Finland’s Keva sees gains from equity, hedge fund investments

first_imgCIO Ari Huotari added that, while the global economy has been showing signs of improvement, global capital markets are still being “overshadowed by concerns” over how central banks are squeezing liquidity.Nonetheless, investment returns for the first nine months of the year improved to 4.8%, above the 3.8% return of the first quarter, or the 2.3% seen in the six months to June.The rise was largely down to a strong performance by Keva’s listed equity and equity fund holdings, accounting for 38% of assets under management.The portfolio returned 11.2%, outperforming all other asset classes.Despite the 0.2% loss posted by the fund’s fixed income holdings – at the end of September accounting for 45.8% of assets compared with 47.6% in June – Keva’s small commodities portfolio saw the single-biggest loss of 3.6%, an improvement on the portfolio’s 7.5% loss for the first six months of the year.Hedge fund investments worth around €1.2bn returned 7.1%, behind the 8.5% investment return by its private equity portfolio.Real estate returned 3%. Finland’s Keva has seen double-digit growth in its listed equity portfolio, with year-to-date returns up to 4.8%, according to its third-quarter results.The fund, responsible for the pensions of local government workers, also saw its exposure to fixed income fall further after a second quarter of losses from its bond portfolio.Chief executive Merja Ailus said the results – which saw assets under management increase by €1.3bn to €36.6bn – should be considered “very reasonable”, but struck a note of caution.“We must not lose sight of the fact uncertainty still exists in the investment environment,” she said. ”On the other hand, we have not really seen a change in that environment since the onset of the financial crisis.”last_img read more

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2020-09-29

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’29th regime’ could solve conundrum of harmonising Europe’s occupational pensions

first_imgOne solution to the “impossibility” of harmonising occupational pension systems across the European Union, due to conflicting social and labour laws, could be a “29th regime”, delegates at EIOPA’s pensions conference heard in Frankfurt.The system could operate in parallel with national schemes, suggested Karel Lannoo, chief executive at the Centre for European Policy Studies (CEPS), a Brussels-based think tank.He said the regime would be the “29th” because there are 28 different jurisdictions in the EU, so it would operate under a new one.The new regime could be optional for both companies and beneficiaries, Lannoo said. The scheme could be made to be sufficiently solid to be safe for outside investors.He implied that a 29th regime could help solve the problem of management costs of national schemes varying from 0.1% to as much as 1.4%.Lannoo’s proposal followed the question: “Why can the EU not have a single European pension product?”It came from Allan Polack, chief executive of asset management at Denmark’s Nordia.Polack said such a product that would provide a higher level of professionalism, give a long-term investment perspective and should have a cross-border function.The theme was echoed by Klaus Wiedner, head of unit for insurance and pensions at the European Commission’s internal market DG.“You need to activate scale,” he said, “and this can only be done at the European level.”last_img read more

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2020-09-29

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UK Kay investor forum ‘desperately needs foreign institutions’

first_imgHe added that the working group was “really proud” to have secured the cooperation of a number of large asset managers and owners so far.“We’ve involved some of the biggest American fund managers, who are intensely good at what they are doing and very serious people,” he said.Anderson, who was also an adviser to the Kay Review board, further noted that the group was currently building relationships with overseas sovereign wealth funds, which would become “really influential in the group”.“None of us in the group has any notion at all that we want to exclude asset owners,” he said, “and any contribution is deeply welcome.”He insisted the investor forum would focus on engagement and not be a platform to “bash companies around”.“The phrase that comes to my mind is that we need to be consistently engaged, rather than occasionally outraged,” he said. Chris Hitchen, chief executive of RPMI and a fellow Kay Review adviser, meanwhile told delegates the implementation of the report’s recommendations would likely be a 30-year project.“That isn’t to say we should be complacent,” Hitchen added.Asked by NAPF chief executive Joanne Segars if the industry had the luxury of time to implement the Kay Review in light of legislative proposals on shareholder voting under discussion at the European Commission, Hitchen added: “Well, I’m not saying we shouldn’t make haste. We have to work very hard at this – it’ll take a long time to change the Western world’s financial system, frankly.”He added: “In this endeavour, the UK government is trying to be our friend – I suspect also the EU government.” The UK Kay Review’s proposed investor forum desperately needs to involve overseas investors in its activities to succeed, according to the chairman of the working group charged with its launch.Baillie Gifford partner James Anderson stressed it was important for the forum, once it got underway, to attract sovereign wealth funds, as UK investors’ “dreadful” diversification away from domestic holdings meant they would need the help of overseas investors to make the forum viable.“We desperately need the involvement of foreign institutions if we’re going to make a difference,” he told a National Association of Pension Funds (NAPF) stewardship conference earlier this week.Anderson, who chairs the investor working group on collective engagement launched by the NAPF and its insurance and asset management counterpart associations in March, said its report on the matter would be published in early December.last_img read more

