Varma Mutual Pension Insurance Company – Reima Rytsölä has been appointed as CIO. Rytsölä will take up his new position in April 2014 at the latest. He will report to Varma’s president and chief executive and be a member of the company’s executive group. Rytsölä will join Varma from Pohjola Bank, where he was senior executive vice-president of banking and a member of the group executive committee. Matti Vuoria is president and chief executive of Varma.Henderson Global Investors – Rob Gambi has been appointed CIO, arriving from UBS Global Asset Management, where he was group managing director and global head of fixed income.Fidelity Worldwide Investment – Richard Parkin has been appointed head of retirement as part of the company’s plans to offer a new retirement service to its UK customers. Parkin will take up the role at the end of October.Man Group – Neil Mason has been appointed senior managing director and lead portfolio manager of the Man GLG multi-strategy portfolios. Mason comes from the role of chief risk officer at Harvard Management Company. Before then, he was CIO at FRM Capital Advisors.Liontrust Asset Management – John Husselbee, chief executive of North Investment Partners, and Paul Kim have been recruited to establish a new multi-asset team. Husselbee will join Liontrust along with the North Investment Partners operation before the end of October. Kim will join as senior fund manager. He has had roles at Liverpool Victoria Asset Management, Capel Cure Myers, Sun Life Portfolio Counselling Services (AXA Sun Life) and other firms.Apollo Aviation Management – Pat O’Brien has been elected as an independent director to the board of Apollo, the Irish subsidiary of aviation asset manager Apollo Aviation Group. O’Brien is a former KPMG Partner who specialised in aviation finance and advising international aircraft leasing companies.State Street – José Almeida, chairman, president and chief executive at Covidien, has been appointed to the board of directors at State Street Corporation. Almeida joined Covidien, formerly Tyco Healthcare, in 1995. He is currently on the board of Advanced Medical Technology Association (AdvaMed) and Partners in Health.Investcorp – Lionel Erdely has been appointed head of hedge funds and CIO. He joins from Lyxor Asset Management, where he has been CIO since 2004, and chief executive of Lyxor Inc since 2009. National Asset Management Agency, Invesco Perpetual, Dutch Code for Pension Funds, Varma Mutual Pension Insurance Company, Henderson Global investors, Fidelity Worldwide Investment, Man Group, Liontrust Asset Management, Apollo Aviation Management, State Street, InvestcorpNational Asset Management Agency (NAMA) – John Mulcahy, head of asset management at Ireland’s NAMA, will retire at the end of next February and be succeeded by Mary Birmingham, currently a senior asset manager at the agency. Mulcahy has been at NAMA since it was set up in December 2009, starting as head of portfolio management.Invesco Perpetual – Head of UK equities Neil Woodford is to leave at the end of April 2014, after 25 years with the company. He will remain responsible for all funds where he is the named manager through a transition period, the company said. At the end of that, Mark Barnett will be named manager of the High Income and Perpetual Income funds, and then succeed Woodford as head of UK equities. Ciaran Mallon and existing fixed income managers Paul Causer and Paul Read will manage the UK equity components of the Monthly Income Plus and Perpetual Distribution funds with immediate effect.Dutch Code for Pension Funds – Margot Scheltema has been appointed as chair of the five-strong monitoring committee for the new Code for Pension Funds, recently presented by the Dutch Pensions Federation and the Labour Foundation (StAr). Scheltema has ample experience in financial management, gained from national and international positions at energy giant Shell as well as from positions at the Foreign Ministry and the Treasury. Currently, she is on the board as well as on supervisory boards of several companies and institutions in the financial sector. Next year, she will leave the audit committee of the €292bn civil service scheme ABP.
