LaSalle wins £750m Greater Manchester Pension Fund property mandate

first_imgAs previously reported in November last year, Peter Morris, director of pensions at GMPF, told IPE sister publication IP Real Estate the fund did not possess the internal resources to increase the value of the pension fund’s property assets and the size of its holdings.The GMPF’s tender came with a requirement that an external manager have at least £3bn of UK property assets under management.LaSalle said it currently manages around £10bn in the UK.GMPF’s seven-year contract ncludes a four-year framework agreement with CBRE and DTZ, in effect making them ’back up’ managers.As previously reported, the mandate had an option to extend by five years and comes with triennial fee reviews.According to the pension fund’s 2013 annual report, property made up approximately 6-7% of its £12.6bn portfolio, with a benchmark allocation to the asset class of 10%.LaSalle, which has $50bn (€38bn) of assets under management, said it would initially target UK properties worth up to £75m on behalf of the fund.Councillor Kieran Quinn, Tameside Council leader and GMPF chair, said: “This is a significant mandate that can rise up to £1bn, and we hope LaSalle can make a significant long-term contribution for the fund’s returns.” The Greater Manchester Pension Fund is outsourcing its UK property portfolio to LaSalle Investment Management.The £750m (€944m) mandate will see LaSalle manage existing GMPF properties as well as invest in new properties in the UK.The mandate could increase to £1bn.The pension fund decided to outsource its domestic real estate portfolio last year. last_img read more

The Jonathan Hill hearings: Eurocrats learn to laugh

first_imgStrangely for the usually staid European Parliament, the session began with a burst of laughter. Then there was laughter during the sitting. And it finished with an amusing digression on the subject of gardening.Thus, Lord Jonathan Hill had brought with him to Brussels a sample of the British humour. Hill will now take over as the EU commissioner to lead the EU’s new DG for Financial Stability, Financial Services and Capital Markets.The parliamentary session – a repeat vetting of the UK prime minister David Cameron’s nominee – looked as if it could open on a sour note. The previous week, MEPs in the Economic and Monetary Affairs committee failed to clear him.“It was as if the commissioner designate were a disgraced schoolboy being put on detention”, is how a German MEP described the situation. Not only had Hill had past links with the City of London (partly blamed for the financial crisis), but he also appeared to be weak on financial law. However, Hill kicked off his opening remarks with the words that he was “happy to be back”, but then immediately joked: “But I didn’t expect to be welcomed back so soon!” His wit got him copious laughter and even applause. Immediately, it was as if the temperature in the Brussels debating chamber shot up from pretty cold to pretty warm.Hence, Hill succeeded in carrying his audience (at least a lot of it) with him through his next cheerily expressed “scenario” of what he’d like to see at the end of his mandate. It was a glowing vision of sunny uplands, indeed. It included a completion of the banking union and went on to visualise contented EU citizens happy to be experiencing lower costs for life insurance and pensions.Furthermore, implementation of a European Capital Market Union would see to the successful funding of SMEs. This, in turn, would contribute to large-scale employment. Also, Hill predicted, there would be no retreat by the UK from the EU. Applause!Nevertheless, one MEP did sneer. He mocked the 2019 scenario as a “gloriously rosy picture”. As a UKIP member, he particularly pointed the finger at the UK staying in the EU.In contrast, there was a specific tribute paid by another of Hill’s interrogators for his British sense of humour. This was unlikely, in that she is a Socialist – that is, on the other side of the fence from Hill, and French! However, Pervenche Berès is herself no stranger to humour. She had once, as a somewhat barbed joke, presented a predecessor of Hill with a Barbie Doll horse. The doll had big blue eyes and a long mane of fine hair. The ceremonial presentation, during another committee session, was to reprimand the commissioner for skipping a meeting, for the sake of attending Cheltenham races.Later, for Hill, came a probing question on how often he met with David Cameron. There was laughter when Hill said he did not attend the “Chipping Norton does” (the British Chipping Norton “set” is an elite group of media, political and show-business acquaintances based on a market town in Oxfordshire).Finally came the gardening. As he was known as a keen gardener, what seeds should be sown when he gets into office, an MEP queried? Whoomph! Hill was now on serious ground. He advised, authoritatively, that, at this time of the year, one does not normally plant seeds. One digs. One cuts back unwanted growth. One applies manure, to achieve sound growth in season. The MEPs laughed. And Hill cleared through his grilling. He is expected to enter office on 1 November.last_img read more