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2020-09-29

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Lawmaker calls on asset managers to acknowledge fiduciary duty

first_img“If something goes wrong, it’s not just the savers but the whole economy that gets affected,” he said.Speaking in the House of Commons as he introduced his Investment Management Fiduciary Duties Bill, Wilson argued that, while trustees are bound by their responsibility as fiduciaries, the responsibility should not be lost if the management of assets is “delegated to someone else”.“We must call on those who manage our funds to do so with our interests ahead of their own,” he said. “At the core of every decision they take should be the saver’s interest because it is our money, not theirs, for which they have responsibility.”The Labour MP said his Ten-Minute Rule Bill – one of the few means for a non-government MP to introduce legislation – was meant to emphasise the importance of sustainable financial returns to pension funds.“Those investors should also have regard for the impact of decisions on the financial system, on the real economy, and also take stock of social and environmental considerations, as well as the implications of any investment activity on the beneficiary,” he said.He said the disclosure of shareholder voting records on issues of pay should be mandatory.“These votes represent our interest and should not be secret,” he said.Wilson warned against introducing more regulation, saying instead that a “new compact” – fiduciary duties for asset managers – was required.Speaking with IPE ahead of the bill’s introduction, he said there was a need for his proposals despite a currently outstanding review of how fiduciary duties apply to companies within the investment chain.The Department for Business, Innovation and Skills asked the Law Commission last year to inspect how the duties currently apply, after professor John Kay’s review of the UK equity markets raised concerns.Its findings are expected later this year.Wilson’s call for fiduciary duties to be extended to all members of the investment chain echoes previous suggestions by ShareAction, with the MP referencing the group’s efforts.The lobby group’s chief executive Catherine Howarth welcomed the recognition of its work.“There is growing political momentum behind ShareAction’s call for a more transparent and accountable investment system,” she said.“Policymakers are increasingly recognising that, by extending investors’ duties to engage with savers and protect their interests, the law can support long-term, responsible investment.”Wilson’s bill will receive a second reading in the House of Commons later this month. Investment managers should disclose their voting records and be placed under an explicit duty to act in the interests of the asset owner, a British MP has said.Phil Wilson, elected in 2007 after former prime minister Tony Blair resigned as an MP, argued that asset managers had a “great moral responsibility” to act responsibly and on behalf of a pension fund’s membership.He argued that managers should therefore be subject to the same fiduciary duty that requires trustees to act in members’ interest.“I’m not asking people in the City to take a Hippocratic Oath,” Wilson told IPE, but said that managers should be responsible and aware of the impact of their actions.last_img read more

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2020-09-29

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Icelandic pension funds return 11% on strength of domestic equities

first_imgIcelandic pension funds achieved returns on assets of more than 11% in 2013, driven by well-performing domestic securities, according to local financer IslandsBanki.The pension funds, which have more than ISK2trn (€13.4bn) in total investible assets, saw real returns of 11.1% over the period, well above their 3.5% actuarial threshold.The funds’ domestic securities, which include ISK243bn in government bonds, returned 12.5%, while their foreign holdings returned 7.9%.Given that foreign holdings are legacy investments – since the funds were barred from investing new capital abroad – and the appreciation of the kroner, the return on foreign investments was impressive, the bank said. Equity holdings, in terms of the kroner, grew by 60% over 2013, as the local equity index, the ISB K-10, returned 37%.IslandsBanki said the pension funds would have benefitted significantly from the listing of Icelandinc firms N1, a consumer services provider, and TM, an insurance company.The funds were large shareholders in the firms prior to their listing.In total, the funds now account for more than one-third of listed equities in the country.The pension funds still represent the government’s largest creditor, with the ISK243bn in bonds accounting for 11.9% of assets, in addition to other municipal bonds, which account for 2.9%.However, in comparison, the funds’ Housing Financing Fund (HFF) investments account for 23% of assets, leaving them significantly exposed to the success of the bonds.These assets were sold to the pension funds in 2010 by the central bank after it soaked up the bonds in the wake of Iceland’s financial crisis and banking collapse.IslandsBanki said, by the end of the year, the pensions scheme held 11.5% of their assets in domestic equities and mutual funds, with a further 20% in foreign equities and mutuals.However, fixed income (56.8%) still dominated the allocations.last_img read more

