• Home
  • 2020
  • September

Lazard, Davis lose out as RBS pension fund targets alternatives

first_imgA more sizable infrastructure portfolio of £120m was also awarded by the main scheme to Hastings Funds Management, and Legal & General Investment Management (LGIM) – already responsible for more than £10bn of RBS Group Pension Fund’s assets – won a £17m forestry mandate.LGIM also won a further £145m global credit mandate, doubling the size of credit investments while terminating the £82m mandate held by Standard Life.The manager saw a liability hedging and cash mandate previously overseen my BlackRock split in two – between a £380m liability hedging and a £132m cash and liquidity portfolio.In the report, the fund noted that its continued diversification into alternatives allowed “a reduced concentration of risk in equities”.“The purpose of this diversification is to give the fund a more balanced portfolio, which should generate more consistent returns based on a broader range of assets,” it said.It also saw property investments increase by £200m to £1bn, largely granted to a £393m UK property mandate overseen by Standard Life. A more than £600m (€711m) reallocation of assets from equities to alternatives by the £25bn pension fund for the Royal Bank of Scotland Group has seen mandates by two asset managers terminated.In its annual report, covering the financial year to 31 March, the RBS Group Pension Fund said it reduced its equity investments to £8.6bn, increasing real estate and alternatives holdings, such as infrastructure.It fund said it outperformed its strategic benchmark by 0.9 percentage points over the course of the year, returning 13.8%, and outperformed its three-year target by 1.3 percentage points, achieving a result of 12.2%,It terminated a £377m global equity mandate held by Lazard Asset Management and a £238m mandate overseen by Davis Funds, while in its smaller, £766m section it invested £13m in infrastructure equities and £6m with Nephila Capital, a specialist manager investing in insurance-linked securities and reinsurance risk.last_img read more

Denmark’s LD awards equity mandates to Carnegie AM, Impax AM

first_imgDanish pension fund Lønmodtagernes Dyrtidsfond (LD) has appointed Carnegie Asset Management and Impax Asset Management to take on two investment mandates.Carnegie Asset Management won a Danish equities mandate that was being tendered by the DKK53.3bn (€7.14bn) fund, and UK firm Impax Asset Management won an environment and climate mandate, LD said.The two new contracts are expected to be in place by 1 April 1.LD said there was stiff competition between investment managers to win the two mandates. Factors such as the quality of investment process, managers’ investment competence and the ability to achieve a good return had carried a heavy weight in the selection process, LD said.Risk management and administrative processes were also important in the eventual choice.Managers’ fee levels had also been important, it said, but it added that price in itself had not been a crucial selection criterion.Bente Anderskouv, head of equities at LD, said: “The mandates we sent out to open competition were attractive ones, so we knew in advance we would be offered reasonable prices.”She said it was satisfying to find that LD had been able to find a couple of managers that were not just good at their job but also suited the way LD liked to work.LD did not disclose the value or duration of the mandates awarded.last_img read more

Aberdeen continues spree with fund-of-funds manager purchase

first_imgIt will also require the approval of listed firms Advanced Developing Markets Funds and Advance Frontier Markets Fund, to which AEC is an investment manager.The £409m manager was started by 1996 and primarily focuses on allocating to investment managers and funds in emerging and frontier markets.It adds four investment professionals to Aberdeen’s business.AEC operates both open and closed funds and will add £8.5bn to Aberdeen’s closed fund business, the company said.Martin Gilbert, chief executive at Aberdeen, said AEC added to the range of alternatives offered by the company.“AEC investors will benefit from the management team’s being part of a larger, independent asset manager and the ability to draw on the group’s established distribution and operational expertise in regard to closed-end funds,” he said.Aberdeen recently purchased Flag Capital Management, a private equity manager, in addition to completing the full purchase of its private equity joint venture with SVG Capital.It has also entered an agreement to buy Arden Asset Management, a US hedge fund manager, which it said would expand its distribution in the region and build its hedge fund and alternatives capabilities. Aberdeen Asset Management is set to acquire Advanced Emerging Capital (AEC), a London-based emerging and frontier market fund-of-funds business.The £307bn (€418bn) asset manager will add AEC into its alternatives business.The news follows recent acquisitions boosting Aberdeen’s hedge fund capabilities in the US and private equity.The AEC deal is set to be completed by the end of 2015, subject to regulatory approval.last_img read more