Dutch doctors scheme SPH to increase pension rights

first_imgSPH, the €9.3bn occupational pension fund for general practitioners in the Netherlands, has said it will increase pension rights by 3.45% in light of its “favourable” financial position. In addition, it plans to cut its contribution for self-employed participants by 9% to a maximum of €20,910, due to the reduction of the tax-facilitated annual pensions accrual, according to the scheme’s newsletter.SPH has a nominal coverage ratio of approximately 140% and is one of the three best-performing pension funds in the Netherlands.The GPs’ scheme attributed the premium reduction in particular to the increase of the official retirement age to 67, in combination with the new cap of tax-facilitated accrual at a salary of €100,000. However, the pension fund also pointed out that the effects of low interest rates and rising longevity would partially offset the benefit of the reduced contribution.The contribution level for employed and deputy GPs will not change, remaining at just over 17% of the pensionable salary.In SPH’s most recent newsletter, chairman Johan Reesink said the pension fund was satisfied with the Netherlands’ new financial assessment framework (FTK), as it has “increased the solidity of the pensions system and improved its ability to cope with downward shocks”.However, he also lamented the higher interest rates and criticised the assumptions for returns that have been set for establishing contributions and indexation.“Working with assumptions that subsequently turn out to be different has caused a lot of unrest and anger, as well as a strong drop in confidence in the pensions sector,” he said.In other news, the €300m Total Pension Fund Netherlands has outsourced its pensions administration to Aon Hewitt as of 1 January.It cited the “strongly increased complexity of pensions provision” and, in its wake, the “increased vulnerability” of its three-strong pensions bureau.Until recently, the pension fund carried out the administration in-house.Earlier, it had placed its asset management with BlackRock.Total Pension Fund Netherlands has approximately 650 active participants, 270 deferred members and 375 pensioners.last_img read more

Derivatives account for two-thirds of annual returns at KPN scheme

first_imgThe pension fund said it increased its strategic allocation from 2.5% to 10%, while also raising its stake in inflation-linked bonds from 12% to 15%. Equity delivered 9.5%, with actively managed global and emerging market equity, and passively managed European equity, returning 11.7% and 5.1%, respectively.The pension fund replaced 5% of its global equities with an equal stake in European equities, “as they were priced more attractively”.Listed real estate, returning 26.2%, was the best performing part of the property portfolio.Actively managed property returned 5.5%.The KPN scheme attributed the 20.5% loss in commodities to falling oil prices and replaced all its passively managed investments – through future contracts – for actively managed holdings in the asset class. According to Cees Michielse, chairman of the scheme’s investment committee, the adjustment was part of a periodical reassessment of the entire investment portfolio.“The fixed monthly extension of the futures appeared to be predictable, allowing other market players, such as hedge funds, to anticipate,” he said.The pension fund also divested its remaining stake in hedge funds.“Already a couple of years ago, we expected better results from equity and bonds, and this prediction has come true,” Michielse said.In December, the KPN Pensioenfonds sold the put options it had used to hedge the equity risk in developed markets.On the back of rising equity markets, these derivatives came at the expense of 0.5 percentage points of the annual return.The scheme said it spent 0.34% of its assets on asset management and 0.03% on transactions.The KPN Pensioenfonds, which has 58,250 participants, is on course to merge with the €900m Ondernemingspensioenfonds KPN – the pension scheme for nearly 2,000 KPN staff who are not employed under a collective labour agreement.The Ondernemingspensioenfonds KPN returned 21.2% last year. As of the end of March, the schemes’ policy coverage ratios stood at 111.2% and 114.3%, respectively. The €7.5bn pension fund of telecoms giant KPN has confirmed that almost two-thirds of its annual return of 22.6% was due to its deployment of derivatives against various risks, including an interest hedge. In its annual report for 2014, the KPN Pensioenfonds said the actual return on investments was 8%.Over the course of the year, the scheme decreased its interest hedge of liabilities – through a combination of fixed income holdings, interest swaps and swaptions – from 85% to 61%.It generated a 10.1% return on its fixed income portfolio, with Dutch residential mortgages returning 9.1%.last_img read more

