Fonchim Pension Fund, the €4bn Italian pension fund for workers in the chemical and pharmaceutical industries, has awarded a €330m mandate for part of its Stability sub-fund to Natixis Asset Management.The sub-fund is an active short-term government bond mandate that uses the BOFA Merrill Lynch Pan Europe Governments Total Return Index 1-3 years Euro Hedged as a benchmark.Groupama will continue to run the rest of the sub-fund.Fonchim had decided to split the mandate to provide diversification. Olivier De Larouziere, managing director of euro interest rates at Natixis AM, will run the mandate.Antonio Bottillo, managing director of Natixis Global Asset Management in Italy, said: “We are pleased Fonchim has put its trust in our fixed income expertise.“De Larouziere has returned very strong performances in the government bond sector in recent years.”The mandate award completes the process of renewing all of Fonchim’s mandates, which was started nearly two years ago.
Some 65% of investors said they felt fund managers and investors’ interests were aligned in the 2014 survey, compared with only 27% who had given that answer in 2010.But 61% of investors in the study said management fees were a key area in need of improvement.In terms of regions, Europe was most favoured for investment this year, with 41% of investors in the asset class targeting this area, followed by North America, which was within sights of 38% of investors.Infrastructure investment was strong last year, Preqin said, with $40bn raised by 52 unlisted infrastructure funds.This was the largest amount of capital raised in a single year by funds since 2008, the survey found.Preqin suggested that, in future, capital may become more concentrated among a small number of very experienced infrastructure investors due to investor priorities.Experience, according to the poll, was the most sought-after attribute for investors choosing new managers, with 80% of respondents citing this as a key factor. Most institutional investors with infrastructure holdings plan to increase or at least maintain investments in the long term, a survey has found.The latest survey on the asset class by data and analysis firm Preqin, which polled 430 investors and looked at different types of alternative investments, showed 84% of infrastructure investors were aiming to increase or maintain their allocation over the longer term.More than half of investors (56%) said they intended to make at least three investments in infrastructure funds in 2014, with 43% saying they intended to commit $100m (€73m) or more over the next 12 months.Investors had become more satisfied that their interests were aligned with those of managers than had been the case four years ago, the survey showed.
The schemes said their supervisory (RvT) and accountability boards (VO), as well as the regulator, had responded positively to their plans.In the coming months, the schemes will look into how exactly the merger should be executed.Stijn Marks, employers’ chairman at SBMN, said SNPF was likely to join the industry-wide scheme. “In order to keep the new set-up simple,” he said, “we’ll try to develop one pension plan for all participants, possibly with additional modules for deviating arrangements.”The new, and yet nameless, scheme is to be directed by a “lean and mean” pensions bureau, according to Eric Uijen, director at SNPF.SBMN does not have a pensions bureau, while SNPF is in the process of scaling down its own bureau, following its recent contracting out of its pensions administration to TKP, which already acts as SBMN’s provider.According to Uijen, both schemes will also look into the most desirable set-up for asset management.SBMN has placed almost all of asset management with insurer Aegon, which has invested the assets through its own funds, while SNPF has six external asset managers.Uijen said: “In principle, we want to follow current practice and focus on contracting out as much as possible.”Both schemes stressed that the merger would not have consequences for accrued pension rights and current benefits.The coverage ratios at SBMN and SNPF was 108.9% and 109.2%, respectively, as of the end of March.Both schemes have cut pension rights twice, in order to stay on the mapped out route to recovery to the minimum required funding of 105%. SNPF, the €1.2bn pension fund for notaries in the Netherlands, and SBMN, the €850m industry-wide scheme for notary employees, have announced their intention to merge on 1 January 2015. The pension funds said their decision was a response to the decreasing market for notary services – following a slump in the housing market – and that it aimed at the benefits of scale for efficiency and cost-cutting.They pointed out that the falling number of active participants meant lower income from contributions, while costs per participant were rising.“At the same time,” they added, “the provision of pension plans, as well as asset management, has become increasingly complicated, and requirements for pension funds’ boards are continuously being raised.”
