Allianz Global Investors – Naveen Kunam has been appointed senior portfolio manager in Allianz Global Investors’ new four-member team formed to develop the global emerging market debt (EMD) business. Kunam joins the company from ING Investment Management. Other members of the team include Shahzad Hasan, who has been hired as portfolio manager, Vlad Andryushchenko as senior research analyst and Eoghan McDonagh, who has been appointed senior trader. Hasan was previously at Credit Suisse, Andryushchenko worked at Renaissance Capital in Moscow, and McDonagh was at Eclectica Asset Management. The new team will be based in London and work alongside Oleksiy Soroka, who leads EMD credit research. La Française – Gregor Volk is joining La Française as head of real estate development for Germany, as part of the company’s strategic development plans for the country. He was previously director of institutional business at Invesco Asset Management in Frankfurt, where worked for seven years. Volk will continue to be based in Frankfurt, and at La Française will report to Philippe Peirs, head of international real estate development. PwC – Mark Pugh is joining PwC as asset management leader in the UK. He is taking over the role from Paula Smith, who is going back to the US after her secondment to the UK firm. Pugh has been an assurance partner at PwC for 10 years. BNP Paribas Securities Services – Ken Back has been appointed by BNP Paribas Securities Services to the role of head of asset managers and alternatives sales for the UK. He comes from Broadridge Financial Solutions. Anne Leyton has also been hired by BNP Paribas Securities Services as head of the fund manager liaison team, joining from Citigroup, where she was a client executive director. Roman Seydoux has been hired as global relationship manager for asset managers, having previously worked at Bank of New York Mellon, and Claire Misata has been appointed global relationship manager for asset managers. Misata was previously at Northern Trust. DIAM International – Anthony Catachanas has been hired by DIAM International to join its EMEA business development team, to help build the group’s institutional business. Catachanas joins from Goldman Sachs Asset Management, where he was responsible for global bank relationships and wholesale and institutional business in the UK, Greece, Cyprus, Belgium and Luxembourg. Vontobel – Catherine Salmon has been appointed by Vontobel as client service manager, joining the firm AllianceBernstein, where she was a senior associate. At AllianceBernstein, she was responsible for managing client relations and providing sales support to large institutional clients, focusing on the defined contribution market. Harcourt Investment Consulting – Michel Salden has been hired by alternative investment boutique Harcourt Investment Consulting as senior portfolio manager. The firm is a unit of Vontobel Asset Management. Salden will manage the Vontobel fund Belvista Commodity. He is taking over the role from Jon Andersson, who will be managing another Vontobel fund, Belvista Dynamic Commodity. Salden has worked for several large Dutch pension funds over the last 12 years, including APG, DPFS and most recently PGGM. Institute for Religious Works, Legal & General, Association of Professional Pension Trustees, Allianz Global Investors, PwC, La Française, BNP Paribas Securities Services, DIAM International, Vontobel, Harcourt Investment ConsultingInstitute for Religious Works – Jean-Baptiste de Franssu has been appointed president at the IRW, also known as the Vatican Bank. The industry veteran, chairman at M&A consultancy Incipit, resigned as head of Invesco Perpetual’s Continental European business in April 2011 after 15 years. He also served as president of the European Fund and Asset Management Association until June 2011. Before joining Invesco, he was a director at Groupe Caisse des Dépôts et Consignations in France. De Franssu succeeds Ernst von Freyberg. Legal & General – Robert Jamieson was recently appointed COO Legal & General Retirement, a unit of Legal & General, which includes the group’s bulk annuity and longevity insurance business, as well as its individual retirement solutions business. He will also be responsible for delivering asset data and risk analytics across the wider Legal & General group. Jamieson joined Legal & General in 2011 from Thomson Reuters.Association of Professional Pension Trustees – Ian Pittaway has been elected chairman of the Association of Professional Pension Trustees (APPT) at its AGM. He is a senior partner at Sacker & Partners. The other council members of the APPT are Claire Altman, Andrew Bradshaw, Andrew Parker, Nita Tinn and Graham Wardle.
