Under the proposed indexation rules, pension funds can grant inflation compensation if they do so “sustainably”.As a rule of thumb, this would be one-tenth of a scheme’s financial buffers exceeding 110%, according to Jetta Klijnsma, state secretary for Social Affairs.Currently, pension funds can start indexing if their funding is more than 105%.Keijmel added that a low discount rate was beneficial for the future pensions of younger workers.He argued it was impossible to establish in advance which generation would benefit or suffer from the current FTK proposals.“The FTK offers sufficient steering instruments for a balanced approach of the various generations,” he said.He also noted that the FTK was not about disputed elements such as the average contribution, or freedom of choice for pension arrangements.“These issues are to be discussed during the society-wide dialogue about the future of the system,” he said.But Keijmel does not believe the FTK is perfect, citing the fact a pension fund cannot adjust its risk profile whilst subject to a recovery plan, as well as too strict rules for indexation and reversing previous rights discounts.He said the proposed increase in financial buffers to counter credit risk might lead to additional system risks, as this would make investing in “safe” long-term governments bonds, Dutch mortgages and loans to small and medium-sized businesses more attractive.Keijmel also argued that the hedging of interest risk should be a policy decision made by a pension fund, rather than prescribed by the assessment framework.He said he expected Parliament to discuss the FTK proposals after the end of October.The new FTK is scheduled to come into force from 1 January 2015, but Klijnsma, state secretary for Social Affairs, has already indicated that some elements of the legislation will be introduced later. The Netherlands’ new financial assessment framework (FTK) will generally be positive for the Dutch pensions industry, and the drop in indexation resulting from the legislation will not be as great as many industry experts predict, according to Mercer.Speaking at a Mercer seminar for pension funds, actuary Sasja Keijmel argued that, with an interest level of 2-2.5% and a return on investments of 6-7%, coverage ratios would improve by up to 5% every year.“Rising interest rates will also help getting closer to indexation,” said Keijmel, who underlined that extra returns would be a condition for inflation compensation anyway.He further noted that the new FTK would have a limited impact on pension funds’ indexation tables, “as most start granting indexation with a funding of more than 110%”.
The remaining third belongs to Banco Santander, meaning the Spanish bank has no legal involvement in the US business.Current chief executive of SAM, Juan Alcaraz, will become the global head of the new holding company, with Pioneer Investments chief executive Giordano Lombardo becoming global CIO.Pioneer said the new combined company would manage around €400bn, with the merger creating “substantial” economies of scale while expanding investment strategies and distribution channels.The arrangement values Pioneer Investments at €2.75bn and SAM at €2.6bn. It will also boost UniCredit’s capital position by 25 basis points.Earlier this week, UniCredit chief executive Federico Ghizzoni confirmed reports the firms were days away from signing the agreement.The Italian bank had been looking to sell its asset management business for some time before announcing in September that it would enter exclusive discussions with Banco Santander and the private equity firms over a merger with SAM.Pioneer’s former chief executive Sandro Pierri left the company at the end of January and was replaced by Lombardo.Pierri spent 11 years at the firm and two and half as chief executive before standing down as merger talks continued. Pioneer Investments and Santander Asset Management (SAM) have confirmed their merger to create a €400bn asset manager, with UniCredit keeping the US operations out of an arrangement with the Spanish bank.Banco Santander, jointly with private equity partners Warburg Pincus and General Atlantic, owned SAM prior to the merger with Pioneer, which was owned by Italian bank UniCredit.The trio has created a new legal structure with a holding company called Pioneer Investments – owned 50% by UniCredit and 50% by the private equity firms.This holding company owns 100% of Pioneer’s US operations and 66% of the merged ex US operations of Pioneer and SAM.