Asset manager BankInvest announced today that it had appointed Bo Bertram as the new chief executive of both BI Holding and the BankInvest Group. Nykredit said Bo Bertram would leave the company’s executive board with effect from today.Following his departure, the board will comprise managing directors Bjørn Mortensen, Georg Andersen and Jesper Berg, it said.The new leadership team at Nykredit Asset Management will be the current investment director Peter Kjærgaard and the new client director Morten Therkildsen.Therkildsen is coming to Nykredit from a job at Carnegie Asset Management.Meanwhile, Nykredit Portfolio Administration will be led by director Jim Isager Larsen, who was previously responsible for clients in the same business area.Therkildsen, Kjærgaard and Isager Larsen will all report to Duus, Nykredit said.Duus said Nykredit had a focused asset management business with some unique skills, and was also Denmark’s largest administrator of mutual funds. “Both areas have now evolved to a level where a division is natural,” he said. “It gives us a better opportunity to focus and define specific objectives for each area, and in this way create the basis for further growth.”Isager Larsen said that, as separate business areas, the vision of each section would become clearer, both for their customers and staff.“Our asset management services are sought after, and we must take advantage of that because the demand for low costs and economies of scale will intensify in the future,” he said.Before coming to Nykredit, Bo Bertram worked for Danske Bank, and he is also chairman of the CFA Society Denmark.At BankInvest, Bo Bertram will be stepping into the shoes of the firm’s current chief executive Bo Foged, who – as reported by IPE in May – has been appointed group finance director at Danish statutory pension fund ATP.Foged will start his new role at ATP on 1 January 2015, on which day Bo Bertram will take up his job as the head of BankInvest. Denmark’s Nykredit Asset Management is splitting its business into two distinct divisions in the wake of the decision by its managing director to move to rival BankInvest.The two new sections are Nykredit Asset Management – which manages investments on behalf of clients – and Nykredit Portfolio Administration, which undertakes outsourced investment administration.Nykredit Asset Management will have a new two-man leadership team, while Nykredit Portfolio Administration will become an independent business area under Nykredit Wholesale, according to the plan.Group director Kim Duus said: “The organisational change is, of course, an extension of our strategic aim of having an increased focus and a strong orientation towards customers, as well as happening against the background of the decision by Lars Bo Bertram – until now managing director – to look for new challenges.”
Lothian Pension Fund has shied from divesting its fossil fuel holdings, citing the costs associated with such a move.Responding to calls from the City of Edinburgh Council to investigate the costs, benefits and feasibility of either partially or wholly divesting, the £5.1bn (€6.9bn) fund raised concerns over the cost of divestment and the potential loss of returns.It is not the first fund to consider divesting from carbon-heavy sectors – last year, the Environment Agency Pension Fund argued that divestment was neither industry-leading nor progressive.Despite this, the Government Pension Fund Global was recently ordered to sell all companies that derive more than 30% of earnings from coal. Lothian noted that, depending on how fossil fuel companies were defined, either 29 or 19 of its shareholdings – equivalent to £151m or £113m of its portfolio – could be subject to divestment.“While the precise impact of divestment from fossil fuel companies is unknown, certain costs are guaranteed, and the overall impact could be significant,” it said.It estimated that the one-off cost of selling its fossil fuel holdings would be as much as £2.5m.It also cited the additional ongoing compliance cost of ensuring no companies regarded as fossil fuel firms re-entered its portfolio.In the report ratified at its most recent pension committee meeting, which accompanied an annual review of its Statement of Investment Principles (SIP), the fund also noted that the recent review of fiduciary duties by the Law Commission had shown that financial returns should be the “predominant concern” of pension trustees, even if they were allowed to take account of non-financial matters.“To the extent that divestment reduces the fund’s investment return in the future as compared to one that retains the ability to invest in the shares of fossil fuel companies, there is risk to the employer contributions,” the report adds.“Such an occurrence could be challenged – for example, by employers and/or taxpayers – to whom the financial burden would fall. This is a significant risk for the funds.”However, the fund said it would continue to incorporate environmental, social and governance (ESG) concerns into its investment approach.It also noted its backing of the “Aiming for A” resolution, which saw BP, Shell and Statoil agree to disclose how they would adapt to a future low-carbon economy.It said divestment would remove its access to company management and fail to change the level of fossil fuels consumed on a global level.“Divestment results in shares being sold to other investors, who may be less concerned about climate change and less inclined to engage with management to change behaviour for the better,” it said.Lothian also stressed its commitment to low-carbon investments by highlighting both its exposure to sustainable timberlands and the growth of its renewable energy holdings, which account for more than one-quarter of its £268m infrastructure portfolio.