Month: September 2020
Swedish prime minister Stefan Löfven, a Social Democrat, has confirmed Per Bolund as the minister for financial markets, replacing Peter Norman.Last month saw the Swedish population take part in a general election, with the left-leaning coalition falling short of a majority, but with Löfven still electing to form a minority government with the Green Party.Bolund, a Green Party MP, will also become the deputy minister of finance in the new Swedish government.In addition to the appointment of Bolund, Annika Strandhäll is set to become the new social security minister, and in turn will take over from Ulf Krister Petersson as the chairperson of the country’s independent pensions committee. The cross-party group helps form policy on the country’s pension system and was behind the reforms announced for the AP funds.Bolund will now oversee this reform, which the outgoing government announced would be reduced from five funds to three, after accepting recommendations from the independent committee.In 2011, the then government initiated a review into the structure of the AP fund system, including the viability of buffer funds AP1 through AP4, and private equity investor AP6.Bolund, 43, became an MP in 2006 for the Green Party and has since been the economic spokesman.Previously, he was a civil servant in the industry ministry.His predecessor, Norman, began the review of the AP system having previously been in charge of the AP7 fund.The reform of the funds has been a contentious issue in Sweden, with AP3 vice-president Gustaf Hagerud leaving the fund amid speculation about whether it would cease to exist.
Last month’s announcement by PFZW that hedge funds would no longer be a strategic asset class raised questions on the role of the platform in PGGM’s business.In July last year, the departure of Jan Soerensen, PGGM’s head of hedge funds and main contributor to the development of the platform, also suggested the asset manager would re-think its strategy.Sorensen went on to found Tang Financial, a hedge fund replication business.PFZW has specified that while hedge funds are not a strategic priority any more, hedge fund-style passive strategies will be considered.Bagijn added that the company was “currently evaluating the different options for the future of the platform.”The platform was developed using the know-how and technology of Paris-based Lyxor Asset Management.At one point, as much as 5% of PGGM’s assets were invested in hedge funds on behalf of clients.PGGM’s proprietary managed account platform, called IMAP (Institutional Managed Account Platform), is based on Irish QIF fund structures.The platform is a plug-and-operate system, where template contracts exist with a suite of different service providers.For each investment held on the platform, the necessary service providers to facilitate the particularities of the investment are plugged in.Bagijn added: “While the platform was built for hedge fund investments, it can facilitate any investments where the preferred vehicle is an Irish QIF structure.”Other Dutch pension funds have left the hedge fund sector.The industry-wide scheme for metal workers PMT announced last year that it would divest its €1bn portfolio because of cost concerns.PME, another pension fund for the metal industry, also divested from hedge funds due to high costs and unattractive returns.The US’s largest pension fund, CalPERS, announced its exit from the hedge fund sector last year, prompting worries that other large pension fund would follow suit.However APG, the €343bn Dutch asset manager owned by public sector pension fund ABP, continues to invest in hedge funds based on the positive performance of its portfolio.In 2013, APG’s hedge fund portfolio recorded a net return of 6.19% against management costs of 4.36%. PGGM, the Dutch pension asset manager, is considering selling its managed account platform.Ruulke Bagijn, CIO for private markets, said PGGM had been approached by “a number of interested parties about a potential acquisition of its managed account platform”.The €155bn asset manager, whose main client is Dutch healthcare pension fund PFZW, developed the platform in 2010 to manage its clients’ hedge fund portfolios.Bagijn said interested parties had approached PGGM “as a consequence of PFZW’s decision to exit hedge funds”.
At AGI, Hilka was also a member of the company’s European executive committee, while his role as head of pensions was created on is arrival.Tobias Pross, who has been with the group since 1999 and was named head of EMEA at AGI last summer, will take on Hilka’s responsibilities, a spokesman said, explaining that a decision on whether to appoint a permanent replacement had yet to be reached.Hilka’s departure comes only a few months after Elizabeth Corley announced she would step down as AGI’s chief executive in April, instead taking on the role of non-executive vice-chair.Andreas Utermann, her co-chief executive and AGI’s CIO, is set to succeed her. Andreas Hilka, European head of pensions at Allianz Global Investors (AGI), has departed the German asset manager.A spokesman for AGI confirmed Hilka’s departure but declined to comment further.Hilka joined the asset manager in 2011 from Credit Suisse, where he was head of multi-asset class solutions for Austria, Germany, Luxembourg and Poland, as well as head of EMEA pension solutions.He has also worked at chemicals company Hoechst, where he spent eight years as a member of the pension fund’s board.