Basel pension fund to move into private equity, senior secured loans

first_imgPensionskasse Basel-Stadt (PKBS), the CHF11.2bn (€10.3bn) pension fund public employees of the Swiss city of Basel, is to invest in private equity and senior secured loans, one of two moves it weighed as part of a search for yield in the prevailing low interest rate environment.The decision was taken by the pension fund’s board of directors at the end of May, and was effective 1 July.It allows the Pensionskasse to invest up to 3% of its assets in each of the asset classes, which the pension fund said will enable it to raise its return expectations across its total portfolio without having to take on “excessive” risks.The pension fund also considered making changes to its asset allocation without venturing into new asset classes, which would mainly have involved increasing the equity component of its investments. It decided that expanding its investment universe was the better option, in particular from a risk and risk diversification perspective.Private equity and senior secured loans emerged as appropriate additions to the Pensionskasse’s asset allocation, it said.PKBS returned 1.19% in 2015, acknowledging that this fell far short of its target return of 4.6% for that year. Its target return since 1 January 2016 was reduced to 3.6%.In the first half of this year, the pension fund has achieved a performance of 1.56% on its investments.As at the end of 2015, some 31% of its assets were invested in equities, followed by nearly 25% in bonds and real estate.It also invests in mortgages, loans, and commodities, and the short-term money market.last_img read more

Joseph Mariathasan: Why crypto-currencies won’t stay the course

first_imgIt is crypto-currencies, of course, that are driving interest in blockchain technology rather than transaction processing. Bitcoin has made the initial investors millionaires or even billionaires, at least on paper.But if, as appears to be the case, most of the market capitalisation of bitcoins is held by a very small number of initial investors, the majority of later investors face a serious risk of massive losses. The initial controlling investors need to sell their bitcoin investments to monetise their value. Selling requires an ever-increasing number of willing buyers. For an asset that produces zero income, and whose increasing value is solely determined by increasing numbers of buyers, it smacks of a Ponzi scheme. Initial investors, whether the famed Winklevoss twins – who, it seems, may have owned 1% or so of bitcoin at one stage – or others, would have to find willing buyers to monetise paper gains. Any large-scale selling by major investors is very likely to trigger a selling panic.The supply of bitcoin may be limited, but the supply of crypto-currencies as a whole is unlimited with no major barriers to entry.Bitcoin mining entrepreneurs are reputed to be setting up facilities where power can be accessed cheaply. But electricity consumption required to “mine” bitcoins is estimated to already be larger than the consumption of 159 countries including Ireland and Nigeria. One report claims that if electricity consumption keeps increasing at current rates, bitcoin mining will consume all the world’s electricity by February 2020. That in itself suggests that there will be a reaction, if only from countries like China who are focussed on reducing pollution from coal fired power stations. If most new bitcoins are being manufactured in China at a time when pollution control is at the forefront of China’s policy drive, it seems inevitable that there will be a clampdown on such non-productive activity.It is true that crypto-currencies are not fiat currencies subject to central bank manipulation. The argument that drives investment in bitcoin is that the supply of bitcoin is limited. That may be true, but the supply of crypto-currencies as a whole is unlimited with no major barriers to entry. Money has many uses, particularly as a medium for transactions and as stores of value. Bitcoin was touted as a medium of transactions, although its popularity here seemed to rest on the ability to hide illegal transactions. That usage looks set to decrease, however, as its popularity has increased with transaction costs and transaction times increasing to unacceptable levels quite apart from the high intra-day volatility that makes any transactions subject to ridiculous amounts of currency risk.As a store of value, crypto-currencies may have as much long-term stability as tulips in 17th century Netherlands. Many crypto-currencies, as regulators in the US and the UK are warning, are clearly scams. Some are well intentioned, others are circumventing listing rules to crowdfund possibly interesting investment opportunities.But the ultimate killer of crypto-currencies as alternative money is that there are no unique characteristics that would make one crypto-currency preferable to another, unlike real currencies, which are backed by central banks and whose valuations, for better or worse, are ultimately backed by the reputation of the central banks themselves. Cryptocurrencies perhaps, are better regarded in the same way as having a flutter on the national lottery. Worth having a bit of fun with maybe, but perhaps not worth mortgaging your house for! A somewhat dubious bond salesman once said to me: “You can fool all of the people some of the time, and some of the people all of the time and that’s the market I am going for!”.I suspect that he is probably heavily involved in initial coin offerings today. When every person on the street talks about bitcoin, it is not difficult to think that 2018 will see a bitcoin crash.Blockchain technology may well be a super way of undertaking many types of transaction processing in a more efficient manner than current software technology allows. The question, justifiably perhaps for most people should be, so what? It may well significantly reduce transaction costs for share dealing and other activity, but is this going to represent a game changer in any sense?It is difficult to see why this should be the case. For long term institutional investors, as against high frequency traders, transaction costs are important, but not necessarily the critical issue when it comes to investment.last_img read more