Proposals to reform Sweden’s SEK1.2trn (€126bn) AP fund system could see it unable to act as a long-term, buy-and-hold investor, the chairman of the Buffer Fund Inquiry, has warned.Mats Langensjö told IPE he was “disappointed” a number of the proposals put forward in his 2012 report on the reform of the buffer fund system were not adopted by the government when it unveiled its consultation last week.The consultation, launched by the left-leaning coalition government after agreeing a joint stance with the main opposition parties, recommended the closure of AP6 and the consolidation of all unlisted assets into what is currently AP2, as well as the closure of a second, as-yet-undecided buffer fund.But the consultation dropped several of the ideas suggested by the initial inquiry, including a strengthening of internal governance. “Our proposals were not rocket science,” Langensjö said. “We tried to find good examples from all over the world and implement good global practice into a Swedish context – and that’s where I’m disappointed.”Under the government’s proposals, a reference portfolio decided upon by a principal will be used to steer the remaining three buffer funds’ investment strategy.The principal would sit within a newly created National Pension Fund Board, but the government could potentially exert influence over the system’s investment strategy if it does not approve of the level of investment risk suggested by the principal.This would run counter to Langensjö’s hopes that the principal could oversee a more “flexible, dynamic” investment approach among the buffer funds.The reforms could also see all AP fund employees become civil servants, with an end to an incentive-driven pay structure.“If you have something called a reference portfolio, and if you then have very little organisational incentive to actually deviate from that, then there is a risk that it becomes a very passive index portfolio, by nature, over time,” Langensjö said.He also argued that the new reference portfolio could see the AP funds fail to employ their “strongest competitive advantage” as true long-term investors.“They don’t have short-term liquidity requirements,” Langensjö said. “They can be buy-and-hold, they can take illiquid positions, they can deviate from market volatility.“When other people are forced to sell, they can be buyers.”He added: “Part of their assets will be perpetual, so why don’t you have a perpetual investment philosophy or strategy for half the portfolio – then you can have an illiquid and a liquid portfolio.”Two of the AP funds, AP1 and AP3, were recently part of a SEK60.6bn consortium to buy the energy distribution arm of Fortum, the country’s second largest. AP3, one of the three Stockholm-based AP funds under threat of closure, said there was little evidence the proposed changes would lead to any improvement.Kerstin Hessius, the fund’s chief executive, said the current system worked well and that the funds had “exceeded expectations”.She added that the reform could put the pension system at risk, and reiterated that there was only a need for the system’s current quantitative investment rules to be amended. The four main AP funds were all seeded with equal amounts of capital upon launch.As of the end of last year, AP4 was the largest, at SEK295bn.
The Lancashire County Pension Fund (LCPF), one of the largest schemes in the UK Local Government Pension Scheme (LGPS), has acquired a 12.5% equity stake in Madrileña Red de Gas (MRG), a gas distribution company in Spain’s Madrid region.MRG, one of Spain’s three biggest gas distribution companies, is owned by a consortium formed by EDF Invest, Gingko Tree Investment and Dutch pension fund manager PGGM.Mike Jensen, CIO at LCPF, told IPE: “We are building a diverse direct infra portfolio, and, up until this transaction, we had a renewable bias, a factor of the attractive deals we had seen.“We had bid – unsuccessfully, unfortunately – for transport assets (London City Airport and Eurostar), and we will continue to look at a wide range of infra assets across a variety of sectors and geographies.” Jensen said the post-financial crisis recovery story in Iberia was part of the appeal of this latest acquisition.But he added: “Specifically, we see MRG as a particularly well-run company with good growth potential and a great regulatory relationship. In addition, we will be in partnership with leading investors.”The cost of the acquisition has not been disclosed.LCPF was advised by Santander Corporate & Investment Banking (France) as exclusive financial adviser and Cuatrecasas, Gonçalves Pereira (Madrid) as legal adviser.The stake in MRG is LCPF’s fourth acquisition of overseas infrastructure assets, following its purchase of a share in EDF Énergies Nouvelles’ Portuguese wind farms last year, and ownership of two renewable energy businesses – landfill gas in the US, and cane waste power plants in Australia.Jensen said the MRG stake illustrated the LCPF’s willingness to continue investing directly in infrastructure assets with attractive dividend yields