Judge gives green light for KBC and others in Facebook class action

first_imgFacebook investors including KBC Asset Management (KBCAM) have been given permission by a US judge to pursue their class action against the social media company, relating to growth forecasts published in the run-up to its initial public offering (IPO) on the NASDAQ in May 2012.The plaintiffs, who represent a class of purchasers of Facebook Class A common stock in the IPO, claim Facebook made materially untrue and misleading statements in its registration statement and prospectus.Facebook’s primary revenue source is advertising, and the registration statement referred to growth opportunities in the mobile market, as well as the risks involved in monetising that market by displaying advertisements on mobile devices, which Facebook had not yet done.But after the statement was published, and only a day after the first roadshow presentation, Facebook cut its internal projected revenue figures for the second quarter of 2012, as potential negative implications of increased mobile use became clearer. Only a small number of analysts were told about this change.Ten days later, the hugely successful IPO saw 421m Facebook shares sold at $38 each, raising a total of more than $16bn (€14.8bn) and making it one of the largest-ever IPOs for a technology company.Soon afterwards, however, news of Facebook’s falling revenues began to emerge.Reuters reported that, shortly before the IPO, Facebook had taken the “rare and disruptive” step of cutting its revenue guidance to analysts during the period when the roadshow was taking place.It also later revealed that, as a result, analysts from three of the lead IPO underwriters – Morgan Stanley, Goldman Sachs and JPMorgan Chase – revised their revenue estimates for Facebook while the roadshow was in progress but disclosed this fact only to a small number of select clients.Following these assertions, Facebook’s stock price fell more than 18% below the IPO price, wiping out billions of dollars in market capitalisation.The share price took more than a year to recover.Robert Sweet, US district judge, Southern District of New York, has now allowed class certification for both institutional and retail investors, allowing them to pursue group lawsuits, and appointed class representatives and counsel.The defendants had argued that shareholders should pursue their claims individually because of the varying degrees of their knowledge about mobile’s negative impact on Facebook’s revenue, as well as about the revised revenue projections.But Judge Sweet said: “As long as a sufficient constellation of common issues binds class members together, variations in the sources and applications of a defence will not automatically foreclose class certification.”The defendants had also argued that the class could not be certified because “US securities laws do not apply extraterritorially … but only where title to the security transfers within the US”.More than 53m shares had been sold through the IPO to investors based abroad.But the judge accepted the plaintiffs’ assertion that foreign allocants “participated in a strictly US IPO of a US company in order to receive shares registered in the US with the SEC that would trade exclusively on an American exchange”.KBCAM’s participation as a plaintiff is through two sub-funds of the KBC Equity Fund, KBC Equity Fund New Shares and KBC Equity Fund Technology.Because of their specific investment proposition – technology shares and IPOs, respectively – both funds invested in a limited number of Facebook shares when the company was floated.The shares account for barely 1% of the funds’ portfolios, and KBCAM said their impact on the funds’ performance and net asset value is negligible.But it said it joined this action because its duty as an asset manager is to defend the interests of its customers and investors, regardless of their size.The lead plaintiffs are the North Carolina Department of State Treasurer (on behalf of the North Carolina Retirement Systems), the Arkansas Teacher Retirement System and the Fresno County Employees’ Retirement Association.The defendants include Facebook, a number of Facebook directors and officers including chairman and co-founder Mark Zuckerberg, and the underwriters of the IPO.Facebook has said it is appealing the decision.last_img read more

