Investor tenders $50m large-cap mandate using IPE-Quest


first_imgInterested parties should state performance, gross of fees, to the end of September.The closing date for applications is 8 November.The IPE.com news team is unable to answer any further questions about IPE-Quest tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE-Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email jayna.vishram@ipe-quest.com. Investment consultant Kieger has tendered a $50m (€36.5m), global, large-cap equity mandate on behalf of an undisclosed institutional investor, using IPE-Quest.According to search QN1347, applicants should have at least $1bn in assets under management (AUM) for the mandate and $10bn in AUM for the company itself.They will also need a track record of at least five years.Asset managers are to measure performance against the MSCI ACWI, keeping tracking error between 2% and 10%.last_img read more

HBS ‘interesting’ but not yet ready for use – Actuarial Association of Europe


first_imgWhile the German pension fund association and PensionsEurope criticised the inclusion of the HBS in the assessment, Valkenburg said it made sense from “an efficiency point of view” to have pension funds calculate the HBS for the quantitative assessment and then use them in the stress test.But the actuary also argued that it was “very difficult to have a single framework for capital requirements” in the pensions sector, as schemes are “executing pension promises in very different ways”.He said using a single risk-free rate would work if all the pensions funds used stochastic evaluations, and the risks were modelled in the same way.But he said this was not the case in reality.“Using a risk-free rate to give a good estimate of the valuation of pension promises that are not fully guaranteed would lead to too high values if the risks are not modelled in the cash flows,” he said. Valkenburg said one of the most “valuable” aspects of the stress tests EIOPA will conduct among European IORPs will be the assessment of defined contribution (DC) plans.While industry group PensionsEurope has questioned whether the stress tests will yield any useful results regarding DC scheme members, Valkenburg stressed the importance of “informing members about how a stressed situation can impact them”.He added: “It is good to see DC is included in the stress tests for the first time because most new accrual of pension assets in Europe is in DC.”One of the goals of the stress test is to assess the impact on the macro economy, which, according to Valkenburg, will not be as great as the impact on individual members who “might have less money to buy a pension” on retirement.“This is important to be aware of, and, hopefully, we can help members to navigate through their lives and minimise the impact,” he said.The AAE issued a paper in February on decumulation in which it warned that the requirement to buy an annuity on the day of retirement might force people to buy at the wrong time.Valkenburg said the stress test might also highlight the problem of guarantees being much higher than the current interest rate. “Guarantees are very expensive, and they were given in times when stakeholders were not expecting a sudden change in the environment like we have seen in the past couple of years,” he said.Valkenburg expects guarantees to come down or be removed altogether in the wake of the stress tests, which he said would, in turn, highlight the problem of people having to work longer. The European Insurance and Occupational Pensions Authority (EIOPA) needs to “take another look” at using the holistic balance sheet (HBS) approach as a means of calculating capital requirements, according to Falco Valkenburg, chair of the Actuarial Association of Europe’s (AAE) pensions committee.Valkenburg said the HBS was “an interesting concept that should be explored further, maybe as part of pension funds’ risk management”, but he also stressed that the HBS concept was “quite new”.“Not even we at the AAE are fully convinced it will lead to something that can work in practice,” he said. EIOPA announced the details of its first stress test for occupational pension funds on Monday. last_img read more