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2020-09-29

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European Commission prepares revisions to Shareholders’ Rights Directive

first_imgThe upgrade’s explanatory memorandum blames short-termism on a “misalignment of interests between asset owners and asset managers”.It also complains of investors facing difficulties in exercising their rights, especially if their securities are held cross-border.The text refers to insufficient focus on the long-term performance of companies, arguing that too much attention is given to share-price movements and the structure of capital market indices.This “leads to sub-optimal returns for the end beneficiaries and puts short-term pressure on companies,” it says.It recommends that institutional investors and asset managements develop a policy on shareholder engagement that “determines, amongst others, how they integrate shareholder engagement in their investment strategy”.The new version of the Commission’s directive also brings in entirely new sections.For instance, there is one on ‘identification of shareholders in cross-border voting’, and another on ‘delegated acts and sanctions’.Under the latter, it is member states that are to “lay down the rules on penalties for infringements”.Commenting in public on the forthcoming legislation, Carlos Maravall Rodriguez, a Commission financial analyst, said work on the revisions aimed to harmonise best practice and protect the rights of investors across the EU member states.Answering questions at a conference, Rodriguez said the Commission’s overall aim was “to make equity more attractive across the board”.This would include institutional as well as private investors, by working via initiatives that touch on both spheres.At present, only “independent investors” are doing something to control company management of listed companies, he said.Chantal Hughes, Commission spokeswoman, said the EC’s presentation of the new proposal was set for April.She described the revisions as fitting in with “our wider objective of improving the environment for the long–term financing of the European economy”. Considerable upgrades to the Shareholders’ Rights Directive of 2007 are due to be unveiled by the European Commission in April.The revised legislation’s aim is to encourage institutional fund managers to increase their investments in equities across the borders of the EU.According to a leaked version of the upgrade, specific objectives will centre on increasing asset managers’ level of engagement with the companies in which they invest.It will also cover directors’ remuneration, transparency, the advice of proxy advisors and the cross-border transmission of data.last_img read more

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2020-09-29

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Shareholder pressure fails to promote sustainable practices – survey

first_imgBarely one in 10 companies feel compelled to improve their sustainability record, despite pressure from institutional investors, a study by the UN-backed Principles for Responsible Investment (PRI) has found.The study, which saw the PRI work with Accenture on its annual CEO survey on sustainability, also found that fewer than one-quarter of responding firms saw large shareholders as key to guiding their approach on the matter.“In the context of a rising focus on sustainability as an essential part of core business, and a driver of future success, the continued absence of the investor as an influential stakeholder is a surprise,” the report said.“The lack of movement in the influence of investors could be best described as ‘the dog that didn’t bark’.” However, the report noted that longer-term, more concentrated investment mandates could be one way of improving their ability to be heard.Fiona Reynolds, managing director at the PRI, told IPE such an approach would allow for “deeper engagement”.“Rather than trying to have a broad engagement with hundreds and hundreds of companies, you can have very meaningful dialogue with fewer companies and really get into the issues,” she said.She added that the PRI would be putting out its discussion paper on such mandates in the coming months, but said the organisation had been looking at the role of long-term mandates not only in improving engagement but also in driving long-term behaviour for managers, pension funds “and ultimately companies, as well”.The report argued that, with 80% of chief executives considering sustainable practices as a key competitive advantage, it should be viewed as a cause for concern that the issue is not yet part of analyst calls and engagement with investors.However, despite 80% of chief executives viewing sustainability as key to the competitive advantage, only 14% of investors questioned by the PRI said they viewed investee companies as being boosted by said advantage.Respondents to the survey included the UK’s Pension Protection Fund, Dutch pension manager PGGM, Allianz Global Investors, the Canada Pension Plan Investment Board and several large Australian superannuation funds, including AustralianSuper.Neither did shareholders and chief executives agree on the importance of sustainability to various sectors, such as banking, mining, utilities and infrastructure and transportation.While only 57% investors thought sustainability was an important issue for the chemicals industry, 97% of company executives saw it has important.Only three-quarters of investors, meanwhile, saw sustainability of infrastructure and transport as key, compared with 98% of chief executives.In fact, across the 11 sectors chief executives were questioned on, only in one – electronics and high tech – did fewer than 90% agree that sustainability was vital, compared with seven areas that saw 90% or more of investors agree.Reynolds suggested the relative lack of concern for sustainability in the chemicals sector stemmed from its highly regulated nature, such as the safety framework required when moving chemicals.“That’s not to say people don’t want to engage with those companies,” she said. “But, by the nature of the work, it does have to be highly regulated.”The survey also found that investors often only approached sustainability through the prism of risk mitigation.It quoted the PPF’s CIO, Barry Kenneth, as arguing that sustainability was “one of a number of risks” examined by the fund.“If a company falls south on sustainability, there can be an impact on value and investment,” he said.For more from Fiona Reynolds on the PRI and its impending governance restructure, see the current issue of IPE,WebsitesWe are not responsible for the content of external sitesLink to UN Global Compact-Accenture CEO Study on Sustainabilitylast_img read more