Friday people roundup

first_imgSpence Johnson – Yoon Ng has been hired to lead Spence Johnson’s Asia-Pacific business. Her initial focus will be on the consultancy’s data platform, Institutional Money in Motion, which currently tracks close to $5trn (€4.5trn) in institutional assets. She joins from Cerulli Associates. ABP, De Eendragt Pensioen, Shell Pensioenfonds, Sprenkels & Verschuren, Aon Hewitt, Mercer, Spence Johnson, Cerulli AssociatesABP – André van Vliet has been appointed as a board member of the €355bn Dutch civil service pension fund ABP. He was nominated by employee organisation Ambtenarencentrum. Van Vliet has been financial director of pensions insurer De Eendragt Pensioen, taken over by insurer ASR last year. Between 1988 and 2014, he was director of financial risk management for pension funds and insurers at consultancy Ortec. Shell Pensioenfonds – Jeroen Kakebeeke has been appointed investment analyst at the €23bn pension fund of Shell Netherlands. He will be responsible for monitoring and investment advice, together with Henk Sytze Meerema, his manager. During the first six months of last year, Kakebeeke was investment consultant at consultancy Sprenkels & Verschuren. Before then, he was portfolio manager for external managers and socially responsible investment at Timeos, the asset manager for the €20bn pension fund PGB.Aon Hewitt – Dominique Grandchamp has been appointed head of investment consulting in Switzerland. He joins from Mercer, where he was a senior investment consultant, advising on ALM, strategic asset allocation, portfolio management and selection of asset managers. Before then, he served as CIO, portfolio manager and fund analyst at a number of institutional financial companies.last_img read more

Sustainable funds outperform with lower fees, says Swedish Pensions Agency

first_imgSustainable pension funds on offer within Sweden’s Premium Pension System (PPM) have had both higher returns and lower fees on average in the last five years than other funds, according to new data from the Swedish Pensions Agency.In its report ’Statistics on sustainable funds within the Premium Pension System’, the Swedish Pensions Agency (Pensionsmyndigheten), the government body which administers and pays national pensions and provides information about pensions, says funds included in the PPM fund marketplace bearing the “M/E” environmental/ethical label had lower fees and higher returns over the five years to the end of December 2015 than other funds.The M/E label is given to funds that take environmental and/or ethical considerations into account in their investment approach.Niklas Näsström, financial analyst at the Swedish Pensions Agency, said: “It is clear that sustainable funds have lower fees than other funds.” This was true regardless of whether the analysis was based on capital-weighted or unweighted average fees, he said.The average return for M/E-labelled funds in the last five years is 5.5% compared with 4.1% for other funds.The outperformance observed applied to all types of fund except bond funds, the agency said, with the same comparative result apparent for equity funds, mixed funds and generation funds, where risk is reduced as the saver gets older. In the case of bond funds, however, which are a small proportion of the overall funds on offer, other funds had performed better over the period than those with the environmental/ethical label.The proportion of sustainable funds among all PPM funds has been increasing gradually since 2009 and reached 23% in 2015, according to the data.last_img read more

Strathclyde slashes equities to crystallise 2017 gains

first_imgThe UK’s largest public pension fund sold 10% of its equity exposure in December as part of an ongoing risk-reduction exercise.The £21.2bn (€23.7bn) Strathclyde Pension Fund cut more than £1bn from a passive equity mandate run by Legal & General Investment Management during the month, according to an investment strategy report presented to the fund’s trustees on 28 February.Strathclyde director Richard McIndoe’s report laid out plans to reduce the scheme’s equity exposure to 52.5% of the portfolio, rebalancing in favour of its short-term and long-term “enhanced yield” allocations. December’s activity meant Strathclyde finished 2017 with 57.5% of its portfolio weighted to equities. The pension fund  – for council workers in and around Glasgow, Scotland – began reducing its stock market exposure last year after an actuarial valuation showed it to be 105% funded as of 31 March 2017. The scheme generated a return of 12.5% a year in the three-year period to this date.It is moving to a broadly diversified strategy including private debt, emerging market debt, global credit and UK infrastructure, the latter with a focus on renewable energy. McIndoe said the fund planned to retain its target allocations for private equity and the direct investment portfolio, meaning the strategies would become a larger part of the overall equity portfolio.Rebalancing favours credit, EMD, infrastructureManagers including Barings, Oak Hill, Ashmore and DTZ stood to benefit from the shift, the strategy report said.Barings and Oak Hill were to receive £420m between them, the report said, for additional investments into existing multi-asset credit strategies. Ashmore stood to receive £210m to invest in emerging market debt. These allocations are part of Strathclyde’s “short-term enhanced yield” silo.In the “long-term enhanced yield” silo – designed to provide inflation protection as well as income – the scheme planned to invest 2.5% of the portfolio with global infrastructure managers.“In the first instance this should look at open-ended pooled funds as these can achieve fairly rapid deployment of capital, good visibility of existing assets and a stable long-term allocation with the option of some liquidity,” the report said.“Consideration should then be given to closed-ended funds which could provide a long-term yield, and a more specific focus on individual market segments in addition to core holdings.”The current allocation shift is scheduled to be implemented by 2020. Under Strathclyde’s longer-term plan, yet to be formally agreed, it could shift its equity allocation down further to 42.5% and then 32.5%.last_img read more