Simon Moss, partner at Hermes GPE, said: “The mandate will allow us to further enhance our relationships in the market as we put the funds to work, and demonstrate our proven execution capability to our global deal sourcing network.”The firm said the £1bn allocation will be invested over three years, and divided equally between funds and co-investments.The money will be invested globally by its investment team of 16 staff, working out of London, New York and Singapore, it said.Hermes GPE said it makes the most of private equity exposure on behalf of institutional investors by using a mix of co-investments from around the world, and investments in primary funds.The firm said it had been an “early adopter” of the co-investment approach within private equity, and had raised $480m for its co-investment fund Hermes GPE PEC II LP at the close in September 2014.This fund was already around 82% committed, and was expected to be fully committed by the end of 2015, it said.The BTPS has been increasing its overall exposure to alternatives in recent months, having been involved in buying stakes in rail company Eurostar and Associated British Ports via Hermes Infrastructure.In March, Hermes Infrastructure bought 10% of Eurostar on behalf of several pension funds when the UK government sold off its stake in the company for £585.1m.In the same month, the infrastructure manager and the Canada Pension Plan Investment Board (CPPIB) jointly acquired 30% of ABP for £1.6bn. The UK’s £40.3bn (€57bn) BT Pension Scheme (BTPS) is almost doubling its exposure to private equity, awarding a £1bn mandate to Hermes GPE to invest in the asset class internationally.According to the most recent BTPS figures, the pension fund had £1.2bn invested in private equity at the end of June 2014, which represented 3.2% of total assets.Much of this exposure is already invested via Hermes GPE, though precise figures were not available.Hermes GPE — part of Hermes Investment Management, which is in turn owned by BTPS — will see its assets under management grow to £4bn as a result of the mandate.
In Brussels-speak, the word ‘probably’ could mean ‘not for a very long time’, warns Jeremy WoolfeThe clearance of the draft IORP II Directive through the European Parliament’s key Economic and Monetary Control Committee (ECON) committee, due in the first week of December, has now been delayed.The new set date is “probably” 25 January 2016, a parliamentary official informs IPE, but with the word “probably” emphasised.Explanation for the existing and possible further hold-up is that major political parties have yet to agree on major “compromises” (amendments), meaning there remain major different opinions. These include the serious issues of cross-border matters, funding rules and transparency.As a result, the word “probably” could be translated, in Brussels-speak, as “not for a very long time”! This would obviously upset reformists.Overall, the status quo today appears not much removed from that in, say, October 2013, when Matti Leppälä, secretary general at PensionsEurope, gave a general thumbs-up for the new rules while calling for something not too “burdensome”.At the same time, other archives show that the European Insurance and Occupational Pensions Authority’s relevant stakeholder group (OPSG) suggested the need for a serious upgrade to the IORP I of 2003. The group noted that many of Europe’s estimated 140,000, mostly small pension schemes were less efficient than if the individual retirement savers had invested alone.The European Commission itself is, at present, keeping largely mum: “We don’t have much to say at this stage.”But Better Finance recently wrote a bitter letter addressed to Brian Hayes MEP, the centre-right ECON committee coordinator. Guillaume Prache, head of the consumer interest group, noted that the “proposed amendments in the ECON draft report would mean a very significant step back in the protection of EU pension savers”.It argued against a watering down of the information IORP participants would receive through the so-called Pension Benefit Statement (PBS). The letter then went on to complain about ECON proposals to delete Commission requirement for disclosure of funding levels to participants. The body went on to comment that the amendments to IORP II were clearly in direct contradiction to the Capital Markets Union Action Plan.Historical