Ediston said it is sourcing assets which it can “intensively manage” in order to create additional value, improve yields and maximise returns.Danny O’Neill, founding director of Ediston, said in May that it is looking to invest in property “out-of-favour” with large institutional investors. O’Neill said he hoped to have Clydebuilt fully invested by year-end. The fund is looking to invest in up to 10 properties.Strathclyde has traditionally focused on investments of over £10m across the UK.Earleir this year, Strathclyde was among bidders for Glasgow airport earlier this year as part of a consortium with Partners Group. Strathclyde Pension Fund has bought its first property for its Clydebuilt fund, targeting assets local to the scheme.The UK’s largest local authority scheme bought the Gallagher shopping park and adjacent development land through its Clydebuilt fund, which Scotland’s Ediston Real Estate created earlier this year.Ediston said Clydebuilt would benefit from the retail park’s secure, long-term income. As well as existing properties, the park has planning permission for a further 200,000sqft of retail warehousing. The scheme is part of a wider regeneration plan for the area.Strathclyde, which uses DTZ for the majority of its property investment management, gave Ediston a £50m (€62m) mandate earlier this year. Clydebuilt has an additional £25m of debt to use. Structured for seven years, the fund has an option to be extended depending on its performance.
“As the need for funding sources other than banks increases, we wanted to meet our social responsibility while prioritising our participants’ interests,” he said.The mortgages investment – made via Syntrus Achmea Asset Management’ Dutch Mortgages Fund – came at the expense of long-duration Dutch and German government bonds, according to the director.Dutch and German bonds – together with long-term Austrian, Belgian and Finnish bonds – currently account for 60% of SPUN’s 70% matching portfolio.The matching portfolio also includes investment-grade credit and interest swaps for the strategic hedge of 70% of the interest risk on the scheme’s liabilities.SPUN’s other investments have been placed in a return portfolio of high-yield government bonds and credit, as well as equity and infrastructure.The pension fund reported an overall return of 20.1% for 2014, due chiefly to returns of 26.2% and 26.5%, respectively, on long-term government bonds and interest swaps.High-yield government bonds and credit returned 3.3% and 6.7%, respectively, while equity and infrastructure returned 9.5% and 5.8%.Investment-grade credit produced an 8.5% return.The scheme’s coverage ratio – calculated using the current interest rate with the application of the ultimate forward rate – was approximately 102%.Its policy funding – which considers the average coverage of the 12 months previous, as well as the new criterion for rights cuts and indexation – came to 106.2%.SPUN’s investment in mortgages is part of a growing trend of pension funds filling gaps left by banks that are reluctant to lend due to increasing capital requirements.At the start of this year, the railways pension fund (SPF), the public transport scheme (SPOV) and the pension fund of TNO invested a combined €750m in the Dutch Mortgage Funding Company’s (DMFCO) Munt Hypotheken product.In September, the metal scheme PMT, the pension fund of steel works Hoogovens and the industry-wide scheme for the printing industry (PGB) invested almost €2bn through DMFCO. The €480m Dutch pension fund of IT company Unisys is to invest €20m in Dutch residential mortgages.Geert Bierlaagh, the scheme’s director, told IPE the new allocation was meant to reduce the concentration risk posed by government bonds. The pension fund – also known as SPUN – also seeks to improve its risk/return profile, he said, adding that it expected extra returns of 200-300 basis points on the mortgage investments.Bierlaagh also cited the “social” aspects of the investment.
The association said that, with the appointment, it was expanding its management in response to growth in the organisation, as well as an increase in the demands placed on it over the last 10-15 years.The IFB’s current director Jens Jørgen Holm Møller will continue in his role alongside Klinkby, focusing particularly on the technical aspects of work within the sector and continuing to represent Denmark within a Nordic, as well as an international, context, the organisation said. ATP’s head of press, pensions and investment, Anders Klinkby Madsen, is moving to the Danish Investment Funds Association (Investeringsfondsbranchen or IFB) to lead the industry body as chief executive from 1 August. Tage Fabrin-Brasted, chair of the IFB board, said: “Among other things, there is a need to strengthen communication with the world around us and have a closer dialogue with the many interested parties in the sector.”He said the association had carried out a recruitment process in which it assessed several candidates, and had found the most suitable one.“Anders Klinkby has a profile that combines strong skills in communication, stakeholder work, management and investment,” he said.Klinkby said he was very pleased with the new job.“Investment funds play an important role for private savers, institutional investors and for the companies that the funds manage assets for,” he said.Before becoming head of press for pensions and investment at ATP, Klinkby held roles at Danske Bank including group head of press.IFB changed its name a year ago from Investeringsforeningsrådet (IFR).