The Netherlands missed an “opportunity” when it failed to create a cross-border pensions vehicle straightaway after the introduction of new European legislation, according to Sjoerd Gunnewijk, chair of the €1.2bn Dutch pension fund for BP, which plans to relocate to Belgium this year.In an interview with IPE sister publication Pensioen Pro, Gunnewijk said BP decided to establish its pan-European scheme in Belgium because the country had already moved to support the creation of cross-border pension schemes.He said BP wanted to combine local pensions activities to cut costs and improve governance.“As a result, financing, asset management and part of the governance can be carried out centrally, and we don’t need to hire investment consultants in the Netherlands any longer,” he said. BP’s pension funds in Ireland, Spain and Switzerland have joined the new pan-European scheme.In the interview with Pensioen Pro, Paul Koole, a board member at BP’s Dutch pension fund, said he expected the “Belgian route” would be particularly attractive for financially strong multinational companies, “as the Belgian regulator demands a guarantee from the sponsor”.Gunnewijk, meanwhile, took pains to emphasise the BP scheme was not “running away” from the Netherlands.“We don’t have problems with the new financial assessment framework or supervisor DNB, although we have spent a lot of money and time implementing all the new regulations in recent years,” he said. “The same goes for the reduction of tax-facilitated pensions accrual, which made it impossible for us to keep our final salary arrangements.”The chairman added that Dutch fiscal rules – as well as the social and labour-related aspects of the Dutch Pensions Act – would still apply to its pension rights in Belgium.When asked about the advantages of the cross-border plan, Gunnewijk cited the increased sponsor guarantee, comprising an additional contribution to a funding level of 110%, as well the lower threshold for indexation.“The latter was made possible by the lower discount rate for liabilities, which increases the chance of extra returns,” he said.Gunnewijk also confirmed that the pension fund would not raise its risk profile under Belgian rules.The BP scheme’s works council (OR), as well as its accountability council, have already approved the planned relocation, which now awaits the green light from both countries’ regulators.Gunnewijk is to become chairman of BP’s European pension fund, while Koole will join its board.The rest of the Dutch scheme’s board is to form a pension-rights advisory council for the pan-European scheme, replacing the accountability council in the Netherlands.
They are professional trustee Johan van Dulst, who has been appointed chairman, and Jaap Schepen, the former chair of the pension fund’s investment committee.The BAT scheme is not the first pension fund that has scaled back its board.Last year, Alliance, the €597m Dutch pension fund of food giant Nestlé, announced that it would reduce its board from 10 to eight members, citing “decreasing interest of potential candidates” for a board seat.The €931m scheme of food producer Royal Cosun introduced a similar board reduction at the expense of both a sponsor and a worker representative.Also last year, the €8.3bn pension fund of steelworks Hoogovens reduced its board by one-third to eight members, also bringing in a new and independent chair.The pension fund of British American Tobacco made clear that it had decided to stick to its board model of an even split between employer and employee representatives, after assessing all available options.However, it was not able to directly explain its choice when asked by IPE.The BAT scheme has approximately 2,430 participants and pensioners with four affiliated companies, including Theodorus Niemeyer.Its funding stood at 122.5% at September-end. Last year, it returned 6.2% on investments and granted its participants and pensioners a 0.18% rise through indexation.It reported asset management and transaction costs of 0.32% and 0.02% respectively and attributed the rise of administration costs from €436 to €521 per participant largely to the transition of its pensions administration to Dion Pension Services last year.The pension fund still carries out risk management, communication and asset management strategy in-house. The €640m Dutch pension fund of British American Tobacco (BAT) has reduced its trustee board by 25%, in part to unburden the employer as the main supplier of board members.On its website, the scheme said it had decreased the board’s size from eight trustees – with four representing the employer and two representing workers – to six.In the new setup, both the number of trustees representing the sponsor and the number of worker representatives have been halved.The scheme said it had added two independent trustees in order to increase the expertise on the board.
