PPF to increase alternatives portfolio with £500m energy mandate

first_imgThe UK’s defined benefit (DB) £16.3bn (€19.7bn) lifeboat fund is set to increase its exposure to the growing energy market, tendering a £500m private equity mandate.The Pension Protection Fund (PPF) said it is looking for a manager to handle £400m-500m in allocations to the US oil and gas sector while also investing in renewable energy.The US has in recent years seen significant growth in the field of hydraulic fracturing, or fracking, a method whereby natural gas is extracted from lower layers of sediment after it it flooded with a blend of water and chemicals. Asked if the mandate could include exposure to fracking, a spokeswoman for the PPF would only say it would look at “all options” presented by fund managers. The investment will form part of the fund’s alternatives allocations, which has a strategic allocation of 22.5% after the fund overhauled its investment structure earlier this year.At the end of March, the PPF had £444m, or 2.7%, in private equity, with a strategic allocation of 4% to the asset class.It said it wanted to appoint two or three managers as part of a framework agreement investing in  energy or related companies, mainly in North America and OECD countries.The agreement is expected to last around four years with the possibility to extend this by a further four years.Interested fund managers must have a targeted fund size of over $400m (€308m) with close to 80% of the fund allocated to traditional energy investments, or closely related holdings.The move by the PPF comes after it delivered a marginal negative return over the last financial year after its liability-driven investments (LDI) dragged down returns.It suffered a negative 0.7% return on overall investments which rose to 3.4% after stripping out the fund’s LDI book.Earlier this year the fund overhauled its investment structure changing from holding 30% in risk assets to a more dynamic approach.It will now allocate 58% to LDI strategies, 22.5% to alternatives and 12.5% to hybrid assets that both provide risk exposure and match liability payments with inflation expectations.It transferred some of its property holdings into the hybrid portfolio, thus decreasing what assets came under its alternatives banner.The fund’s move into private equity holdings in the energy sector come after it also made moves to enter the direct lending space, and threw its weight behind smart beta.In January this year, it announced it would begin lending around £150m to UK corporates as it searched for two managers to manage the mandate.It also changed the strategic benchmark for its equity managers from a market-capitalisation approach to a smart beta minimum volatility method.last_img read more

Dutch provide most pension assets per capita in Europe, study shows

first_imgA report compiled by the Dutch government has estimated that combined assets in the country’s pension system would equate to approximately €50,500 per person.Drawing on figures compiled by the Organisation for Co-operation and Development (OECD), the Dutch Cabinet found that the Netherlands had by far the most pension savings in Europe per capita. Switzerland and Iceland – with pension assets of €45,811 and €41,433 per capita – came in second and third place, respectively.Other markets highlighted in the survey included the UK, with €27,366 in pension assets per citizen, Ireland (€16,155), Denmark (€16,056) and Finland (€13,855). Pension assets exceeded €4,000 per capita in none of the 16 remaining EU countries, the Dutch government said. It said pension assets in Germany and Belgium amounted to €1,980 and €1,409 per capita, respectively, while France and Greece fared worst of all, boasting just €91 and €9 per head, respectively.The Dutch Cabinet looked at the accrued pension assets in Europe at the request of Parliament.last_img read more

Switzerland’s AHV drops soft commodities due to ‘political sensitivity’

first_imgThe AHV manages its commodity exposure in-house, tracking the Bloomberg Commodity Index via swaps.Under the new strategy, which allows commodity investments in energy and precious metals only, “the index will have to be changed”, the scheme said.The fund has also decided to manage government bonds in US dollars in-house to cut asset-management costs.The AHV said it expected to save “more than half a million Swiss francs” with the measure.Further, the pension fund decided to define a separate allocation for less liquid investments “to increase transparency in reporting”.Strategic investment in real estate was increased from 6% to 7%, while the AHV said it would start to build indirect exposure to foreign real estate via funds “step by step”.To date, the fund has invested 26% of its real estate portfolio in foreign real estate, mainly Asia and North America, using listed vehicles; the remainder comprises domestic direct and indirect investments.A similar step to invest in foreign property had been considered more than a year ago, when the AHV looked into a Europe-only real estate fund. To make the portfolio “more resilient” to market corrections, hedging tools were expanded to include a tail-risk hedging vehicle, which the fund developed internally and will be implemented in the coming months.Further, it introduced an operational risk report to provide the managing board with additional information beyond the existing compliance report.Last year, the AHV’s portfolio would have returned 10.36%, but equity overlays, as well as interest rate and foreign currency hedges, lowered the reported return to 7.1%.However, after the Swiss National Bank cut the peg of the Swiss franc to the euro on 15 January this year, the AHV noted its foreign-currency hedging prevented a CHF1bn loss. Switzerland’s CHF33bn (€27bn) first-pillar fund AHV has decided against investing in agricultural commodities in future, according to its 2014 annual report.It said it based its “new concept” for commodity investments on “political sensitivity” to investments in food, agriculture and livestock.In 2014, commodity holdings were the only part of AHV’s portfolio to register a loss, returning -8.2%.For the year previous, the asset class returned -9.85%.last_img read more

