Month: September 2020

Business lobby, unions condemn UK watchdog’s approach to DB

Business lobby, unions condemn UK watchdog’s approach to DB

first_imgA business lobby group and trade unions have teamed up to criticise the UK Pensions Regulator (TPR) over its planned implementation of a new governing regime for defined benefit (DB) schemes.In an open letter, the CBI and Trades Union Congress (TUC) confronted the current head of the regulator over what it calls a “too rigid approach”, which will drive pension scheme trustees towards excessive prudence.TPR has just concluded a consultation on its new DB funding regime, which saw the inclusion of a new objective from the UK government.The regulator must now incorporate the requirement to ensure that pension deficit recovery plans are balanced, and support the continued growth of the sponsor’s business. However, the CBI and TUC said the regulator’s current approach to implementing its new objective was an opportunity missed.The letter said the rationale for the new objective was not adequately reflected in TPR’s draft documentation on its new governing regime.It added that its draft code of practice, which expresses behaviours the regulator would expect trustees to demonstrate, risks preventing the new objective’s implementation altogether.“We are therefore calling for a shift in culture and approach,” it said.“Far from minimising risk, the regulator’s approach may increase the chances that employee benefit rights cannot be met.“Together, we are calling for less prescriptive instructions and greater flexibility to encourage cooperation between businesses and trustees.”The letter was co-signed by Neil Carberry, director for employment at the CBI and his namesake, assistant general secretary Kay Carberry, at the TUC.Neil Carberry said the objective was intended to ensure trustees and businesses fostered healthy companies and pension schemes.“We are concerned this intent is not sufficiently reflected and the regulator is trying to force schemes to artificially reduce risks in a way that will divert necessary cash away from business investment,” he said.Kay Carberry added: “The regulator needs to get the right balance between the health of the scheme, [and] the interests of the sponsor.”The concerns expressed by the two organisations echo similar criticisms made by respondents to the regulator’s consultation.The National Association of Pension Funds (NAPF) and Society of Pension Consultants (SPC) were two of many organisation arguing that the regulation in its current guise is too prescriptive, and may heavily pressurise trustees to act differently.However, in response to these claims, and the letter sent to TPR’s chief executive Stephen Soper, the regulator said its principles were designed to improve dialogue between trustees and sponsors.“It is our role to balance the needs of employers, members and the PPF,” Soper said. “TPR is grateful for all feedback to our consultation. The majority of concerns can be addressed.”last_img read more

Oxford University Endowment Fund returns 9.1% over 2014

Oxford University Endowment Fund returns 9.1% over 2014

first_imgThe Oxford Endowment Fund (OEF), a £1.7bn (€2.3bn) pooled fund run on behalf of Oxford University and a number of individual colleges, has reported a 9.1% investment return for the 2014 calendar year.This takes its annualised net return for the five years to the end of 2014 to 8.9%.OEF’s investment objective is to achieve 5% growth in real terms per year, with lower volatility than experienced solely by investing in public equity markets.Together with the £300m Oxford Capital Fund, which provides expendable capital over the medium term (typically for building projects), OEF is run by Oxford University Endowment Management (OUEM), a wholly owned subsidiary of the university.   The current investment structure was established on 1 January 2009.Global equities, which make up 52% of the portfolio compared with a 45% target allocation, returned 7.7% over 2014.While OUEM said there had been less opportunity for growth in more mature markets, it continued to add incrementally to Japan, given the positive economic and structural changes occurring in the country.It also considers the Japanese market to be more attractively valued than other developed markets.At end-2014, Japanese investments made up 6% of the overall fund portfolio, while 37% of the fund was invested in North America, 27% in the UK, 16% in emerging markets and 11% in Europe.Meanwhile, private equity was the biggest-returning asset class, with a 25.4% return for the year.The allocation has moved from 1.9% of the portfolio at inception to 17.7% at 31 December 2014, and an average age of invested capital of less than two years.Real assets, which include property and inflation hedges and make up 13% of the OEF portfolio, returned 9%.Rural property has been a significant driver of performance, returning 13.8% on an annualised basis since 2009.This was driven by strong uplifts in rural UK land valuations and specific value enhancements in individual estates.In 2014, OUEM began implementing a direct commercial property strategy.It said that while high valuations had been a challenge for investing, it continued to target areas of the UK market where it had a competitive advantage.From 1 January, the real asset allocation has been split into property and inflation hedges – which include index-linked bonds, natural resource equities and commodity investments – to reflect the different investment opportunities of each asset group more accurately.The target allocation for property has been increased to 9%.Last month, in response to a student campaign, Oxford University announced measures to strengthen its fossil fuel investment policy but stopped short of full divestment.However, the OEF has no direct investments in the energy sector, although an estimated 3% of the fund is exposed to the sector via pooled vehicles.last_img read more

