumptions and judgements.last_img read more

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UK government proposes ‘expert stewardship oversight group’

first_imgThe UK government has proposed establishing an “expert ‘stewardship oversight group’” to improve the quality of stewardship of UK companies by investors. The group could review significant corporate failings and scandals, make recommendations, and ensure that lessons are applied throughout the investment chain, according to proposals from the Department for Business, Energy & Industrial Strategy (BEIS).Suggested members included the Investor Forum, company chairmen, company secretaries, asset owners and the Financial Reporting Council (FRC). Launched in 2014, the Investor Forum was one of the key recommendations to come out of the 2012 Kay Review. It exists to facilitate better engagement between UK public companies and their shareholders.   Another idea suggested by BEIS was to get large listed companies to commit to “hosting periodic strategy and stewardship forum meetings focusing on the company’s long-term strategic plans”.“This is an essential counterpart to the Department for Work and Pensions’ recent defined benefit white paper”.Pensions and Lifetime Savings AssociationBEIS floated the ideas in a consultation on insolvency and corporate governance on Tuesday. It said they were options for reform alongside those suggested by the FRC earlier this year in connection with its upcoming consultation about the Stewardship Code.BEIS said the FRC’s consultation would be “a significant opportunity to help strengthen the quality of investor engagement with UK companies”.The government’s consultation was aimed at improving the UK’s corporate governance framework and ensuring “the highest standards of behaviour in those who lead and control companies in, or approaching, insolvency”.BEIS said: “The vast majority of UK companies are run fairly and responsibly, but a small number of recent corporate governance failures have raised concerns that company directors can unfairly shield themselves from the effects of insolvency and – in the worst cases – profit from business failures while workers and small suppliers lose out.”Other proposals in the consultation included disqualifying directors or holding them personally liable if they were found to have sold a struggling company recklessly or knowing it would fail, and giving the Insolvency Service new powers to investigate directors or dissolved companies.The high-profile collapse of Carillion, a UK construction company that went into liquidation in January, has been the focus of considerable political and media attention in recent weeks. It has triggered questions about the behaviour of a range of actors – company directors, auditors, investors, regulators and others – and the regulatory framework governing them. The UK pension fund association said the government’s new consultation was “an essential counterpart” to the recent defined benefit white paper from the Department for Work and Pensions (DWP).Caroline Escott, policy lead for investment and defined benefit at the Pensions and Lifetime Savings Association, said: “In light of recent events, such as the failures of BHS and Carillion, we are glad to see the government looking at the relationship between good corporate governance and good outcomes for pension scheme members.“This is evident both in today’s consultation from the BEIS and also from the DWP’s recent defined benefit white paper. It is imperative that the interests of scheme members remain at the forefront of a company’s considerations in the case of insolvency or restructuring.”Last year the government announced corporate governance reforms that focused on boardroom accountability to shareholders, employees and the public.last_img read more

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GAM forecasts CHF925m loss after rocky 2018

first_imgListed Swiss asset manager GAM expected to post a loss of CHF925m (€822m) for 2018 and proposed to cancel its dividend for this year, it said in an update yesterday.It also revealed that assets under management had fallen by CHF7bn in October and November, taking them to CHF146.1bn as at 30 November.This was mainly driven by net outflows of CHF4.2bn from its investment management division.The group has had a tough time this year, following the decision to halt dealing in its unconstrained and absolute return bond funds after a surge in redemption requests in the wake of the suspension of a senior fund manager in late July. In its statement yesterday GAM said it was expecting an underlying profit of around CHF125m for 2018, compared with CHF172.5m in 2017.It also expected next year’s financial results to be materially lower than those for 2018, because of “significantly lower levels” of assets under management and the phasing in of a cost reduction programme.As part of a group-wide restructuring programme to “enhance efficiency, support profitability and simplify the organisation”, the group expected to cut fixed personnel and general expenses by at least CHF40m by the end of 2019.A one-off charge of around CHF30m for 2018 was likely, the group said, in relation to the implementation of the restructuring programme and “professional costs” in connection with the absolute return and unconstrained fixed income strategy.Lead manager Tim Haywood was suspended on 31 July after an internal investigation identified problems with his risk management and record keeping. Dealing in the unconstrained and absolute return bond funds was subsequently halted after a large number of investors attempted to pull out of the strategies.GAM did not discover any “material client detriment” during its investigation, but nonetheless was forced to begin winding up funds in August.GAM aimed to complete the liquidation process for its absolute return bond funds in the first quarter of next year, subject to market conditions. As at 12 December, between 89% and 92% of Luxembourg and Irish-domiciled absolute return bond funds, and 66% to 72% of the assets in the Cayman and Australian feeder funds, had been returned to clients.Group CEO Alexander Friedman stepped down last month, with replacing him in the interim while a permanent new CEO was sought.last_img read more

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LGPS Central raises £700m for emerging markets fund

first_imgLGPS Central, the pooling vehicle for nine local authority pension funds in central England, has raised £700m (€781.7m) from four of its partner funds for an emerging market equities mandate, according to council documents.BMO Global Asset Management, UBS Asset Management and Vontobel Asset Management were named to the mandate in January. According to a statement from LGPS Central yesterday, they have been handed a third each of the Emerging Markets Equity Active Multi-Manager fund.LGPS Central declined to disclose the size of the fund at its launch on 19 July, but according to meeting minutes from Leicestershire Council’s pension fund committee from 5 July, four funds committed to invest at launch with approximately £700m between them.Leicestershire’s £4.1bn pension fund and Worcestershire’s £2.8bn scheme both planned to transition assets into the fund, according to council documents seen by IPE. Colin Pratt, investment director and manager of managers at LGPS Central, said: “A lot of hard work has gone into making sure this fund will serve the needs of our partner funds, and we truly believe it will meet their long-term objectives.” Source: WikipediaLeicester, UKThe launch is the fourth from LGPS Central this year, following the February opening of a private equity platform targeting £2bn over the next few years. In March it named Fidelity and Neuberger Berman to a corporate bond mandate, and five managers to a global sustainable equity mandate. The pooling company already oversees roughly £20bn of its partner funds’ £45bn in combined assets through pooled funds and advice mandates.LGPS Central was set up to pool the assets of nine Midlands-based local government pension schemes, including Cheshire, Derbyshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, Worcestershire, West Midlands Pension Fund and the West Midlands Integrated Transport Authority.last_img read more

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