By law, the CBR has three months to return the balance on the clients’ accounts, with up to a further month of internal procedure at the first-pillar Pension Fund of the Russian Federation (PFR), after which affected members will be free to join another fund.None of the banned funds was among the 32 currently signed up to the guarantee scheme operated by the Deposit Insurance Agency (DIA).Any non-state pension fund that has not applied by the end of this year to join the scheme will be barred from managing mandatory pensions savings.The yield-to-date ranged from 22.5% to minus 0.25%, while inflation for the period totalled 10.4%.Vnesheconombank (VEB), the state-owned bank that manages mandatory pension assets for those workers who have not chosen a fund, returned 12.17%.The funds’ investment profile continued to shift towards the real economy.As of 1 October, according to the CBR, the share of investments in bank deposits and cash moved from first to second place, to 28.7%.This was driven by the CBR’s reducing the maximum investment limit in this asset class from 80% to 60% in September and to 40% by the start of 2016, as well as falling interest rates.The biggest share was taken by corporate bonds, which, since the start of June, increased over the following four months by 9 percentage points to 39.2%.The sectors in whose bonds the funds invested included oil and oil pipelines, road building, nuclear, hydro and electric power, railway stock, highway construction, telecommunications, steel and retail.The share of stock investments grew by 4.5 percentage points to 13%, and that of Russian government securities by 2.3 percentage points to 6.1%.To encourage further long-term investment, the CBR is supporting proposals to change the valuation of these securities from a daily to a ‘hold-to-maturity’ basis.It also intends, as of July 2016, to introduce robust risk-management into the pensions sector in 2016, a move supported by recent OECD recommendations presented to the CBR.The requirements will be phased in over two years, culminating in mandatory portfolio stress testing. As a strong supporter of the funded second-pillar, the CBR did not back the moratoriums imposed on pension contributions in 2014-16.In its first strategic document on financial market development, published at the start of December, it warned of the risk of the moratorium’s being extended to 2017 and beyond.This, the CBR wrote, would adversely affect public trust in the pension system, resulting in a reduction in the growth of long-term investments. The assets and memberships of Russia’s privately managed mandatory pension system shrunk in the third quarter.Compared with the end of the second quarter, the value of pensions savings, at market value, declined in Russian rouble terms by 1.5% to RUB1,674.8bn (€22.3bn), while the number of insured shrunk by some 1.43m to 26.7m, according to Bank of Russia (CBR), the sector’s regulator.The shrinkage is due to CBR’s annulment, in August and September, of eight pension licences.A further five lost their licences in November.
Dutch pension experts have concluded that pension funds can have a stabilising effect on markets during financial crises.Roel Beetsma and Siert Vos, in an article published on the Centre for Economic and Policy Research’s website, attribute the stabilising effect to pension funds’ tendency to rebalance their investment portfolios frequently.“If a shock causes their equity or fixed income allocation to drop below a strategic level, pension funds start topping up,” they write.“This, in turn, triggers additional demand for the asset class, which could help breaking a vicious circle of falling prices.” Beetsma, a professor of pensions economics at Amsterdam University (UvA), and Vos, a researcher at UvA, suggest that, within one month, pension funds rebalance 20% of changes in equity holdings caused by market movements.They estimate the corresponding figure for a changed fixed income weighting at 25%.The researchers point out that the recent stress tests conducted by European supervisor EIOPA confirmed that pension funds help cushion the drop in markets in 2008-09.The stress-test report cites Dutch pension funds buying equity in 2008 to rebalance their portfolios towards their positions at the end of 2007.At the time, pension funds in Austria, Spain and Slovenia divested equity, while German schemes sought protection in derivatives, which forced divestment, according to EIOPA.The regulator concluded, however, that pension funds’ overall impact had been anti-cyclical, citing differences in local investment strategies to the differing responses in the various countries.According to Beetsma and Vos, supervisors’ increasing tendency to issue similar rules for different market players carries the risk that all parties respond to market shocks in a similar way, which may increase the impact of an event.The researchers also cite the fact pension funds rarely borrow as a reason why they pose little systemic risk.“Because schemes invest for the long term, they could be technically insolvent, but they can’t go bust,” they add.“Insolvency could be tackled through an increase of contributions, additional payments by a scheme’s sponsor, a reduction of indexation or rights cuts.“This way, pension funds can recover in an orderly fashion and avoid a much more disruptive bankruptcy process.”