European supervisors warn of risks in valuing illiquid assets


first_imgThe report said: “Risks resulting from low interest rates and search for yield remain unchanged.”The fragile economic recovery is still hitting profitability in the financial sector, it said.It added that market uncertainty linked to Greece’s financial situation had led to capital controls, high market volatility and renewed risks to the cohesion of the euro area, though it noted that a pact between Greece and the other euro-area countries had mitigated immediate risks.Reduced corporate bond market liquidity has exposed asset managers to valuation risks, the report said, adding that managers also face risks because they are investing more in illiquid assets. The authorities said worries about asset managers’ liquidity risks could get in the way of plans to spur economic growth by channelling funds managed by institutional investors to SMEs.Supervisors need to scrutinise efforts to clean up balance sheets and look closely to see how sustainable financial entities’ business models are, in order to manage current risks and make asset owners more able to lend, the report said.“A clear picture of institutions’ earnings potentials, funding mixes and strategies is crucial,” it said. “Promotion of rigorous valuation of assets and liabilities and transparency in the disclosure of valuation risk is essential to discourage mis-valuation tendencies.”They said regulators should go ahead with plans to support market-based funding by, for example, making suitable rules for non-bank loan origination models.They should also support “adequate, transparent and harmonised marketing of investment products”. Three European supervisory authorities have jointly warned that there are still risks in EU financial markets and said that action needed to be taken, particularly to counter the valuation risks that exist in illiquid markets.In their Joint Committee Report on Risks and Vulnerabilities in the EU financial system for August, the European Supervisory Authorities for securities (ESMA), banking (EBA) and insurance and occupational pensions (EIOPA) said risks resulting from low interest rates, the search for yield and low profitability of financial institutions were still there.These risks are just as severe as reported in the March 2015 report, they said.There are also risks related to lower market liquidity and their possible implications for asset managers, according to the supervisors’ latest assessment.last_img read more

Karch criticises German pension system’s interest rate sensitivity


first_imgThe German occupational pension system has overlooked its interest-rate risk sensitivity, a dependency that will force it to re-evaluate its approach to guarantees, according to Heribert Karch, chair of the country’s pension association.Karch, chairman of the aba and chief executive at MetallRente, said that, following the collapse of Lehman Brothers, the German pensions sector was proud of how well it weathered the crisis.“But we overlooked how sensitive to interest rates we were,” he told the aba’s annual conference in Berlin this week.“Today, we still finance a greater number of countries than we do economies. This results in a interest rate dependency and a sensitivity to interest rates that forces us to re-think the dilemma of [low] returns and guaranteed [payments].” Karch called for the industry to truly re-think the issue and not simply assume a defensive stance.“If we can come to a sensible agreement, then I am not worried that we can ensure [income] security for employees.”The chairman’s comments came shortly after the German government received two detailed reports on pension reform, examining possible tax incentives to boost participation and the role of collective bargaining agreements.The respective ministries, for finance and social affairs, have offered tacit support for one of the main findings, proposing the use of an auto-enrolment system to boost participation rates.However, aba and Karch warned against attempts to introduced a defined contribution-based system, without any guarantees, noting it would be a difficult reform to sell.“The federal government must now look at the numerous reform proposals and settle on the right shape of reform.“The aba stands ready to offer its assistance – both with the big picture and the detail.”last_img read more

Managers signal warning over European markets


first_imgEuro-zone equities have “struggled” relative to US equities, BoAML added. Average allocations to Europe have reduced slightly since May, but the researchers said they remained positive in the short term on the region, citing the economic backdrop and expected free cash flow growth.A majority of those surveyed (42%) said that the Fed’s planned reduction of its quantitative easing programme this year would be a “non-event”. Roughly a third (31%) said it would send bond yields up and stock prices down.“Yet until 10-year Treasury yields climb the wall of 3%, few investors think Treasuries will cause an equity bear market,” BoAML’s researchers said.The survey also showed that the sample of 179 managers had their highest net underweight position in US stocks since January 2008. The UK was managers’ biggest underweight relative to the survey’s history.During June, US tech stocks were among the most sold sector: 68% of respondents said US and global internet stocks were “expensive”. A further 12% said the sector was “bubble-like”.Since 2009, technology has been the most popular sector in 80% of BoAML’s surveys, the company said.Managers held an average 4.9% in cash, the research showed, down slightly from 5% in June’s survey. A quarter of those holding higher cash levels said they were doing so because of “bearish views on markets”. The European Central Bank (ECB) is the most likely trigger of a selloff, according to a leading survey of fund managers.Managers told Bank of America Merrill Lynch’s (BoAML) monthly sentiment and positioning survey that the risk of a policy mistake from the US Federal Reserve or the ECB was the second biggest tail risk, after a bond market crash.In addition, respondents said euro-zone equities and EU and US credit were among the most crowded trades, which BoAML said meant the ECB was the “most likely central bank to spark global ‘risk-off’” scenario.BoAML’s researchers said: “The persistent overweight in euro-zone versus US equities could be more bad news for European investors. The three-month average for allocation [to Europe] is above 50% and, at 57%, is a record high. This is often a contrarian signal.”last_img read more