background is that the new rules for occupational pensions, as proposed by the Commission in April 2014, passed first to the Council of the EU, representing national governments, before going on to the Parliament. This order is contrary to normal practice.In December 2014, the Council gave crucial support for the removal of remaining prudential barriers for cross-border IORPs, while advocating provisions for clear and relevant information to members and beneficiaries. In addition, the member states’ position was, and most likely still is, to recommend good governance and risk management, and ensure that supervisors have the necessary tools to supervise IORPs effectively.One has to ask why MEPs, who supposedly also reflect the views of their national interests, should now have suggested a mammoth number of 700 amendments during the later committee processing stage?As for next steps, the Dutch six-month presidency, starting in January 2016, is considered unlikely to tolerate matters dragging on after any vote in the European Parliament. However, it will also face the need for the whole re-worked shooting bag to have to go back to “trilogue”, which would involve the Commission, the Council and Parliament having to get together in three-way meetings to agree finalisation. Only an optimist would see this lasting just another 2-3 months.As stated by Erik Hormes, from the office of Paul Tang, centre-left MEP shadow coordinator for IORPS II in the ECON committee, he has never seen a Directive on “such a slow burn”.That’s certainly one way of putting it.
Cambridge Associates, BP Investment Management, BMO Global Asset Management, Invesco, BlackRock, Royal London Asset Management, F&C Asset Management, IFM Investors, Hermes Investment Management, Close Brothers Asset Management, Employer Covenant Working Group, RedingtonCambridge Associates – The institutional investment adviser has hired Vicky Williams as senior investment director. She joins from BP Investment Management, the in-house fund manager for the BP Pension Fund, where she was head of private equity. Before that, she ran the private equity portfolios of British Airways Pensions Management and Shell Pensions Management Services.BMO Global Asset Management – Richard Wilson has been promoted from chief executive at BMO for the EMEA region to global chief executive and CIO. He was appointed as chief executive at F&C on 1 January 2013, prior to its acquisition by BMO Financial Group. He has also held positions at HSBC Asset Management, Deutsche Asset Management and Gartmore Investment Management.Invesco – Chris Evans has been appointed to the newly created position of investment-consultant relations director for the EMEA institutional team. He joins from BlackRock, where he was the EMEA head of the global consultant relations team. His previous experience includes working with Australian superannuation and UK pension schemes, as well as at Mercer, where he was an investment consultant. Royal London Asset Management – Nick Woodward has been appointed head of liability-driven investments (LDI), effective 1 July. He joins from F&C Asset Management, where he was a senior member of the LDI team. Before then, he served as head of modelling at KPMG and a pensions adviser at Deutsche Bank and Aon Hewitt.IFM Investors – Brian Clarke has been promoted to the newly created position of global head of investor relations. He was previously executive director of global investor relations for North America.Hermes Investment Management – Gill Clarke has been appointed strategic compliance director. She joins from Close Brothers Asset Management, where she was head of legal, compliance and risk. Before then, she held similar roles at BlackRock, ABN Amro and UBS Global Asset Management.Employer Covenant Working Group – Keith Hinds has been appointed chair, effective 1 June. The Employer Covenant Working Group is a group of industry experts formed to work in collaboration with trustees, scheme sponsors and regulators to address issues facing defined benefit pension schemes in respect of covenant advisory work. Hinds is a pensions partner at Grant Thornton UK.Redington – Patrick O’Sullivan and Karen Heaven will assume managing director roles within the client consulting team, while Steven Yang Yu has been promoted to the position of managing director in the asset and liability modelling team.