Interested parties should state performance, gross of fees, to the end of September.The deadline for applications is 16 December.The IPE news team is unable to answer any further questions about IPE Quest tender notices to protect the interests of clients conducting the search. To obtain information direct from IPE Quest, please contact Jayna Vishram on +44 (0) 20 7261 4630 or email [email protected] An undisclosed investor based in Australia has tendered a AUD100m (€70m) large-cap equity mandate using IPE Quest.According to search QN-2240, the client is looking for an active value manager.Although the client has no requirements for minimum assets under management, managers should have a minimum track record of two years – and preferably three. Managers should also observe a minimum tracking error of 2% relative to the S&P ASX 300 or 200 indices.
“I want to be absolutely crystal clear we are not going to be put in that position,” he said. “So if we find that there are industry solutions that don’t measure up then that’s philosophically where we’ve got to be prepared to go to.”The Investment Association is working on a standard method of cost disclosure, which was recognised in the FCA’s report, along with its own suggestions for improvements.Woolard said there were “some very mixed views” on the FCA’s recommendation that it is allowed to regulate investment consultants. Questions around investment consultancy would not lend themselves to “an immediate silver bullet type answer”, he added.In its report, published last year, the FCA recommended that the Competition and Markets Authority (CMA) launch an inquiry into the investment consulting sector. Speaking to the audience in Edinburgh this week, Woolard said the regulator had a limited range of powers to examine the issue and that the CMA was potentially in a position to do so “further and better”.Investment consultancy “is not the first part of the financial services industry ever to encounter a potential conflict of interest,” he said.“And you could imagine providing the same kind of remedies as we’ve done generically elsewhere, which were about the separation of those sorts of advice, those kinds of services as a means of trying to work through that,” Woolard added.However, he said “this is not something where at this stage of the process we’re getting to a definitive conclusion” and that further work may be required, either by the FCA or the CMA, he said. Aon Hewitt, Willis Towers Watson, and Mercer have called in lawyers to aid a joint response to the regulator.The FCA also expected the CMA to look into the ability of smaller schemes to challenge investment advice, Woolard said.The FCA has provisionally decided to refer the institutional investment advice sector to the CMA to address what it sees as a lack of transparency and competition among providers. In its interim report it said it was “considering recommending” to the government that institutional investment advice be brought within its remit. The Financial Conduct Authority (FCA) will not accept investment industry initiatives to improve cost transparency if it feels these will not deliver, the regulator’s director of strategy and competition has said.Chris Woolard was speaking about the FCA’s asset management market study at the Pensions and Lifetime Savings Association’s investment conference in Edinburgh yesterday.He said it was positive that the industry was pursuing solutions, but what mattered was whether the final outcome met the needs of end customers. He strongly suggested the FCA will not accept an inadequate solution.In the past, when regulators had sought industry-led solutions, they had all too often become “stuck” with “whatever comes out the other end of the pipeline”, Woolard said.