Chart of the Week: Angela Merkel begins a long ‘auf wiedersehen’


first_imgAertzeversorgung Westfalen-Lippe6,390 She is to step down later this year as the leader of her party, the CDU, which she has led since 2000. While Merkel’s leadership in Europe has been often praised as the European Union has expanded and managed myriad problems – not least the sovereign debt crisis of 2010-11 – recent regional election results in Germany have put her party under pressure. Deutsche Lufthansa AG15,917 Source: S&P Capital IQHow German and European equities have fared since Angela Merkel first took powerGermany’s cost of borrowing has also fallen substantially in the same period. The yield on a 10-year German Bund was 3.4% in November 2005, but as the country’s economy strengthened and proved resilient in the financial and sovereign crises that followed, investors flooded to the percieved safe haven, pushing the yield down to around 0.4% at the end of October this year.Germany’s top 10 pension funds in 2005 and 2018 At the start of this week, German chancellor Angela Merkel announced she would not stand again as chancellor in 2021, meaning the end of her fourth term will see Germany’s first female leader leave politics altogether.  Volksfuersorge Pensionsfonds23,503 Top 10 total278,479 Siemens AG14,622 Hannoversche Pensionskasse8,535 Winsecura Pensionskasse10,853 B-W Aertze, Zahnaertze und Tieraertze13,966 Germany’s top 10 pension funds 2018AUM (€m)Bayerische Versorgungskammer87,000 BASF SE13,576 Nordrheinische Aertzeversorgung13,709 Top 10 total133,093 VBL34,300 BVV16,000 Deutsche Rentenversicherung Bund33,097 BVV28,095 VBL8,000 Daimler AG24,197 Siemens Pensions Trust10,500 A disastrous result in Hesse over the weekend was widely seen as the trigger for Merkel’s decision, but tensions had been mounting since her election victory last year. It took several months for the CDU to agree a coalition arrangement with the SPD, after negotiations with other parties failed.Equity marketsRegardless of recent problems, the Merkel era has undoubtedly been a good one for Germany equity markets. The DAX index rose by 121% from November 2005, when Merkel was elected, to 1 November 2018, according to S&P Capital IQ. The MSCI Europe index is just 11% higher.#*#*Show Fullscreen*#*# E.on Energie6,200 Nordrheinische Aertzeversorgung7,112 Germany’s top 10 pension funds 2005AUM (€m)Bayerische Versorgungskammer36,000 IPE’s inaugural Top 1000 Pension Funds report was published in October 2000, shortly after Angela Merkel became the CDU’s first female leader.The first few iterations – including the report published in 2005 – consisted of 750 continental European schemes and a separate list of the UK’s top 250 funds. Germany provided 100 constituents in 2005. Since then the methodology of the Top 1000 has changed almost as much as the European pension sector has. This year’s report included 107 German funds as a result of a much broader data set used.Assets run by the top 10 German schemes more than doubled since 2005, led by BVK, which grew from €36bn to €87bn, making it now the fifth biggest pension fund in Europe. VBL more than quadrupled in size from €8bn to €34.3bn.See IPE’s Country Report for Germany, published in April, here.IPE’s Special Report on German Asset Management from the October magazine is available here.last_img read more