Private equity investment, fundraising in Europe hit record highs

first_imgSource: Invest EuropePrivate equity divestments – measured at cost – were at their third-highest level in the past 10 years, increasing by 7% to €42.7bn. Roughly 3,800 European companies were sold in 2017.Almost 7,000 companies received investment, 87% of which were small and medium-sized enterprises.France and Benelux-based companies received 27% of the private equity investments made in 2017, followed by companies in the UK and Ireland (26%), the ‘DACH’ region of Germany, Austria and Switzerland (20%), southern Europe (13%), the Nordic region (9%), and central and eastern Europe (5%).According to data firm Preqin, private markets fund managers were seeking a record high of nearly $1.4trn (€1.1trn) in capital from investors at the end of March, with private equity strategies accounting for two-thirds of the more than 3,800 funds in the market. However, the data firm said data for the first quarter of this year indicated a slowdown relative to 2016 and 2017.The European Commission recently launched a venture capital programme aimed at enticing investors such as pension funds and insurers to the asset class in Europe. In 2017, institutional investors from outside Europe contributed more than 40% to the €91.9bn raised. Investors from Asia made their highest contribution to date with a 15% share, although North American investors continued to represent the highest share of non-European capital put to work in the region.#*#*Show Fullscreen*#*# Private equity investment in European companies hit a 10-year high last year, with pension funds accounting for nearly a third of all capital raised, according to Invest Europe.Investment amounted to €71.7bn, a 29% year-on-year increase, according to the industry association. Private equity fundraising reached €91.9bn, the highest amount since 2008 and 12% more than 2016 levels.Pension funds provided 29% of all capital raised, followed by funds of funds (20%), family offices and private individuals (15%), sovereign wealth funds (9%), and insurance companies (8%).In 2016 pension funds accounted for nearly 35% of private equity capital fundraising, and in 2015 they made up 20%.last_img read more