Dutch pension fund replaces equity managers with BlackRock

first_imgAs a result, its matching portfolio now consists solely of government bonds and interest derivatives.Last year, the pension fund adopted a dynamic asset allocation strategy centred around SNPF’s ‘policy funding’.Under this new strategy, the scheme raises or lowers the risk profile of its investments in synch with its coverage ratio.SNPF chairman Eric Greup conceded that the strategy change had not yet taken into account the planned merger with SBMN, the €1bn pension fund for notaries’ staff.“Currently,” he said, “a working committee is assessing how the future joint investment policy could be shaped.”Greup explained that the schemes’ investment model differed too greatly for amendments ahead of the merger, but he said options had been identified for strategic asset allocation and interest hedges.SBMN has contracted out its asset management to Aegon AM.At the start of 2015, it replaced its capital contract for investments with Aegon funds, which allowed SBMN to choose its desired risk/return profile.Last year, the scheme for notaries’ staff replaced its interest hedge through the Aegon Long Duration Overlay fund with Aegon’s Strategic Liability-Management Fund (SLM).Last year, SNPF also outsourced its pensions administration to TKP Pensions.Greup warned that the planned merger was taking longer than expected and acknowledged that it could face a second delay.“Nevertheless,” he said, “our intention still is that the merger should start on 1 January retrospectively, if the deal is concluded not too long after this date.”According to Greup, all relevant bodies and authorities have already approved the merger plan, including the Dutch government.“However, the Council of State, the Netherlands’ highest legal college, is still assessing the necessary amendment of the Notaries Act,” he said.SNPF and SBMN returned 24.1% and 25.6%, respectively, last year, chiefly due to their interest hedges.Just before the recent reduction of the ultimate forward rate, their funding ratios were 108% and 109.7%, respectively. SNPF, the €1.4bn pension fund for Dutch notaries, has replaced equity managers JP Morgan Asset Management and BNP Paribas for BlackRock to “streamline” its investment portfolio.The pension fund, according to its 2014 annual report, made the changes to cut costs and reduce risk. It awarded BlackRock two passive mandates, covering developed and emerging markets.SNPF also concentrated its high-yield investments within the European credit section of its return portfolio.last_img read more

​Eurosif concerned over tax amendments to Shareholder Rights Directive

first_imgThe binding vote on executive remuneration was at the heart of the Commission’s initial legislative proposal and hailed as a step towards a greater focus on long-termism by then-commissioner Michel Barnier.In a position paper, Eurosif added that it was aware of the argument CBCR could be “burdensome and onerous” if imposed on all listed companies. “We therefore recommend policymakers think about ways to focus to alleviate such burden and make recommendations in that direction,” it said. It also argued that it would be preferable to amend accounting regulation, rather than the Shareholder Rights Directive, as a means of introducing CBCR.Eurosif said the rationale for institutional investors backing CBCR was one of managing reputational risk.It noted that the distinction between illegal tax evasion and legal tax avoidance had “dissolved in the eyes of governments, NGOs and citizens”.It added that aggressive tax practices risked undermining a company’s sustainability strategies, and that the short-term gains or profits achieved by such tactics could fall away as a result of the medium to long-term impact of reputational risk.,WebsitesWe are not responsible for the content of external sitesLink to Eurosif position paper on Shareholder Rights Directive Eurosif has questioned attempts by the European Parliament to introduce greater corporate tax transparency by amending the Shareholder Rights Directive.The sustainable investment association stressed that it was wholly supportive of the introduction of country-by-county reporting (CBCR) for all listed companies but said that agreeing an “ambitious” text for the Shareholder Rights Directive was a priority.European parliamentarians recently voted on an amended draft of the directive, which proposed the introduction of CBCR, currently only mandated for banks and extractive industries.But they watered down a pledge for a binding vote on pay by leaving it to individual member states to decide if shareholders should be granted one.last_img read more