Active global equity fees have dropped 11% since 2017: LCP


first_imgThe average annual fee for a £50m investment mandate was 65bps, down from 73bps in 2017, saving £40,000 a year, according to the consultant.It added that the largest contributing factor to declining fees was decreasing allocations to active equity mandates.LCP calculated that, as a result of DB schemes changing their asset allocations since 2010, the average scheme was paying more in fees to credit and liability-driven investment managers than to equity managers.Fixed income costs on the riseWhile the average fee for actively managed global equity had decreased by £40,000 for a £50m mandate, the cost of a similar-sized corporate bond mandate had risen by £35,000.LCP suggested that the increase in fixed income fees could be due to pension funds’ demand for bespoke and more sophisticated fixed income strategies.The survey also found wide variations in reported transaction costs for listed infrastructure and actively managed global equity.“This illustrated the need to ask managers to explain and justify these costs,” said LCP.Matt Gibson, head of investment research at LCP, said that falling investment manager fees had allowed investors the opportunity to renegotiate their fees to the new market level.However, he highlighted that reduced costs didn’t always result in value for money “as fees and costs should be considered against the value created by the investment manager”.The LCP survey found that transaction costs for global equity and corporate bonds added 25% and 45%, respectively, to asset management costs on average.It noted that, despite regulatory pressure, many asset managers had not been able to provide detailed transaction cost information, only providing a full breakdown of these costs for 170 of the 677 surveyed products.LCP said that a change in regulation at the end of 2017 had allowed for accurate and comparable analysis of transaction costs data for UK institutional investors for the first time in the history of the survey.The LCP survey was conducted among 71 asset management organisations and covered 49 asset classes.Further readingManagers urged to comply with new cost disclosure templates The UK could legislate to enforce new cost transparency codes if investment managers and service providers do not comply voluntarily, the country’s pensions minister has warnedCost transparency poses threat to asset managers, says Moody’sThe UK’s newly launched investment cost reporting templates could hurt asset managers’ business models and financial stability The average fee for an actively managed global equity mandate for a UK institutional investor has fallen by 11% since 2017, according to LCP.In its latest Investment Management Fee Survey, the consultancy cited increased competition and downward pressure from low-cost index trackers as the main reasons for the fall.The survey also revealed “notable” fee reductions in a range of other key asset classes, including multi-asset diversified growth funds, multi-asset credit, liability-driven investment strategies, and passive global equity mandates.The pensions adviser estimated that a typical £500m (€548m) defined benefit (DB) pension fund in the UK had seen a reduction in total investment fees from 39 basis points to 36bps, or £140,000 a year, in the past 10 years.last_img read more

DNB: Dutch investment institutions return 18% on average


first_imgDutch investment institutions have produced their best performance figures since the start of the financial crisis, with returns of 18% on average last year, according to regulator De Nederlandsche Bank (DNB).It said it found the returns for these institutions and investment funds ranged from almost 4% for hedge funds to 27% for equity funds.The supervisor noted that, despite a lack of profit growth among listed companies in Europe and the US, equity worldwide yielded high returns, in part thanks to falling interest rates.In 2018, Dutch equity funds lost 6% on average, it said. Since interest rates in the euro area continued to decline until the end of August, bond funds also managed to achieve profitable returns in 2019, DNB added.In the fourth quarter they had to give up some of this growth, but for 2019 as a whole they achieved returns of almost 11%.With 3.8%, hedge funds were the only type of funds that achieved returns below 10%, the regulator reported.This type of fund generally does not confine itself to a single category of investment – such as equity, bonds or real estate – but seeks to achieve positive returns by leveraged funding or by pursuing a strategy that is not tied to general market indices, it explained.DNB also stated that the value of each euro invested 11 years ago had increased to €2.37 on average across all investment institutions.Investors that had solely targeted equity funds had seen the value of each euro invested rise to €3.60, according to the supervisor.last_img read more