Net inflows and assets under management (AUM) hit record highs in Europe last year, according to data provider Morningstar.European-domiciled open-ended funds had €8.9trn of AUM at the end of 2017, up from €7.96trn a year before. Net inflows reached €682.8bn, with fixed income products “raking in a record €288bn”, Morningstar said.Assets in long-term passive funds grew more than those in actively managed funds, primarily in equity. Bond funds remained dominated by active management, with the market share of passive fixed income funds rising only slightly from 11.8% to 12% year on year.BlackRock was the most popular European asset manager last year, bringing in €62.7bn of assets. Net inflows were €16.5bn. Standard Life’s Global Absolute Return Strategies fund had the most outflows, with €9bn exiting.In Germany, assets under the management by the fund industry topped €3trn last year, a record high, the country’s investment management association announced.The figure represents a 77% increase over 10 years, according to the BVI.At €1.6trn, assets in open-ended institutional investment funds (Spezialfonds) accounted for more than half of the total. Assets held in discretionary mandates amounted to €379bn.Open-ended funds had their second-best year for sales, with managers attracting €160bn of net inflows. Discretionary mandates saw outflows of €16.2bn, and closed-ended funds brought in net inflows of €2.9bnSpezialfonds attracted the most inflows – €88.1bn – with retirement benefit schemes such as professional pension schemes and pension funds, as well as insurance companies, accounting for a combined total of €63.5bn.Tobias Pross, the BVI’s president, said: “Along with the low interest rates, retirement planning was the main driver behind new business for funds.”The BVI also said that outsourcing of portfolio management had “markedly increased” in the open-ended Spezialfonds segment. At the end of 2012, 37% of assets in open-ended securities Spezialfonds were managed by third-party managers, and at the end of 2017 this stood at 41%.“This is due to the fact that foreign asset managers use the portfolio management of funds to access the German market without having to establish their own investment management company,” said the BVI.“In addition, many institutional investors opt for specialised asset managers to manage certain asset classes, such as emerging-market securities or corporate bonds.”The trend was beginning to gain traction in open-ended property funds, it added.In Switzerland, assets under management in the fund market stood at CHF1.1trn (€1trn) at the end of 2017, having passed the CHF1trn mark in July for the first time.SFAMA, the Swiss fund and asset management association, said that together with CHF845bn of assets in discretionary mandates for Swiss and foreign institutional clients, the total volume of assets managed by asset managers in Switzerland came to around CHF2trn.
Index provider MSCI has confirmed plans to increase the weight of China A shares in its indices from 5% to 20%, after consulting market participants.This will lift the pro-forma weight of A-shares in the MSCI Emerging Market index to 3.3%, from 0.7%.However, MSCI conceded it should make changes to its initial approach to increasing the number of Chinese stocks it counts in its benchmarks.Remy Briand, chairman of the MSCI index policy committee, said the implementation of an initial 5% inclusion of China A shares had been a “positive experience” for international institutional investors. He said it had fostered an appetite to further increase their exposure to China’s mainland equity market, leading to MSCI’s initial proposal in September last year.“The strong commitment by the Chinese regulators to continue to improve market accessibility, evidenced by, among other things, the significant reduction in trading suspensions in recent months, is another critical factor that has won the support of international institutional investors,” Briand added.However, MSCI has adapted how it intends to increase the number of A-shares within the index, moving from a two-stage to a three-stage process.The index provider said investors and other market participants had flagged that a two-stage process could incur “execution pressure on the implementation dates”.Additionally, a significant proportion of investors asked for mid-cap shares to be included in the MSCI indices jointly with the weight increase in large-cap shares, to allow for a smoother implementation. Source: Eastspring InvestmentsMichelle Qi, EastspringMichelle Qi, chief investment officer for China at Eastspring Investments, the Asian arm of Prudential, said MSCI’s move would increase demand from global asset managers in the next few years.Qi said inflows to the country’s stock markets were estimated to be $70-80bn (€61-70bn) in 2019, with an even larger inflow next year.By the end of 2018, according to statistics from the People’s Bank of China, foreign investors’ equity holdings stood at RMB1.15trn (€150bn), or 6.7% of A-share free-float cap, Qi said. This scale was already close to the equity assets under management of domestic mutual funds, the mainstream local players in the A-share market.“Accordingly, we will see stronger pricing power of foreign investors at onshore market,” she added. “Foreign investors’ investment thesis, research framework and stock pitching preferences have already had, and will continue to have, a growing impact on the A-share market going forward.”MSCI’s initial announced was followed by fellow index provider FTSE Russell. However, some, including ERI Scientific Beta, said they would not be doing the same, citing restrictions to the use of derivatives, limited capacity for rebalancing and the high number of stock-trading suspensions in the mainland Chinese market.