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2020-09-29

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Romanian pension fund investment in Bucharest Stock Exchange tops €800m

first_imgRomania’s second and third-pillar pension funds have become the country’s biggest local institutional investors and a major force in the stock market, according to an analysis published by the Romanian Pension Funds’ Association (APAPR).As of the end of 2014, the funds had €753m invested in 35 companies listed on the Bucharest Stock Exchange (BSE), compared with €426m a year earlier.By the end of March 2015, the total investment had risen to €824m.The stock exchange investments include companies deemed of strategic national importance, in sectors such as energy, finance and pharmaceuticals. At the end of 2014, the biggest holdings were in closed-end fund Fondul Proprietatea (RON639.1m; €143m), Romgaz (RON497.3m), Banca Transilvania (RON430.2m), OMV Petrom (RON354.5m), Electrica (RON287.7m), Transgaz (RON261m) and Transelectrica (RON170.2m).According to APAPR’s analysis, these seven companies are held in the portfolios of all the seven mandatory second-pillar and 10 voluntary third-pillar funds.Currently, the funds have nearly €5bn in assets, of which some 20% are invested in listed shares.Of these, some 85% are Romanian stocks listed on the BSE, the remainder being other EU companies.The APAPR also reported that the second-pillar funds, which started collecting contributions in 2008, had since generated an average annualised return of 11% as of end-March 2015.The third-pillar funds, in place the previous year, generated 8.1%.According to Romania’s Financial Supervisory Authority, the second-pillar funds increased their two-year weighted average return as of end-March to 9.44%, from 8.5% 12 months earlier.Membership grew by 4.1% year on year to 6.37m, and net assets by 38.7% to RON20.6bn.Asset growth this year will be boosted by a 0.5 percentage point increase in the contribution rate, to 5%.In the much smaller third pillar, membership grew by 11.3% to around 356,200, and net assets by 29.8% to RON1.1bn.Returns for the high-risk funds increased from 8.35% to 8.86%, and those for the medium-risk ones from 8.24% to 8.87%.last_img read more

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2020-09-29

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Friday people roundup [updated]