Greater Manchester, AP2 invest in new timberland company

Greater Manchester, AP2 invest in new timberland company

first_imgGTR will focus on the development and management of sustainable plantation forestry assets to supply growing worldwide demand for wood and forestry products.Jose Minaya, senior managing director and head of private markets asset management at TIAA-CREF Asset Management, said: “The macroeconomic fundamentals for timber investment are strong, and we see great potential for direct investment in emerging economies where we can benefit from low-cost production and better proximity to growing demand.”GMPF’s commitment represents around 0.2% of its overall £17.6bn (€24.5bn) portfolio value.Greater Manchester has now made its first timber-related investment within its special opportunities portfolio.A spokesman for the scheme told IPE: “GMPF has no specific allocation to timber-related funds within its overall investment strategy, but such investment opportunities may be considered in the future.”He added that the long-term returns for timberland and for the GTR investment were considered consistent with GMPF’s target returns for its special opportunities portfolio.GWR manages around $1.5bn in assets for institutional investors, which includes the capital committed to GTR.TIAA-CREF has been investing in timberland since 1998 and manages a portfolio of more than $2bn in timber assets around the world.TIAA-CREF and GWR are committed to sustainable investment practices and utilise best practices set out by the Forest Stewardship Council.In addition to signing up to the UN Principles for Responsible Investment, TIAA-CREF is also a founding member of the Principles for Responsible Investment in Farmland, launched by a group of international institutional investors in September 2011.These principles aim to improve sustainability, transparency and accountability of investments in farmland. The Greater Manchester Pension Fund (GMPF) and Swedish buffer fund AP2 are among investors committing to Global Timber Resources LLC (GTR), a new company designed to invest in timberland assets across different regions, including North America, Latin America, Europe and Asia.Both pension funds have each committed $50m (€45.2m).GTR has been launched by TIAA-CREF, a US-based financial services provider specialising in the educational, medical and cultural sectors, and its subsidiary Greenwood Resources, a global timber management company.It closed its fundraising with commitments of $667m, with other investors including Caisse de dépôt et placement du Québec (Caisse) and the TIAA General Account.last_img read more

ESG roundup: Danish pension funds sharpen climate focus

ESG roundup: Danish pension funds sharpen climate focus

first_img“This in itself shows there is growing attention being paid to the climate,” Jersild said.In the report, pension funds were awarded up to two points for each of six categories, including integration of the Paris Agreement in investment policy, setting of investment goals for green energy technology and exclusions approach.PKA – which topped the WWF’s ranking for the fourth year in a row – gained nine of a possible 12 points, followed by PFA with 7 points.Lægernes Pension took the number three spot with six points. Several other funds also scored six, including ATP, MP Pension, Nordea Liv & Pension, P+ (the joint administration company for the pension funds JØP and DIP), PenSam and SEB Pension. Pension funds in Denmark are working harder on the issue of climate change, spurred on since the signing of the Paris Agreement, according to a new report by WWF Denmark.In a report, the environmental organisation ranked the 17 largest Danish pension providers according to their activity in relation to climate change. PKA was the pension fund doing the most, the 2017-18 report said, with 14 of the funds getting the same or a higher score than documented in the WWF’s 2016 report.Hanne Jersild, senior adviser at WWF –  the World Wide Fund for Nature – said: “It is clear that several pension companies have an increased focus on climate, as a result of a combination of a the Paris Agreement, uncertainty about the future of fossil fuels and pressure from members and non-governmental organisations such as WWF.”Since the investigation was completed in January, the pension funds had come out with several new climate-related announcements and initiatives, she said. Peter Damgaard Jensen, PKAPeter Damgaard Jensen, chief executive of PKA, said: “We are very pleased with the recognition of our strategy. It underlines the fact that the combination of green investing, exclusion of the worst CO2 sinners and trying, at the same time, to make companies go in a more climate-friendly direction makes real sense – both from a climate and economic point of view.”WWF Denmark said this year’s results were not directly comparable to those of the 2016 report as it had changed some of the categories, including introducing an active ownership criterion in place of a score for how much influence members or customers could have over a pension fund’s environmental stance.PKA cuts 35 oil companiesSeparately, PKA has announced the exclusion of 35 oil companies on financial and climate grounds, bringing the total number of oil and gas firms blacklisted by the fund to 40.The new exclusions were made after conducting an investigation into action being taken by 62 oil and gas companies, in view of the Paris Agreement goal.On top of the 35 companies now blacklisted, another 15 companies have been put under observation, the pension provider said.PKA has already excluded 70 coal companies from its investment universe, and said would turn its climate-related focus to the car industry in the future.Damgaard Jensen said: “An effective conversion of the transport sector is crucial for meeting the Paris Agreement. Automakers who don’t invest in the development of electric and hybrid cars will pose a financial risk, as electric cars will be more attractive to consumers in line with technological developments in the long run.”The International Energy Agency has estimated that there needed be 600m electric and hybrid cars on the streets by 2040 in order to comply with the Paris Agreement.PRI takes TPI under its wingThe Transition Pathway Initiative (TPI) is partnering with the Principles for Responsible Investment (PRI).The PRI is to provide support and secretariat services to TPI, an initiative set up by the investment bodies of the Church of England and the Environment Agency Pension Fund (EAPF).The partnership will also allow PRI signatories to access analysis generated by the TPI.TPI offers an online tool that allows users to assess companies’ governance in relation to climate change issues and how aligned they are with international greenhouse gas emission reduction targets. The tool is provided by and available on the Grantham Research Institute website.The institute has analysed cement producers, steel makers, paper producers and car manufacturers.TPI is chaired by Adam Matthews, of the Church of England Pensions Board and Church Commissioners, and Faith Ward, chief responsible investment officer at the Brunel Pension Partnership, on behalf of the EAPF.TPI is also to be overseen by an international asset owner steering group.Ward said: ”The partnership between TPI and PRI will provide us with the infrastructure to make the most of the great analysis and support a wider group of investors to get to grips with the climate transition risk.”last_img read more