SEB: Green bonds to raise $185bn this year despite headwinds

first_img“The decreasing growth rate overall for the market has its roots intertwined in a number of dynamics, most of which are not specific to green finance,” SEB said. “The overall bond market has slowed in 2018 and fickle market conditions have held back issuance globally in July.”However, the bank maintained that the second half of this year would be more positive for new green bond issuance with “heightened activity” in corporate markets such as the US.While SEB’s “base case” for green bond fundraising was $185bn for the year, it said there was a “possibility” for as much as $210bn.  Green bond issuance in 2018 is expected to hit $185bn (€160bn), according to a forecast from Nordic bank SEB.However, the bank also warned that macroeconomic concerns such as Brexit and international trade tensions could stall new issuance in the short term.SEB reported in a July market update that $47bn was raised through green bonds in the second quarter of 2018, the second-highest quarterly figure on record. This followed a weaker first quarter figure of $36bn.However, the bank recorded just $4bn of new issuance in July, down “at least 40%” compared with July 2017. Christopher Flensborg, head of climate and sustainable finance solutions at SEB, said: “What is also promising in the mid-term is the rise in corporate lending which we and a number of our peers are experiencing currently…“Corporate treasurers are spending an increasing amount of time examining their funding options, hence, leading to prospects for larger corporate issuance ahead – and thereby also more attention to the green bond market.”SEB reported 17 publicly announced green bond fundraising drives planned for the rest of 2018, including corporate and supranational issuers from a range of countries including Argentina, Belgium, India, Mexico, Nigeria, South Korea, and the US. center_img According to Standard & Poor’s, the green bond market was worth $372bn at the end of December 2017.last_img read more

LGIM backs call for IOSCO to foster harmonised climate risk reporting

first_imgIOSCO is the international body bringing together securities regulators.LGIM’s Omi was writing in a foreword to a report by three non-profit organisations calling for other investors to encourage IOSCO to act to harmonise climate risk reporting.“IOSCO occupies the most favourable position for action at a global scale, and should be a key target of investor-led initiatives seeking to ensure harmonised climate risk reporting,” said the report.“IOSCO has remained silent on this issue since the release of the recommendations – but investors have a strong basis for demanding action either through activating national securities regulators to engage with IOSCO on their behalf, or through engaging IOSCO directly.”The report was produced by activist law firm ClientEarth, think tank CarbonTracker, and conservation campaign group WWF.According to the authors, there was a risk that reporting in line with the TCFD recommendations would be an “EU phenomenon”, which could lead to regulatory divergence with other regions in terms of climate risk disclosure and corporate governance practices. This, in turn, would make it difficult for investors with a global portfolio to accurately assess risk and allocate capital, they argued.The report identified different ways in which IOSCO could promote harmonised climate risk reporting and widespread implementation of the TCFD recommendations, and how investors could push for such action from the body. One of the world’s largest asset managers has backed calls for global standard setter IOSCO to play its role in ensuring the usefulness of climate risk reporting for global investors.The International Organization of Securities Commissions (IOSCO) was “ideally placed” to accelerate progress on climate risk reporting, according to Meryam Omi, head of sustainability and responsible investment strategy at €1.1trn Legal & General Investment Management (LGIM).Despite “undeniable” momentum behind support for the work of the Taskforce on Climate-related Financial Disclosures (TCFD), the usefulness of climate reporting depended on expanding harmonisation and standardisation across different jurisdictions, she said.“As a major global investor, we would like to call on IOSCO to acknowledge the TCFD recommendations and encourage their incorporation into international listing standards,” added Omi.last_img read more

Scientific Beta criticises MSCI weapon exclusion comments

first_imgSSF’s open letter to index providersIn a letter to the president of SSF, Amenc noted that many other index providers also argued that a broad cap-weighted index could not contain an ESG filter by default.MSCI declined to comment on Scientific Beta’s press release. SSF is in the process of engaging with the large index providers.The SSF investor campaign continues to gain backers, with the CHF8bn (€7bn) Swiss pension fund Profond among recent signatories of the open letter to index providers. The chief executive of index provider Scientific Beta has described as “inadmissible” arguments made by MSCI in response to a call from investors for index providers to exclude controversial weapon manufacturers from their mainstream indices.In a press release, Noël Amenc said there were “no practical or academic grounds for the idea that a broad cap-weighted index representing all investment opportunities cannot as a result contain an ESG filter by default”.The weight of the exclusions proposed by Swiss Sustainable Finance (SSF) – the organisation co-ordinating the investor campaign – was far lower than the exclusions or weight limitations implemented by all index providers to guarantee the liquidity and investability of their global market capitalisation-weighted indices, said Amenc.In addition, he said, excluding stocks linked to controversial weapons would not significantly affect the weighted average market performance provided by cap-weighted indices. Scientific Beta was of the view that “promoting an opt-in option that corresponds to a paid service falls short of what is at stake with this exclusion from an ethical and humanitarian standpoint”.center_img Noël Amenc, Scientific Beta CEOIts statement continued: “Ultimately… MSCI’s response is representative of the attitude of a large share of the players in the index industry who consider that ESG is a good business opportunity rather than an opportunity to do good.”The smart beta index provider indicated that, from June, it would offer all clients indices with “minimal exclusions”, and that it would also consult with clients about making these exclusions the default choice, with an opt-out approach.Amenc was responding to MSCI comments reported by IPE last month, after SSF published an open letter to index providers in several newspapers.last_img read more