According to a statement issued by Mallowstreet today, new signatories included representatives of the pension funds for Lloyds Banking Group, insurance company Aviva and energy distributor National Grid. Dawid Konotey-Ahulu, co-founder and director of Mallowstreet, said: “The investment community has the power to make a meaningful difference in the fight against climate change, and it needs to use this power now.“What the Climate Charter will achieve is that at every trustee meeting of pension funds someone will ask, ‘if we make this investment, what is the impact on the climate?’, putting the climate emergency at the top of the agenda. We want everyone to ask their pension fund provider what they are doing to combat climate change.”Those who have signed up to the charter have done so in a personal capacity, meaning it is not binding on the pension funds they represent.Mallowstreet has also called on pension fund members to write to their schemes to demand that they sign up to the charter. More UK trustees and pension fund managers have pledged support for a ‘climate change charter’ to increase scrutiny of asset managers.In total, 76 individuals representing pension funds with a combined £367bn (€414.2bn) of assets have signed the Climate Charter, set up by pensions industry forum Mallowstreet.Signatories have committed to scrutinise all investments made to assess the impact on the environment and climate change.The forum launched the charter in June, and it was initially supported by three senior individuals working for UK pension funds: Paul Trickett, a trustee at three major schemes including RPMI Railpen; Mark Tennant, chairman of the £8bn Centrica Common Investment Fund; and Rosie Lacey, group pensions manager of the £970m De La Rue Pension Scheme.
Choi Danielsen said since index provider MSCI launched the ESG Leaders version of its All-Country World Index, the return difference between the ESG-filtered and standard indices had grown to around 20 percentage points in favour of the ESG Leaders.However, stripping out emerging markets from both indices would trim that return premium to just 0.5 percentage points, she said.In emerging markets, Choi Danielsen explained, a high ESG score resulted in a wider return advantage than it did in developed markets, partly because of the greater variation in ESG development which existed in the corporate scenes of emerging markets.The PFA chief strategist said the coronavirus crisis had shifted some of the focus within ESG to social and governance factors, as opposed to the environment factor – which had received most attention before the outbreak.“This is because in times of adversity and when future prospects are uncertain – which has been the case in recent months – the gaze increasingly falls on executive management,” she said.“In this way, the spread of the coronavirus may have contributed to an even greater interest in sustainable investments,” she said.Since COVID-19 hit Italy in late February, Choi Danielsen said the Europe ESG Leaders index had fallen 11.5%, while the standard MSCI Europe index was down 17%.“Companies’ ability to deal with environmental concerns, social responsibility and management must be regarded as important parameters when it comes to achieving success in times of crisis,” she said.This development had also been supported by the fact that the EU’s upcoming recovery fund was expected to have a climate focus, she said.PFA has recently launched its new PFA Climate Plus pension product, which is based on climate-friendly investments. The chief strategist of DKK688bn (€92bn) Danish pension fund PFA has set out a series of arguments to show that investing sustainably does not jeopardise returns, and said firms with top environmental, social, and governance (ESG) credentials outperformed in the worst of the COVID-19 crisis.Tine Choi Danielsen, chief strategist at the Nordic country’s second-biggest pension provider, said: “If you look at the development, there is no doubt that sustainable and responsible companies have performed at least as well as the remaining in the stock market – and in some periods even noticeably better.”She said history, the fund’s own experience and societal trends showed returns on investments were not compromised when investing responsibly and sustainably.In the coronavirus crisis, companies with high environmental, social and governance (ESG) standards outperformed the overall market, and in emerging markets in particular, sustainable companies had returned more than the index over the last few years, she said in a commentary on the commercial mutual provider’s website.