Denmark’s PFA lures Industriens CIO to co-head new investment team

first_imgPFA Pension, Denmark’s largest commercial pension fund, has put a new asset management team in place following the loss of its joint heads of the division to Danica earlier this year, poaching Henrik Nøhr Poulsen from his job as CIO at Industriens Pension.PFA Pension, which manages assets of DKK552bn (€74n), said it appointed Nøhr Poulsen as one of the three directors of its subsidiary PFA Asset Management.He will take up the post on 1 December.The other two directors of the three-man management team will be Christian Lindstrøm Lage and Rasmus Bessing, who are already in their roles as directors. In the new management team, Nøhr Poulsen will be in charge of equities and alternative investments, while Lindstrøm will be responsible for fixed income and credit, and Bessing for back and middle office.Henrik Henriksen, PFA’s chief strategist – who has been acting as the third director of PFA Asset Management alongside Lindstrøm Lage and Bessing recently – will continue is his role as part of the leadership team in PFA’s investment and risk business area, with particular responsibility for investment strategy, client mandates and communication.In May, Danica announced that it hired the joint managing directors of PFA Asset Management Poul Kobberup and Jesper Langmack.Danica said at the time the appointments were part of the new investment strategy conceived by its CFO Jacob Aarup-Andersen and approved a year ago.Following that announcement, PFA said its group director Anders Damgaard would take over the daily management of PFA Asset Management.Once the three permanent directors are in place, Damgaard will continue to have overall responsibility for PFA’s investment strategy, including PFA Asset Management’s activities.Anders Damgaard said: “It is a pleasure to be able to say we now have a strengthened and forward-looking team in place in PFA Asset Management.”He said PFA had taken the current team as the basis for identifying those areas that would be strengthened further.No one at PFA was immediately available to say which these areas were.Damgaard Jensen said the new leadership at the asset management division was built on the strong investment team it already has, and that some new faces would be joining this team.Erik Hallarth is coming to PFA as chief portfolio manager, while Henrik Nordestgaard – who has been a director at Barclays Capital in London for the last few years – will join PFA Asset Management shortly.Hallarth was previously CIO at Denmark’s AP Pension.last_img read more

New Estonian pension provider crowdfunding start-up capital

first_imgBy Tuleva’s reckoning, the management company, once established, will be sustainable once 3,000 members join and transfer their existing second pillar savings.The mandatory second pillar currently has close to 685,870 member and €2.7bn of assets.As of 23 August the association was half way past its target, with €1.53m of capital collected since the end of April, and a membership of 1,700 acquired entirely by social media and word-of-mouth.Members pay an up-front fee of €100 and pledge to bring in their second-pillar savings.The first 3,000 members can also make an additional voluntary contribution of between €1,000 and €10,000 to the start-up capital, fully returnable if the fund management company is not established by the end of next July, in return for a higher profit share.According to Pekk, a former chief executive of GA Fund Management who has also worked for PwC and the European Bank for Reconstruction and Development, 0.05% of the Tuleva’s AUM will be distributed among the members according to the size of their pension account in Tuleva funds, while the rest of the profit – both from the business as well as investment income of the start-up capital – will be distributed among all members according to their contribution to start-up capital.In addition to the novel ownership structure, Tuleva intends to charge lower management fees, a contentious issue in the Estonian pensions market. According to Pekk, management fees currently average 1.26%, while the total expenses ratio is some 1.5-2%.Tuleva will initially charge a management fee of 0.5%, reducing this when the membership increases.It intends to achieve the lower costs through a fully passive investment strategy – 75% invested in the MSCI All Country World Index and 25% in the Barclay Capital Global Aggregate Index – using mostly BlackRock as its provider.Pekk told IPE that Tuleva hopes to have the necessary documentation ready by September and the finances in place by the end of October, with the pension fund launching next year pending regulatory approval.Estonia’s finance ministry, meanwhile, which itself called for greater competition and fee transparency, is incorporating two of Tuleva’s proposals into forthcoming amendments to financial legislation.The current exit fee for pension fund members switching providers is to fall from 1% of assets to 0.1%, while the minimum share capital will be cut to €1m.Tuleva is not alone in turning to passive investment to cut fees.This week LHV announced that it plans to launch two new passive index funds – a second-pillar fund 75% invested in equities, and a third pillar one fully invested in equities –  each of which will charge a management fee of 0.39%.LHV plans to receive the regulatory go-ahead for its new offerings later this year. Estonia’s shrinking pension fund landscape may soon have a new player, operating on a profit-sharing cooperative model.Tuleva, started up by 22 prominent Estonian financial and business individuals, has been established as a commercial organisation, a collective of members with similar interests, with each member holding one vote, in contrast to the four existing bank-owned market players.“The market for the second pillar fund system is uncompetitive, and returns since its launch in 2002 have been poor,” Tuleva board member Tõnu Pekk told IPE.The association is building up capital to set up a second-pillar pension fund management company, which under current Estonian law needs a minimum capital of €3m, as well as funds to finance costs such as regulatory, legal and depositary expenses.last_img read more