Local authority pension pool to launch £1.2bn UK equity fund

Local authority pension pool to launch £1.2bn UK equity fund

first_imgThe town hall in Leeds, where Border to Coast has its head officeRachel Elwell, CEO of Border to Coast, said: “It is a testament to the commitment of the asset management community to the LGPS that we received so many high-quality submissions. I am confident that with the combination of Baillie Gifford, Janus Henderson and UBS Asset Management we can begin to build up the long-term returns our partner funds need.”Border to Coast eventually aims to pool the majority of assets for 11 LGPS funds from across England: Bedfordshire, Cumbria, Durham, East Riding, Lincolnshire, North Yorkshire, South Yorkshire, Surrey, Teeside, Tyne & Wear, and Warwickshire.Some UK equity managers stand to lose mandates as the pension funds transfer their assets to the pool in the months ahead. According to the pension funds’ annual reports for the 12 months to 31 March 2018, these include Columbia Threadneedle, Aberdeen Standard Investments, Majedie, and Schroders.Border to Coast launched its first two funds in July, pooling internally managed UK and global equities from three of its member funds.It plans to launch an externally managed global equity fund next year, with a formal request for proposals to be issued by the end of 2018. One of the UK’s emerging local authority pension asset pools has launched a £1.2bn (€1.4bn) UK equities fund and appointed a trio of investment managers.The Border to Coast Pensions Partnership – a collaboration of 11 local government pension schemes (LGPS) with £46bn between them – has appointed Baillie Gifford, Janus Henderson, and UBS Asset Management to run the active equity portfolio.The Border to Coast UK Listed Equity Alpha fund will launch later this year, subject to regulatory approval, Border to Coast said in a statement yesterday.The fund’s target is to outperform the FTSE All-Share index by 2% a year after fees over the long term. Baillie Gifford and UBS will be benchmarked directly against this index, Border to Coast said, while Janus Henderson would focus on smaller companies. More than 30 asset managers submitted proposals for the mandate. last_img read more