The strata by-laws all Cairns unit occupiers have to know


first_imgDecorating indoors can be subject to strata by-laws.He said owners and tenants in strata properties had to know their scheme’s by-laws inside and out. “But, unfortunately, there are many instances of residents taking actions that are in breach of the by-laws,” he said.More from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days ago“We had a report of a unit owner concreting their courtyard then having to jack hammer it all up as they didn’t have approval for the works. The resident previously lived in a house with only council regulations applying and was not aware he could not make this type of alteration to his courtyard without first seeking approval as stipulated within the scheme by-laws.” Mr Mifsud said even changes to the inside of the unit could be risky without checking the property’s strata by-laws. “Even changing the curtains can be an issue that causes a breach in a strata scheme. There can be by-laws that specify light backed curtains should only be installed in particular windows,” he said. “Similarly, making unauthorised changes to blinds can be a problem, while the same situation can arise with window tinting.” Apartment blocks across the city are subject to their own strata by-laws. PICTURE: ANNA ROGERSSTRATA management is meant to create harmony across a townhouse or apartment block, but not sticking to the rules can land owners and tenants in hot water. Archers the Strata Professionals partner Grant Mifsud said even the wrong choice of curtains could result in costly consequences. “As a tenant or owner within a strata property, it’s important to be aware of the things you can and can’t do in your strata scheme,” he said.“Strata schemes have by-laws which regulate common property to help maintain peace and harmony within the community and also to ensure residents can live safely and in an orderly fashion protecting the value of their properties.” Swimming pools are a common cause for contention in apartments and units.The strata expert said common areas like swimming pools were not only strata by-law landmines, but could also raise tension between neighbours. “Some residents treat the pool like it’s their own private resort when in fact it is a shared area which can have strict rules such as ensuring children using the pool are supervised by an adult, for both safety and harmony,” he said. He said other common sources of strata-scheme disputes could involve pets, parking, parties, passive smoking, hanging laundry from the balcony as well as the behaviour of visitors.“Tenants and owners should brief their visitors about the accepted behaviour inside the strata property, particularly when holding any gatherings and be mindful of the other occupants’ peaceful enjoyment of their home,” he said.“To maintain a harmonious, friendly and comfortable atmosphere in a strata property, it’s always good to familiarise yourself with your strata scheme by-laws and play within the rules.”last_img read more

Bardon house a fated purchase for its seller


first_imgThe kids love playing in the pool.She said she would look back on her time in the home fondly.“I have photos of the kids sitting on the lawn with their towels draped over seats and it looks like the happiest of summer scenes, which really is what this house has been about.”Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:51Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:51 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p432p432p270p270pAutoA, 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 Rate1xFullscreenStarting your hunt for a dream home00:51 Lie in bed and look out at the view.Ms Foley has two favourite areas in the home, one upstairs and one downstairs.“The deck off the master bedroom is semi-built in with cut outs, so you can lie in bed and see the trees,” she said.“My husband and I have coffee out there in the mornings and often wine at night while we watch the sun go down. The kitchen is modern.Living in the house with her husband Graham Findlay and two children has been a dream come true for the past 13 years, during which time the couple undertook renovations. Louise Foley knew she wanted to own this house when she was just a child.LOUISE Foley knew she wanted to own this Bardon house when she was child.Fast forward to 2006 and she would be pocketing the keys to the Bardon property.“My parents … lived within blocks of that house,” she said.“As a child I’d seen it from up on the hill and it had a pool, which was very unusual for those days, and even though it was tiny at the time, I thought it was a mansion.”center_img Sitting on this bench is one of Ms Foley’s favourite spaces in the house.“My other favourite spot is a massive sliding window downstairs which has a bench inside and out.“The kids will sit on the bench outside in their togs and eat iceblocks and we relax on the other side.” The crazy pavers in the patio are one of Ms Foley’s favourite aspects of the home.More from newsParks and wildlife the new lust-haves post coronavirus14 hours agoNoosa’s best beachfront penthouse is about to hit the market14 hours ago“We moved walls around put in lots of insulation and a new roof, but we primarily focused on wood features inside and out,” Ms Foley said.“I also fell in love with some crazy pavers for outside.“I had to have them, they’re beautiful and I look at them all the time.”last_img read more