AXA IM: Investors must focus on China’s digital services economy

first_imgMark Tinker, head of Asian equities at AXA Framlington, added that innovative developments were boosted by China’s growing middle class population and rising incomes, as well as by the continuing migration to urban areas where more people were digitally connected.He advised investors to shun state-owned firms “as they represent the old industry”.The same went for indices and exchange-traded funds because they lacked sufficient technology, innovation and growth, Tinker contended. “Only by actively investing will investors benefit from the technological revolution in China,” he said. AXA Framlington only offers actively managed funds.Bryan Collins, head of Asian fixed income at Fidelity International, also saw opportunities in the transition to a consumption-driven services economy which was increasingly focused on the environment.“As a consequence, new chances are created in technology such as renewable energy and air purification,” he said.Collins also emphasised that investments were possible across the entire spectrum of the Chinese capital market, comprising a diversity of bonds in terms of duration, rating and coupon rates as well as dollar and renminbi-denominated government paper.He noted that China’s “onshore bonds” for foreign investors – issued since 2015 – have been added to several indices and that this trend was accelerating.As the onshore market represents a value of $12trn (€10.1trn), the potential was enormous, according to Collins. Investors should refocus on China as a new digital services economy rather than on “old China” and its production-based economy, according to AXA Investment Managers (AXA IM).Speaking at the annual conference of IPE’s Dutch sister publication Pensioen Pro last week in Amsterdam, senior economist Aidan Yao said that the country’s transition to a services-based economy was in full swing and was driven by a fast-growing middle class, as well as innovation and new technology.This trend was confirmed by an annual rise in research and development costs of 12% across the country during the past five years, he said.Although the Chinese government was largely sponsoring these costs, in Yao’s opinion, the reform policy was bearing fruit “as the authorities are increasingly open to the privatisation of companies”.last_img read more

Ilmarinen urges preparation for long-term future of pension system

first_imgJouko Pölönen, Ilmarinen’s chief executive, said the outlook for pension financing in Finland would be stable in upcoming decades, according to a long-term calculation concerning the sustainability of the pension system. The Finnish Centre for Pensions published its latest figures on pension sustainability last month.“The pension contribution can be kept below 25% up until the 2050s,” he said. “However, in the long term, a decline in the birth rate will cause significant pressure to raise the contribution, which we need to prepare for well in advance.”First-quarter gains hit 4.6%Ilmarinen’s investment assets grew to €47.4bn at the end of March, from €46bn at the end of December.The fund’s first-quarter return amounted to 4.6%, compared with a loss of 0.1% in Q1 2018.Equity investments generated a return of 8.8%, while fixed-income investments returned 2%. The long-term average nominal return was 5.7%, corresponding to a real annual return of 4.2%, Ilmarinen reported.The pension insurer’s solvency ratio strengthened by 1.1 percentage points to 124.8%, with solvency capital at €9.6m, compared with €8.9m at the end of 2018. Rising employment in Finland will support pension contribution volumes this year despite economic weakness, according to the country’s largest pension fund.However, Helsinki-based Ilmarinen warned that the country’s low birth rate meant preparations must be made for the long-term future for Finland’s pension system.Despite expected slower economic growth both in Finland and other industrialised countries compared to 2018, domestic employment and payroll were expected to continue to develop favourably, Ilmarinen said in its first-quarter report.“This will have a positive impact on pension providers’ premiums written in 2019,” the pension insurance firm said.last_img read more