ERI Scientific Beta raises alarm over popular factor analysis tools

ERI Scientific Beta raises alarm over popular factor analysis tools

first_imgPopular tools for measuring the factor exposure and allocation of portfolios could be dangerous for some investors, according to a report from smart beta index provider ERI Scientific Beta.Published in collaboration with a new venture, Scientific Analytics, the report argued that the use of some factor analysis tools could lead to a “serious” misalignment between investors’ factor diversification objectives and the measured and realised allocation.In a research paper, the groups addressed two topics: factor definitions used by popular tools offered to investors – by providers such as Style Analytics, Bloomberg, MSCI and S&P – and the way in which measurement of factor proxies was implemented.Introducing the analysis, Noël Amenc, CEO of ERI Scientific Beta, said some people would find them “slightly too controversial”, but that the message needed to be strong due to “the danger of transforming very important research concepts and results into poor and dangerous investment practices”. Factor definitions used by popular tools were not supported by serious academic research, the report argued. This meant that most factors used in commercially available analytic tools were probably false.Another conclusion, Amenc said, was that ‘non-standard’ factors could lead to incorrect measurement of exposures, or capture exposure to redundant factors.“Analytic tools for investors distort the key idea of factor investing because they lack transparency and expose investors to providers’ conflicts of interests,” he added.Factor ‘scores’ versus factor ‘betas’The research paper also argued that using factor “scores” instead of beta data to measure portfolio factor exposures was “a cause for concern” because it was a departure from factor investing literature.The major drawback with factor scores, according to the report’s authors, was “double counting” of exposures, which was due to their disregard for “the correlation structure of factors” and made them a “very poor proxy for factor betas”.Overall, the organisations claimed the limitations of popular factor analysis tools could lead to investors being “unable to translate their risk allocation choices into a consistent allocation, with fairly severe financial consequences”.Scientific Analytics is a new EDHEC Business School venture dedicated to factor analysis and allocation. It aims to provide institutional and private investors with tools that allow them to analyse the factor exposure of their portfolios and construct “completeness portfolios” that correspond to a search for better diversification. It plans to launch a freely accessible online tool at the end of next year.The research paper can be found here [link corrected]. See also the EDHEC Research Insights supplement distributed alongside IPE’s November issue.last_img read more

​Including ESG in fixed income ‘boosts market efficiency’, says Norway’s GPFN

​Including ESG in fixed income ‘boosts market efficiency’, says Norway’s GPFN

first_imgTwo leaders of Norway’s domestically focused sovereign wealth fund have called for more work into the effects of environmental, social and corporate governance (ESG) factors in fixed income management.Jørgen Krog Sæbø, CIO for fixed income at Folketrygdfondet, and Lars Tronsgaard, deputy CEO, wrote in an article for Norwegian financial newspaper Finansavisen: “Responsible fixed-income management has developed over the last few years to become increasingly central in the management of bond portfolios.“Our experience with responsible management is that it provides a more holistic understanding and deeper knowledge of the companies. This contributes in turn to better investment decisions and better functioning capital markets.”Folketrygdfondet oversees the Government Pension Fund Norway (GPFN), the smaller, Nordic-investment counterpart to the huge Government Pension Fund Global. It had total assets of NOK252.3bn (€25.3bn) at the end of March. Its strategic asset allocation is 60% equities and 40% bonds. Krog Sæbø and Tronsgaard said that working with ESG led to improved results for companies’ bottom lines – for investors as well as for the environment.“In equity management, this effort has yielded results,” they said. “Now the time has come for fixed-income management.”Responsible management involved mapping risk factors associated with ESG to improve returns, as well as working to improve the efficiency and transparency of capital markets, the pair wrote.“Responsible management is not about ethics, but about creating returns based on good risk assessments where ESG is also taken into account,” they added.Folketrygdfondet was dependent on companies managing to service their debt, Krog Sæbø and Tronsgaard said, meaning it also had to assess whether the businesses had control over their ESG challenges.A report published earlier this month by JP Morgan Asset Management found that ESG scores could enhance fixed income portfolio outcomes via lower drawdowns, reduced portfolio volatility and, in some cases, marginally increased risk-adjusted returns.Further readingGuest Viewpoint: Fiona Stewart & Georg Inderst How can environmental, social and governance criteria be incorporated into fixed-income portfolios?AXA IM calls for ‘transition bonds’ to help companies go green The French asset manager said the new form of bond could help carbon-intensive companies move away from fossil fuelslast_img read more