The Austrian pension fund federation (FVPK) has proposed a new long-term savings account for payments related to overtime and unused holiday, as it pushes to expand pension coverage through inclusion in a greater number of collective bargaining agreements.Andreas Zakostelsky, the federation’s chairman, backed the introduction of a new type of savings vehicle, a flexible benefit long-term account to be managed “by a professional third party”.According to the chairman, the FVPK wishes to hold talks with social partners about creating the new account structure. Zakostelsky proposed its income would be drawn from overtime pay, bonuses or the cash equivalent of unused leave.He added that the assets could then be invested and later used for sabbaticals, personal care or supplementary retirement. “This is just an idea we want to present, and we think it will start an interesting discussion – all of it has to be voluntary of course,” said Zakostelsky. Eventually, such a model would require changes to Austrian social and labour legislation, as well as supervisory guidelines.Zakostelsky also said FVPK was in talks with social partners to convince them to include pension fund arrangements in their new collective barganing agreements, most of which are up for negotiation this autumn.Currently 69 out of the 859 collective bargaining agreements setting remuneration standards for various sectors signpost the use of Pensionskassen as way for companies to provide retirement benefits.Zakostelsky said he was convinced collective bargaining agreements would provide the leverage to achieve the FVPK’s goal of doubling the number of Austrians saving into a Pensionskasse.Currently around 23% of all Austrian workers and employees are accruing assets in a Pensionskasse or are already drawing down their supplementary occupational pension.The chairman also took issue with the European Central Bank’s (ECB) current monetary policy, saying it was “questionable” to keep up a low interest rate policy over such a long period to “desperately try and keep the price of a commodity at zero”.“The EU’s low interest rate policy is borderline irresponsible and relatively absurd as we do not really see the effects we hoped for, like kickstarting the economy.”In an unusually critical statement, he also said the ECB’s measures led to “systematic redistribution – not to say expropriation” and were “keeping the middle-income segments from increasing their assets via compound interest effects or indeed any interest rate effects”.The German association of company pension funds previously expressed similar criticism in 2014 and two months ago a representative of the Austrian insurance industry said pension providers were regarded as “collateral damage” of the ECB’s policy. However, Zakostelsky stressed institutional investors such as Pensionskassen were still able to generate some return in the current environment if employing the right risk management.For the first half of 2016, Austrian Pensionskassen only managed an average performance of 0.22%.However, Zakostelsky pointed out over the last three years of low-interest rates the annualised average return stood at 4.14%, and 5.93% over the last five years.
In the first half of 2015, the two funds returned 10.5% and 0.6%, respectively.However, AP7 said developments on global stock markets had been strong in August this year. “This has meant that the unit price for the AP7 equity fund, as of 24 August 2016, has increased by 7.3% since mid-year,” it said.AP7’s board decided last year to scale back the leverage in the equity fund to 125% from 150%, from the summer of 2015.The pension fund said the equity fund’s leverage rate was 124.8% as of the end of June.Within its equities fund, AP7 said active alpha management had detracted from investment profits to the tune of SEK238m (€24.9m) in the half year.Tactical asset allocation, on the other hand, contributed positively by SEK59m in the six-month period.The pension fund explained that active management consisted of tactical allocation and pure alpha management involving taking long or short positions in shareholdings, while tactical asset allocation mainly involved departing from the established leverage ratio by 12 percentage points up or down.AP7 also said it made an SEK25.3bn net profit on its active-equities lending programme in January to June via its depositary bank Bank of New York Mellon.The equity fund’s assets fell in value to SEK259.7bn at the end of June from SEK261.1bn at the end of December 2015, while the bond fund’s assets grew to SEK23.5bn from SEK22.1bn, according to the interim data. Sweden’s state pension fund AP7 – the default defined contribution (DC) fund in the Premium Pension System (PPM) – reported a 0.5% loss for the first half of the year for its Såfa lifecycle product, which it said was still slimmer than the 1.7% loss private premium pensions suffered over the period.The return on the Såfa product, which combines investments from AP7’s equity and bond funds, is much lower than the 9.8% AP7 managed to generate for its savers in the same period in 2015.In its interim report, AP7 said the equity fund, which holds the bulk of the pension fund’s assets, suffered a 0.5% loss between January and June, in line with the benchmark index.The bond fund, meanwhile, produced a return of 0.7%.