Pension schemes are paying their active investment managers up to 70% more than six years ago even though average fee rates have dropped for most asset classes, according to consultancy LCP.For an active global equity mandate that had matched the return of the global equity index, an investor could be paying up to 70% more in fees than they had been in 2011, LCP reported in its latest Investment Management Fee Survey.It said this highlighted how active managers were rewarded for simply retaining assets, and not necessarily making above-benchmark returns.The report’s author, Matt Gibson, partner and head of investment research at LCP, said: “Investment managers have done very well out of increases in assets under management over recent years.” But these increases had mostly been driven by general rises in equity and bond markets, he added.“Whilst we welcome the reduction in fee rates in many asset classes, overall, investment managers are charging much more but don’t seem to be doing more,” Gibson said.The findings of the report – which examined total costs for a hypothetical £50m (€59m) investment across the most popular asset classes used by LCP clients – showed it was important for schemes to monitor their investment managers regularly and put negotiating pressure on them to reduce fees, Gibson said.Of the asset classes covered by the report, the highest average costs were for UK property at £590,000 (roughly 1.18%), while passive UK equity was the cheapest at £38,000 (roughly 0.08%).Certain hedge fund strategies had even higher charges, the consultancy said.The survey separately found benefits for defined contribution schemes using platforms instead of accessing funds directly. LCP said a £10m allocation to a passive global equity fund would be £5,500 cheaper via a platform.LCP’s survey also reported a lack of consistent and transparent reporting on transaction costs. This echoed recent work from the Financial Conduct Authority, the UK regulator, which criticised fund managers for weak pricing and a lack of transparency. The asset management trade body, the Investment Association, is currently consulting on a new fee disclosure code.While some managers only gave data on explicit trading costs, such as broker’s commission and stamp duty, others tried to quantify implicit costs such as dealing spreads and the impact of the fund’s transactions on the market price of a security, the consultancy said.
Richard Gröttheim, CEO, AP7Under the proposal, Facebook would have distributed two of the new shares to shareholders as a dividend for each class A or B share they own.Zuckerberg controls the company by owning the majority of B shares, which each carry 10 votes, while A shares carry one.The idea behind the stock reclassification was to allow Zuckerberg and his wife to sell much of their stock to fund philanthropic activities without losing control over the company.Gröttheim said AP7 agreed to lead the litigation because it believed that the Facebook stock reclassification would create “a terrible corporate governance scheme”.“If Mark Zuckerberg wants to sell his stock and become a philanthropist, he should do that,” he said. “But he shouldn’t be allowed to keep controlling Facebook while devaluing current stockholders after he does so.”In a post on Facebook earlier this week, Zuckerberg explained the decision to withdraw the proposal just days before he was due to go to court.He said last year he had thought the stock reclassification was the only way to achieve his philanthropic aims, but now thought there was a better solution.“Over the past year and a half, Facebook’s business has performed well and the value of our stock has grown to the point that I can fully fund our philanthropy and retain voting control of Facebook for 20 years or more,” he said.As a result, he had asked the board to withdraw the proposal. The lawsuit is now expected to be dismissed as moot sometime next week, according to Grant & Eisenhofer, a law firm representing several institutional investors.AP7 did not have any legal costs resulting from the action as these were borne by its US lawyer, Gröttheim said.The Swedish pension fund was represented by the law firm Kessler Topaz Meltzer & Check as co-lead plaintiff in the case. Swedish national pension fund AP7 has declared a “full victory” over Facebook’s decision to halt plans to reclassify its stock, a move it said would have cost public shareholders $10bn (€8.5bn).AP7 was the co-lead on litigation in the US to stop the share dilution.Richard Gröttheim, chief executive of AP7, told IPE: “We’re very proud to have shown that this instrument for corporate governance works very well.”He said the pension fund was very happy with the result, which was “a full victory for Facebook’s public stockholders”. AP7 is one of the largest shareholders in Facebook, with its holding of A shares in the company worth around SEK3.2bn (€334m).Gröttheim said the case had saved Facebook’s public shareholders from a potential $10bn investment loss, which it was estimated would have resulted from the depreciation of their stock following the reclassification.The pension fund, which runs the default option fund for Sweden’s premium pension system, launched a legal case against Facebook in May 2016 in the Delaware Court of Chancery after the US social media company announced a plan to issue a new voteless “C” class of shares, adding to the “A” and “B” shares already in issue.