​Italian pension fund Solidarietà Veneto to add infrastructure, real estate

first_imgItalian pension fund Solidarietà Veneto has announced plans to broaden its asset allocation to include infrastructure and real estate for the first time.Reporting on developments in the first half of this year, the €1.36bn pension fund said that because of the experience it had gained in private debt and private equity, it was now ready to further develop its alternatives investment, but also to introduce two new asset classes: infrastructure and real estate.In doing this, the fund — which covers staff of companies based in the Veneto region — said it would ideally try to “neutralise the environmental impact”.Paolo Stefan, director of the pension fund, described this approach as: “highly innovative for our country, but one that is almost normal if we look beyond the Alps”. The pension fund reported that environmental considerations were increasingly mentioned in meetings by some members. Solidarietà Veneto said that in the January-to-June period, financial markets had remained hostage to the policies and announcements of the central banks, which meant that attempting to diversify via quoted investments alone was likely to prove partially ineffective.This, it said, was the reason the pension fund had planned, in its last strategic asset allocation review, gradually to increase its allocation to alternatives.Since 2013 the fund had been leading the way in Italy in this area, it said, citing the start of its investing in private debt and private equity. Fresh sub-fund tweaks The pension fund also said it made changes to some of its sub-funds at the beginning of July, including to the asset allocation mix of the ‘Dynamic’ fund. The equity weighting for this sub-fund has been ramped up to 54% from 50%, with the bond weighting falling to 46% from 50%.“The intention is to compensate for the greater volatility arising from the increase in equities through deeper diversification and a more effective risk/return ratio, which will benefit the young people associated with this sub-fund,” the pension fund said.Meanwhile, benchmarks for the ‘Prudent’ and ‘Income’ sub-funds are changing to lengthen the bond duration, which the pension fund said should result in higher expected returns over the next few years.Solidarietà Veneto’s total assets rose to €1.36bn at the end of June from €1.26bn at the close of 2018.“The new wave of expansive monetary policies announced by the ECB and the FED has driven the performance of almost all the asset classes in the first part of 2019,” the pension fund said.The Dynamic sub-fund made a 6.09% return in the six-month period, it reported, while the Income, Prudent and Guaranteed TFR sub-funds posted returns of 3.93%, 3.59%, and 1.03% respectively.last_img read more

Swedish regulator softens edges of rules for IORP II provisions

first_imgThe Swedish financial services authority has announced it will amend its proposed IORP II regulations regarding the calculation of balance sheet provisions for occupational pension funds.The announcement follows critical responses from several major pension providers to a consultation on the draft proposal for new regulations on occupational pension activities.In their joint response last month, Folksam, AMF and Alecta said the new rules would negatively affect both pension savers and employers.The regulator – Finansinspektionen (FI) – has now made a draft addition to its previous proposal, including an amended rule for calculating capital requirements for share price risk and new rules for an alternative method for calculating the long-term forward rate (UFR). This is the rate at the far end of the interest rate curve that pension funds use to determine provisions. Lars-Åke Vikberg, chief executive of Swedish pension fund SPK, told Danish pensions news service Pensionsnyheterna that infrastructure would, relatively speaking, come out a little better in the new proposal from FI.“It is good. Infrastructure investment fits very well into pension portfolios, which are naturally very long-term,” he was reported as saying.It was also positive that the regulator was allowing pension funds a phase-in of the UFR and did not have to apply the EIOPA rate immediately, he said.“FI has listened to criticism from the referral bodies,” Vikberg said.FI has set a tight deadline for written comments on the supplementary proposal of 14 October, and also invited parties to make oral submissions directly at a meeting convened for that day.The new regulations are currently scheduled to enter into force on 1 January 2020.last_img read more