Mandate roundup: Swiss scheme tenders CHF150m property mandate

Mandate roundup: Swiss scheme tenders CHF150m property mandate

first_imgThe deadline for applications is 20 December. The IPE news team is unable to answer any further questions about IPE Quest, Discovery, or Innovation tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email [email protected] invests in Albion Capital’s private equity fundThe £9bn (€10.3bn) Merseyside Pension Fund has invested in Albion Capital’s asset-backed private equity fund, Albion Real Assets Fund (ARAF). The scheme has committed £10m.ARAF is a continuation of Albion Capital’s asset-backed investment strategy and focuses on investing in operational businesses underpinned by assets with intrinsic value and working with proven management teams.Adam Chirkowski, investment director at Albion, said: “ARAF’s initial investments in fibre optic broadband and wedding venues are similar in that we have been able to identify opportunities in strong, exciting niches and invest in order to grow them to scale.”Albion targets sectors with strong societal drivers that have resulted in substantial unmet demand for premium physical assets and infrastructure, and creates value by building a group of these assets, Chirkowski added. A Swiss pension fund has tendered a mandate via IPE Quest.The asset owner is seeking for a manager to run a CHF150m (€134m) core real estate multi-manager mandate.Managers should have at least CHF2bn in assets under management in real estate. Applicants should state performance data to 30 September 2019, gross of fees.Their track record should be at least five years, but a minimum of 10 years is preferred.last_img read more

House and land in prized school zone up for grabs

House and land in prized school zone up for grabs

first_imgThe property at 282 Ham Rd, WishartAn ageing, lowset house on a whopping 2019sq m block near one of Queensland’s top performing schools will go to auction on Saturday.Described as a “gold mine” of potential, the property is being marketed as “Santa’s biggest present to the market place this year”.The property is located at 282 Ham Road in Wishart, and is just four houses away from Mansfield State High School. Mansfield State High School is one of Queensland’s top ranking schoolThe school is one of the top ranking public high schools in the state, scoring 99 out of 100, and is second only to Brisbane State High School.With a score of 99, its academic ranking is up there with some of the state’s most expensive and exclusive private schools including Anglican Church Grammar School, St Margaret’s Anglican Girls School, Brisbane Boys’ College, All Hallows’ School and Somerville House. More from newsParks and wildlife the new lust-haves post coronavirus15 hours agoNoosa’s best beachfront penthouse is about to hit the market15 hours agoMitch Schenning of Master Agents, who is marketing the Wishart property, said they had 12 potential registered bidders for the auction, with another seven buyers in the wings. The auction is expected to attract a range of buyersProperty records show the property was last bought for $110,000 back in 1988, but the median house sales price in Wishart has skyrocketed since then, and now sits at $722,750.And very few, if any, of those houses would come with such a huge block.“You just don’t find gems like this very often — an older house that can be knocked down on a huge block with so much potential,” Mr Schenning said.He said he expected to see frenzied bidding when the property goes under the hammer at 10.30am.center_img The kids could walk to schoolHe said those interested buyers were families keen to buy in to the school catchment and small developers who knew the value of the area.“There is no DA (development approval) on it as yet but you can see what can be done, with a lot of subdivisions nearby,” he said.Of the ma and pa buyers, Mr Schenning said they were locals, people from interstate, and families from a range of cultures. last_img read more

Old Salisbury home given a new life

Old Salisbury home given a new life

first_imgThe house at 285 Lillian Ave, Salisbury, is for sale.EMMA Vearing and Brock Turton were trying to break into the property market when they bought an old cottage at Salisbury.The paint was peeling, but Ms Vearing could see past the tired facade of the highset house at 285 Lillian Ave. The bathroom is fresh and modern.Ms Vearing said the area was community-orientated, and there were a number of tightly held houses on Lillian Ave.“Our neighbours across the road have been there for 50 years. Everyone goes out of their way to say hello and we all give each other Christmas presents.” The house is fresh, but still retains character elements.“The house looked like it was falling down but we could see the potential,” Ms Vearing said.“There is a trend in the area of houses being knocked down, but we made a point of wanting to restore it.” The bedroom with stained glass windows is Ms Vearing’s favourite.Besides the potential of the house, there was one other aspect that drew Ms Vearing to the house.“Walking out into the backyard and seeing the big mango tree helped sell us the house,” she said.“It alternates years, but right now it has got fruit.” The turquoise glass is original and has been restored.That restored glass adds to what is now Ms Vearing’s favourite room in the house.“My favourite room would probably be that front bedroom with the leadlight windows.“It’s got a beautiful feel and I’ve always had a good night sleep in that room.” The kitchen is modern, but fits the look of the house.Restoration, not modernisation, was the focus of the couple’s project.“We had all the leadlight windows professionally restored, and when they came out they said that the turquoise glass in our window, and the green and yellow glass was pre-1900s.More from newsParks and wildlife the new lust-haves post coronavirus14 hours agoNoosa’s best beachfront penthouse is about to hit the market14 hours ago“When we were doing up the house, it cost a fortune to have all of those things restored, but we wanted to keep all of that character for someone else to love.” The back deck is a great place to entertain.Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:51Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:51 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p432p432p270p270pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenStarting your hunt for a dream home00:51last_img read more