that provide long-term returns, as well as a significant source of diversification.Total Infrastructure makes up 9.6% of the LCPF’s total portfolio, worth £5.8bn at 31 December 2015.The fund’s infrastructure target range is 10-15%, and it is working on further transactions at present.Jensen said: “Over time, I would expect to increase the allocation to this asset class, given that its characteristics are so well suited to an open defined benefit pension scheme.”The fund’s strategy for infrastructure investing is to split the allocation two-thirds/one-third between direct and funds, within a global infrastructure mandate.The next step is to create a balanced portfolio by sector and geography, but, given the transactional nature of the market, said Jensen, this will take a prolonged period to achieve.“From an investment thesis point of view,” he said, “we follow the usual mantra – stable companies generating stable, and where possible, inflation-linked cash flows.”As for return, the LCPF has set a hard hurdle of 8% for the asset class and so far has substantially beaten that target across the portfolio.Jensen told IPE: “The portfolio has performed excellently, and the landscape of opportunities for a global mandate is good. Partnerships remain important, given the size of some transactions and the strong competition for assets.“Prices are strong, but, in what we believe will be a lower-return world going forward, they still represent value for pension funds of our type.”The LCPF returned 14.9% on its entire investment portfolio over the 12 months to 31 March 2015.As regards future direct infrastructure acquisitions, Jensen said the fund was ambivalent on location, as long as a specific opportunity passed its stringent investment and governance tests.However, sterling equivalent returns are one of those tests.“Energy remains a focus, as does transport, utilities and some social infra,” he told IPE. “Renewables will also continue to be of interest.”And he said one of the LCPF’s advantages was its flexibility of approach.“We are not precious on name tags of assets or on hybrid deals,” he said. Meanwhile, Jensen said the asset-pooling partnership with the London Pension Fund Authority (LPFA) had made progress that was “on target”.The strategic partnership was announced last July and creates a single investment vehicle exceeding £10bn.Jensen said: “Pooling is a very logical step, and both the LCPF and the LPFA recognised the logic very early, before the government made its views clear.“In the infra space, scale is important, so we expect pooling to make sensible investment easier and more relevant to the LGPS in aggregate.“That said, partnerships remain key, given the need to create diversified portfolios. I expect to continue in partnership with a number of major international investors but perhaps on a more equal footing in the near future.”
“With potentially weaker diversification characteristics, investors with passive commodity exposure may be more inclined to consider an active approach.”In February, Goldman Sachs, the investment bank, said it saw potential returns of 15% on its commodity index – and 10% over the next year.Falling commodity prices, particularly the fall in the price of a barrel of oil, which sank below $28 (€21) just two years ago, and bullish global stock markets have combined to dent the performance of the asset class in recent years.However, due to possible US sanctions against Iran, oil spiked recently at a little over $75 a barrel.“Commodities are very cyclical and moves can be pretty violent,” said Michael Spinks, manager of Investec Asset Management’s Diversified Growth Fund. “Interest has been low for a number of years as performance has been poor.”Accessing the market through an “index-based structure” might be more appropriate for investors, Spinks added.Gold remains a problematic investment, according to a note from the natural resources team at BlackRock, the world’s biggest asset manager.“We see both headwinds and tailwinds for gold today and our base case is that it remains range-bound this year,” its report said. “Economic growth expectations have improved, dampening investor appetite for ‘safe-haven’ assets like gold.” Investors should reconsider commodities as the sector shows signs of a marked resurgence after years in the doldrums, analysts at investment advisory firm bfinance have argued.“After a decade of poor performance, many commentators delivered a more bullish outlook for commodities during the first quarter,” the firm stated in a report. “Such predictions are buoyed by global economic growth and some helpful market dynamics.”Toby Goodworth, head of risk and diversifying strategies at bfinance, said that the core tenets for allocation to commodities – inflation protection and diversification – “still hold true”.“Yet some market participants have cited a long-term turning point in the decorrelation between commodities and equities in early 2017, with the two markets appearing to be more positively associated through the last year,” he added.