first_imgMN – Femke de Jong has been appointed ICT director at the €105bn asset manager and pensions provider, starting 1 July. Over the past nine years, she has been managing director of ICT at merchant bank NIBC. De Jong has also been IT director at Friesland Bank and asset manager Robeco. MN is provider for the large metal pension funds PMT and PME.Martin Currie Investment Management – Mark Whitehead is to head the manager’s equity income team, joining from Sarasin & Partners, where he was partner and head of equity income. Whitehead has been with Sarasin for the majority of his career, starting as portfolio manager in 2001. Before that, he worked for Capel Cure Sharp and Natwest Stockbrokers.Financial Reporting Council – Ann Muldoon has joined the UK regulator as director of actuarial policy. She joins from Retirement Advantage, where she was chief risk officer. She has also previously worked for Friends Life. At the FRC, Muldoon will be responsible for actuarial policy at the UK and EU level.Schroders – Paul Grainger, Mads Nielsen, David Gottlieb, Vincent Messina and Whitney Tindale have joined the asset manager’s fixed income global multi-sector team. Grainger will join in June as senior portfolio manager, having previously worked at Wellington Management. Nielsen will be quantitative strategist and joins from GLG Partners. Gottlieb, Messina and Tindale all join from Third Wave Asset Management, which they jointly founded.Pensions Management Institute – Kevin LeGrand has been named president of the academic body for UK pension professionals, succeeding Paul Couchman. Robert Branagh was also elected as vice-president, while Gerry Degaute was re-elected. LeGrand until recently worked at Buck Consultants. La Française, Achmea, Dalriada Trustees, MN, Martin Currie Investment Management, Sarasin & Partners, Financial Reporting Council, Schroders, Wellington Management, GLG Partners, Third Wave Asset Management, Pensions Management InstituteLa Française – Jean-Baptiste de Franssu and Philippe Marini now form part of the La Française supervisory board. De Franssu is chairman of INCIPIT, a mergers and acquisitions advisory and consulting firm he founded in 2011. He is also non-executive director at ACOFI SCA, Petercam and Tages. He has been president of the Istituto per le Opere di Religione since July 2014. Marini is the mayor of Compiègne, president of the Greater Compiègne urban community and president of the Syndicat Mixte de la Vallée de l’Oise.Achmea – Bianca Tetteroo has been appointed as a member of the executive board, as of 15 June. Tetteroo will be responsible for pensions and life insurance, asset management and Achmea Bank. She is to succeed Danny van der Eijk, who recently departed. Tetteroo has been chairman of Pensions & Life at Achmea since 2012. After a career of 13 years at Fortis, she became financial director at pensions provider Syntrus Achmea in 2009. Achmea’s supervisory board also appointed Roelof Konterman as executive vice-chairman. The current executive board also consists of Willem Duin (chairman), Huub Arendse (CFO), Henk Timmer (CRO) and Jeroen van Breda Vriesman.Dalriada Trustees – Richard Favier, until 2013 the Pension Protection Fund’s (PPF) head of restructuring and insolvency, has joined as a trustee representative. Favier left the lifeboat fund in 2013 to launch his own consultancy, and, before joining the PPF on launch, he was an adviser on insolvency matters to the UK government.last_img read more

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2020-09-29

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Second-quarter losses cancel out Q1 returns at KLM pension funds

first_imgThe Algemeen Pensioenfonds, KLM’s €7.5bn pension fund for ground staff, reported a 5.5% loss over the period and a 2.8% return for the first half of 2015. The scheme reported negative returns on all asset classes, with fixed income losing 4.7%, real estate 3.2% and equities 1.7%.It also lost 2.4% on its 50% interest hedge.The scheme for ground crew said it offloaded some of its interest swaps over the second quarter, pointing out that falling interest rates would have a decreasing impact on its financial position, while rate increases posed a growing risk.“Moreover,” it added, “swaps have a significant impact on liquidity.”The €8.1bn scheme for pilots, meanwhile, lost 2.4% over the first quarter, bringing its overall first-half return to 4.5%.Funding at all three KLM schemes, due to rising interest rates and falling liabilities, increased by at least 9 percentage points over Q2.However, their ‘policy funding’ – based on the 12-month average of daily coverage – fell by a couple of percentage points on average, to 114.2% for the cabin crew scheme, 115.2% for the ground staff scheme and 125.2% for the pilots’ scheme.Separately, KLM is seeking to cut costs by replacing its defined benefit plans with collective defined contribution arrangements.The company is now negotiating a new scheme with unions.According to Zakaria Boufangacha of union umbrella group FNV, KLM wants a “sustainable” pension plan, with a fixed contribution, freeing the company from having to resolve any future funding gaps.Although KLM could not be contacted for comment, its pension fund for ground staff said it expected the social partners to agree on a “new and sustainable” pension scheme some time this year. KLM’s three pension funds in the Netherlands have incurred significant and portfolio-wide losses over the second quarter, largely cancelling out returns generated over the first three months of the year. Pensioenfonds KLM Cabinepersoneel, the €2.6bn scheme for cabin staff, reported a loss of 6.4%, which lowered its year-to-date result to 2.7%.The scheme lost 3.6% on fixed income and 3.7% on real estate, while equities generated a loss of 1.7%.It also lost 3.9% on its 50% interest hedge, due to rising interest rates.last_img read more

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2020-09-29

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