‘Dirty, smelly, awful’ is turning into gold for our newest millionaires

first_imgProperty investor and renovator Vivienne Halliday at her latest project in Bardon. Pic Peter WallisA new breed of millionaires has emerged in Queensland, who buy, renovate and flip properties, making as much as $100,000 off just eight weeks’ work.This as experts find women, especially in their mid-40s to 50s, increasingly using property flipping as a strategy to supercharge retirement funds and even head into early retirement.Dale Beaumont, author of Secrets of Property Millionaires Exposedsaid there were three ways to make money off property — buying really well, holding for a long period of time or adding value through renovation, addition or subdivision.“In a rising market you can add tens to hundreds of thousands to a property,” he told The Sunday-Mail. “Now is a really great time (to buy for flipping). It’s definitely a buyers market. There is less competition right now.” A survey by the School of Renovating found two in every five women renovating to flip properties was 45 to 54 years old, while a third were older 55 to 64. Most use subcontractors to do the work but two-thirds take on some of the DIY themselves.Property investor Vivienne Halliday, 56, has flipped 10 properties and plans to do two more a year for the next three years before “semi-retirement”. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:58Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:58 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD432p432p216p216p180p180pAutoA, 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 Rate1xFullscreenHow much do I need to retire?00:58 MORE: Is first homebuyer 5pc deposit for real? Fixer uppers in prized locations hot for buyers Brisbane house price hits new high Sun finally shines on Townsville market “I’m looking for dirty, smelly, really awful from the outside. That sort of thing reduces buyers so I don’t have much competition and it helps get the price down. It has to be well below market value,” she said of the properties chosen for flips.“I’ve always loved property, old houses especially but my husband works Fly In, Fly Out, so it’s my way to getting some money to get him home (earlier).”She started on “little bits” around her home then threw herself into learning about property investment and began buying and flipping. “I saw what other people were doing, buying one that had land to subdivide and a house to renovate, then sell both.” More from newsParks and wildlife the new lust-haves post coronavirus12 hours agoNoosa’s best beachfront penthouse is about to hit the market12 hours agoHuge Aerial Panorama of the Brisbane Skyline, Queensland, Australia. Converted from RAW.The most she’s ever spent on a renovation, she said was $120,000, because the home was so run down by white ants it needed a new roof.“Most are below that, I try and keep the costs low because that’s your profit.”Profit, she said, was about “$100,000 per property” but “that depends on where it is”.“I’m certainly not going to say no to a good $20-30,000 profit if it’s quick and easy but I aim for $100,000.”Mr Beaumont said “typically you want the worst house in the street or one that will require a lot of TLC” to do a fix and flip well.For the greater Brisbane area, he recommended areas 15km outside the city, where there was “good public transport and a good family area”.His top tip was to find two or three suburbs that met that criteria, look at 100 properties that have sold there, make offers on five and “hopefully one or two will be accepted”.“Once you’ve seen 100 properties, you know what represents good value and what doesn’t,” he said. And, he said, whatever happened, “do not become emotionally connected” to properties.“It’s a great time to buy slightly under market value, and when the market does bounce back you will already have equity. What you could do is buy properties now that have potential for renovation in future, hold on for two years and then renovate a little bit later on.” FOLLOW SOPHIE FOSTER ON FACEBOOKlast_img read more