The UK’s Universities Superannuation Scheme (USS), Dutch pensions company PGGM and Canadian pension fund manager OPTrust are investing €350m in infrastructure debt for Globalvia Inversiones.USS is investing €150m and PGGM and OPTrust are each investing €100m in the form of a convertible loan to Globalvia Inversiones – a portfolio of 20 core infrastructure companies based in seven countries.PGGM and OPTrust are both adding to commitments of €200m each made to Globalvia in 2011, the pension funds said.USS said the structured facility added to its growing portfolio of infrastructure debt and equity investments and matched its strategy of developing private market investment opportunities that fit well with its long-term pension liabilities. Gavin Merchant, senior investment manager for infrastructure at USS subsidiary USS Investment Management Limited (USSIM), said: “Our ability to invest across the capital structure has allowed the deal team to originate and execute this unique opportunity for the scheme.”He said the Globalvia deal was an important new investment that further diversified the pension scheme’s portfolio of infrastructure assets.Globalvia was established in 2007 and is owned by Spanish groups Fomento de Construcciones y Contratas and Bankia.Completion of the deal is subject to approval by the European Commission.USSIM arranged the transaction for USS, and its in-house infrastructure team will manage the investment, which USS said substantially reduced its overall cost of investing in infrastructure.The UK pension fund said the new commitments of €350m from the three pension funds would help Globalvia expand its existing portfolio of 14 toll roads and six light rail assets.
SPF Beheer, Swiss Life, Mercer, Woodford IM, Jupiter, Aegon AM, VAM GroupSPF Beheer – The provider for the €15bn railways scheme SPF has appointed Justus van Halewijn as its new CIO as of 1 February. He is to succeed Marcel Andringa, who has started as an executive trustee for asset management at the €38bn metal scheme PME in September. During the past two years, Van Halewijn has been head of investment management at Achmea, the department managing the insurer’s €40bn in assets. Prior to that, he was head of investment strategy research at asset manager Blue Sky Group for nine years.Swiss Life – Simon Heim has been named head of Swiss Life’s employee benefits legal practice, where he will continue to focus on Swiss regulatory matters. Heim previously worked as a pensions lawyer and consultant at Towers Watson.Mercer – Ben Gunnee has been named UK head of fiduciary management, starting next year. Reporting to European head of fiduciary management Michael Dempsey, the new role is a promotion for Gunnee, who currently heads up the Middle East investment business. He was previously a director of the Mercer Sentinel Group. Woodford Investment Management – Gavin St John-Heath and Simon Osborne have been appointed chief risk and operations officer and head of compliance, respectively. St John-Heath will join from BlueQuant Capital Management early next year, having also worked at Petronas Energy Trading. Osborne, meanwhile, joins from Nuveen Investments and has also worked at PIMCO, in both its London office and California headquarters.Jupiter – Stephen Mitchell has been appointed head of strategy for global equities. He will join from Caledonia Investments, where he has worked since 2011. Prior to this, he worked at Fleming & Co and JP Morgan Asset Management.Aegon Asset Management – The asset manager has appointed Thurstan Robinson as global head of communications and marketing. Based at Aegon Asset Management’s headquarters in The Hague, he joins from Aegon Global Pensions, where he was responsible for media relations.VAM Group – Stephan Kevan has been named group marketing director. He most recently worked at NinetyEast Financial as chief marketing officer and has also worked at old Mutual and Barclays Wealth.
The Dutch pension funds of Achmea Group, tank storage company Vopak and chemicals company Huntsman have announced partial indexation of pension rights. The €6.2bn Pensioenfonds Achmea said it would grant its workers inflation compensation of 1.54%, drawn on the salary index.Its pensioners and deferred participants are to receive an allowance of 0.21%, based on the derived consumer index, which does not take into account product-related taxes, such as VAT, or consumption related taxes, such as road tax.The €505m Pensioenfonds Huntsman Rozenburg is to grant its active participants an indexation of 0.46%. This percentage consists of an unconditional indexation of 50% – based on the consumer index – plus a conditional allowance of 0.13% drawn on the scheme’s financial position.The former workers and pensioners at Huntsman Rozenburg can expect a conditional indexation of 0.18%, following the derived consumer index.The pension fund’s official ‘policy funding’ stood at 113.8% at January-end.The €1.1bn Pensioenfonds Vopak announced a partial inflation compensation of 0.24%, based on the consumer index.It indicated that the level of indexation for its employees still had to be established.Under its current rules, workers can expect an allowance of no more than the difference between the consumer index and the salary index.The indexation for its active participants is to be paid from a special reserve, funded through a 1% levy on pension contributions.The policy coverage of the Pensioenfonds Vopak was 115.8% at the end of January.