In the statement, GAM chairman Hugh Scott-Barrett backed Friedman’s handling of the suspension of Tim Haywood, head of the absolute return bond team, on 31 July. Alexander Friedman, group chief executive officer of Swiss asset manager GAM, has stepped down from his role effective today, according to a statement from the company.David Jacob, a member of GAM Holding’s board of directors, has been appointed interim group CEO until a permanent replacement is chosen.Friedman’s departure follows a difficult period for the group, which recorded a net outflow of CHF17.7bn (€15.5bn) in the third quarter of this year in the wake of the suspension of a senior fund manager.GAM’s share price has fallen by more than 60% since the start of this year, from CHF16 to CHF6 at the close of trading yesterday. Source: GAMAlexander Friedman“Alex has ably led the business during a time of unprecedented challenges for the active asset management and hedge funds industry,” Scott-Barrett said. “Alex had the full support of the board in the decision to suspend a portfolio manager in July.“During his tenure as CEO he has driven a significant programme of change that has made us a more modern, diversified and cost-effective business. We would like to thank Alex for his significant efforts over the last four years and wish him well for the future.”The chairman said Friedman’s departure was a joint decision that would “better enable us to take the action necessary to support profitability and drive forward the group’s strategy”. He added that the leadership team still had “some important decisions” to make regarding the future of the company.Jacob joined GAM’s board in 2017, and was previously CEO at Rogge Global Partners from 2014 to 2016. He worked at Henderson Global Investors (now Janus Henderson Investors) for nine years until 2013 in a variety of senior roles including chief investment officer. He has also worked at UBS Global Asset Management, Merrill Lynch Investment Managers and JPMorgan Asset Management.GAM said his “immediate priority” would be ensuring that “the steps necessary to drive forward GAM’s strategy and to support profitability are actioned as soon as possible”. GAM was forced to halt dealing on its absolute return bond fund range at the beginning of August after investors began to redeem their money in the wake of Haywood’s suspension. The company subsequently decided to liquidate the funds and return cash to investors, although new vehicles are planned for those investors wishing to remain in the strategy.
Briefing: Cyberwar without endDaniel Ben-Ami explores how financial institutions are faring in the cyber arms race against criminalsAsset managers urged to collaborate on cybersecurityInvestment firms should share resources and invest in new technologies, says the UK’s trade body for the sectorPensions industry underestimating threat of cyber crime, experts warnThe pensions industry worldwide is underestimating the risks posed by cyber crime, and too few experts are available to help tackle the problem The risk of data security incidents is increasing as pension funds insufficiently factor cybersecurity into their risk assessments, Dutch pensions supervisor De Nederlandsche Bank (DNB) has warned.In its annual security monitor, the regulator said that financial institutions, including pension funds, insufficiently evaluated their risk management in this area, or failed to anticipate developments in data security.“As cybersecurity threats increase and change, evaluating and anticipating is crucial,” said DNB.It said it was remarkable that concrete threats – such as phishing, ransomware and hacking – received “little attention”. The watchdog also noted that pension funds often did not have sufficient knowledge of security measures at their outsourced service providers.“As a consequence, schemes are unable to show they are in control, or make clear that measures are effective,” DNB said.DNB added that sometimes a scheme knew how outsourcing partners had organised their security, but lacked insight into mutual dependencies.This raised questions about whether all measures combined would be sufficient for the entire investment chain.Last year, DNB warned that pension funds’ view on data security often fell short of the requirements, sometimes because of data stored in ‘the cloud’.The regulator also drew attention to access rights, highlighting that schemes often lacked formal procedures for processes such as authorisation of access to data.Further reading:
Michael and Ann-Louise are takingtheir home to auction on June 2. Picture: AAP Image/Steve PohlnerAnn-Louise and Michael Coulson bought their property at 81 Tooth Ave, Paddington, a year ago before transforming it into the modern home it is today.“The first time we walked into the house we saw its immense potential,’’ Mrs Coulson said.“Upstairs the floorplan had been converted into a dance studio, while downstairs a seventies reno had seen the creation of a rabbit warren. “However, both floors looked out to the most amazing views and many period features remained, so we knew there was a gorgeous Queenslander in a great location just waiting to be brought into the 21st century. 81 Tooth Ave, PaddingtonMore from newsNew apartments released at idyllic retirement community Samford Grove Presented by Parks and wildlife the new lust-haves post coronavirus18 hours agoMrs Coulson said they felt it was important to modernise the home while retaining its character features.They renovated and extended the home and added a swimming pool, which proved to be a bit of an engineering feat. The pool sits 7 m above the ground level.Mrs Coulson said her favourite part of the home would have to be the two large decks.“We love the upstairs deck for its tranquillity and views, while the lower is the party deck – flowing straight out into the pool area with its own amazing views and outdoor kitchen.”The two-level home has five bedrooms and is on a 503sq m block. The back of the home with the raised pool.It has open plan living areas and indoor and outdoor entertainment areas.The kitchen has 2 pac cabinetry, Caesarstone benches, Smeg appliances including a 900mm gas cooktop, oven and a 50L Speed combination oven.There is also a breakfast bar.It is being marketed through Judi O’Dea and Michael Kleimeyer of SPACE Property Agents and will be auctioned today at 10am.