IPE Awards: ATP is Europe’s best pension fund

first_imgAustria APK Pensionskasse / APK Vorsorgekasse Factor InvestingMerseyside Pension Fund Risk Management FRR IrelandAccenture Defined Contribution Pension Plan Multi-Employer/Professional Pension FundAlecta SpainPlan de Pensiones Nestlé Public Pension FundBundespensionskasse ItalyFondo Pensione Laborfonds Silver Awards   SwitzerlandCPEG, Caisse de prévoyance de l’Etat de Genève Themed Awards  Pension Fund Achievement of the YearAPG GroeiFabriek Outstanding Industry ContributionChristian Böhm ATP was named European Pension Fund of the Year at last night’s IPE Awards dinner in Copenhagen.The top prize was one of six awards scooped by Denmark’s biggest pension fund, including for Long-Term Investment Strategy, another gold award category. The DKK934bn (€105bn) investor was also recognised for its work in emerging markets and innovation.Accepting the main award,Bo Foged (pictured far right above) said, “I didn’t expect to receive this prize, but thank you to the jury and the audience and also the team at ATP who worked really hard this year.” Corporate Pension FundPensions Caixa 30 Passive ManagementFRR BelgiumPensioenfonds KBC Small CountriesAlmenni Pension Fund Country / Regional Awards  Gold Awards   Long-Term Investment StrategyATP Active ManagementFjärde AP-fonden (AP4)  Christian Böhm receives the Outstanding Industry Contribution award from IPE editorial director Liam KennedyThe Outstanding Industry Contribution award went to Christian Böhm, APK Pensionskasse’s chief executive officer.A veteran of the Austrian and European pension fund industry, Böhm has led APK since its foundation in 1989. He is deputy chairman of the Austrian association of pension funds and sits on the board of PensionsEurope.”The ultimate goal for us to achieve is to deliver the best for our beneficiaries. Thank you very much,” he said upon receiving his award.Böhm has engaged on matters such as EIOPA’s pension fund stress tests and the European Commission’s proposed regulation on sustainable investment.APG won Pension Fund Achievement of the Year for its GroeiFabriek (Growth Factory), which is the Dutch investor’s response to the need to innovate. It aims to stimulate the growth of new ideas from within APG and to build an ecosystem of continuous innovation.The 2019 IPE Awards attracted more than 430 entries across 43 categories, with participating investors having €2trn in assets under management. Ninety one judges were involved in assessing entries. Central & Eastern EuropeSwedbank Pension Plan InnovationATP PortugalOcidental Pensões United KingdomPension Protection Fundcenter_img Bronze Awards  The UK’s Merseyside Pension Fund was also a multiple winner, taking home awards for climate-related risk management, credit and alternatives, and factor investing. DenmarkATP and PensionDanmark NetherlandsStichting Calpam-Pensioenfonds FranceAG2R La Mondiale European Pension Fund of the YearATP CommoditiesHVB Pension Fund Portfolio Construction & DiversificationSEB Pension och Försäkring Small Pension FundStichting Calpam-Pensioenfonds National / Sovereign FundATP Credit & AlternativesMerseyside Pension Fund Climate Related Risk ManagementMerseyside Pension Fund Emerging MarketsATP Germany (bAV)Telekom Pension Fund Real EstateChurch Commissioners for England AlternativesIndustriens Pension Fixed IncomeAlecta Germany (Versorgungswerk)Ärzteversorgung Westfalen-Lippe In-house Investment TeamFjärde AP-fonden (AP4) EquitiesBBVA Pensiones V and ERAFP                      Pensions Governance & AdministrationPensions Caixa 30 ESGChurch Commissioners for England Real Assets & InfrastructureBundespensionskasse SwedenSwedish Pensions Agency DC & Hybrid StrategiesAirbuslast_img read more