12 Isley St, North WardA PROPERTY in a tightly held pocket of Townsville with limitless potential is expected to attract plenty of buyer interest when it goes to auction.The home at 12 Isley St, North Ward will be sold under the hammer on site at 11am on July 7.The three-bedroom, one bathroom home is one of only 16 houses that border Jezzine Barracks.Harcourts Kingsberry sales consultant Jodye Hunt said the home was functional as is but could be renovated or demolished and rebuilt without overcapitalising due to the enviable location.More from news01:21Buyer demand explodes in Townsville’s 2019 flood-affected suburbs12 Sep 202001:21‘Giant surge’ in new home sales lifts Townsville property market10 Sep 2020“This little red brick home is functional as is but is likely to appeal to home buyers, developers, land bankers and the list goes on,” she said.“It is a corner block and one of just 16 houses that border with Jezzine Barracks and they are very rarely up for sale.“I think it’s going to attract a range of buyers.”The home is on a 506sqm corner block with views of Castle Hill from the living room. All bedrooms are large with built-in robes, the living areas are open plan and car access is from Isley St and Eyre St.Ms Hunt said the property would be sold at auction. Open for inspection on Saturday, Sunday from 1pm-1.30pm. I nformation from Ms Hunt on 0409 344 031.
MORE: RELATED Southeast Queensland land market top performer Brookwater Residential general manager Nick Kostellar said the new offering had been approved for up to 897 blocks, and resident master architect Marco Calvino had already started planning a range of homes. Brookwater Residential’s master plan.Mr Kostellar said they had reached the halfway point for Brookwater.“We’ve developed golf course frontage land around the back nine holes, and that’s what we’ve been focused on for the past 17 years,” he said.“Now we’ve just started … Dress Circle, which is around the front nine golf holes.”Mr Calvino said it would meet buyers expectations for lock up and leave style apartments. Mr Calvino, who has been instrumental in the community’s master design, believes it is important to embrace an indoor/outdoor design to make the most of the setting.“The other element is trying to really embrace the golf course and trying to bring it in to the house. “The natural setting is really what we’re trying to maximise.“I’ve been involved in all the master planning and the land releases to make sure that the land offering that we put in to the market will get the best design outcome. “Looking at slopes and just looking at traditional curvatures and aspects close to the golf course.” Dragons live behind waterfalls, why not live beside one? >>FOLLOW EMILY BLACK ON FACEBOOK<< Brisbane’s units $100k more expensive Marco Calvino custom designs homes at Brookwater Residential.“Most of the designs use natural materials, so in terms of timber and stone I try to tie it back to the great local setting of the golf course,” Mr Calvino said. “The first eight are in the process of being developed and will be released in the new year,” Mr Kostellar said. “Podium Apartments … will be released to the market first quarter of 2019 and will cater to the downsizer market. “They are all three-bedroom products.” More from newsParks and wildlife the new lust-haves post coronavirus15 hours agoNoosa’s best beachfront penthouse is about to hit the market15 hours agoArchitect Marco Calvino said the maximised design using the natural setting.Mr Kostellar said to buy into the new precinct would cost between $1 million to $1.5 million for a quality home on the golf course.“Predominantly we sell to second, third home buyers … million-dollar investment on the golf course,” he said. “It’s not an investment product. (It is) families and a high proportion of owner occupiers — that’s our main market.”According to dresscircle.com.au, the estate is set to have its own concierge service. “With the increased prosperity and demand for a luxurious lifestyle, residents are looking to work and live in communities,” it said. One of Marco Calvino custom designed homes at Brookwater Residential.Springfield Land Corporation has launched the latest residential offering at Brookwater Residential —Dress Circ le . Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:50Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:50 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD540p540p360p360p180p180pAutoA, 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 Rate1xFullscreenDifferences between building in new or established estates01:50