Joseph Mariathasan weighs the pros and cons of local-currency emerging market debtArgentina just undertook its first international bond issue since its 2002 default, raising $16.5bn (€14.7bn) in an auction four times oversubscribed. As there is clearly demand for all types of emerging market debt (EMD), perhaps the time has come to revisit local-currency EMD.Emerging market local-currency debt is a large and rapidly growing asset class. It is very liquid and available to any investor, so it cannot be ignored. But it has not been giving decent returns since the 2013 ‘taper tantrum’. Not surprisingly then, investors are reluctant to consider it seriously.But with the asset class, it is important to separate out the structural long-term opportunities from the shorter-term cyclical headwinds we have been experiencing. The longer-term opportunities are tremendous, with local-currency debt now a $6trn market, accounting for 20% of the global bond markets, while emerging markets account for 40% of global growth. Hard-currency EMD, by contrast, is a declining asset class primarily because emerging countries have developed the institutional infrastructure to be able to issue in local currency across the maturity spectrum. That structural change makes emerging markets very different in character today from what they were a decade or two ago.The reason EMD has not been more prominent is the political risk associated with emerging markets. The volatility of the institutional framework of emerging markets compared with those of the developed world and the propensity for the frameworks of those institutions to change gives rise to the risk a country sets on a cycle that can lead to questions over its debt sustainability. Pension funds may also face reputational risk if they invest in a country that then hits the news as a result of political instability – Russia is a case in point.But some of this may be misconceived. The economist Jerome Booth believes the market pricing of sovereign risk can be thought of as having three component layers. The first is quantitative based on macroeconomic ratios such as debt/GDP, fiscal deficits, etc. This garnered much attention during the euro-zone crisis with the work of economists Reinhart and Rogoff (2009) on sustainable levels of debt/GDP.Second, Booth sees a policy layer, reflecting the ability of policymakers to implement sound economic policy, engender the spread of a market economy and for policy to react in an intelligent and timely manner to events. This depends on the development of a robust institutional framework incorporating independent central banks, savings intermediaries such as pension funds and insurance companies, and a regulatory framework that seeks to enforce a level playing field through the rule of law.The third layer consists of just perceptions of risk, which Booth describes as the “prejudice layer”. The most significant development across emerging markets as a whole and in Asia in particular has been the phenomenal institutionalisation of their economies dramatically improving the ability of policymakers to implement policies. “In the 1997 Asian crisis, it was locals who fled the markets first, selling local assets and the currency to shift to safer havens,” he writes. “There is central bank independence now, a growth of domestic pension funds and institutional investors mandated to invest in domestic assets.”But political risk also creates opportunities for active bond managers. The standard JP Morgan benchmark index suffers from the requirement to include only countries that have easily accessible bond markets. That means the index is essentially weighted towards 12 countries and lacks exposure to major Asian issuers such as Korea and India. But active managers are able to provide the full armoury of derivatives to generate proxy exposures to the bond markets. What that means is that investors should not regard benchmark indices as the minimum risk position for local currency EMD.Perhaps the key issue for potential local currency EMD investors is not whether they should be investing but when. The danger for many investors is that of trying to time entry to hit the very bottom and, as a result, enter the market once it has bounced back some way. But that is human nature.Joseph Mariathasan is a contributing editor at IPE
Australia’s AUD2.6trn (€1.7trn) pension system has become “an unlucky lottery” for many Australian workers and their families, according to a new government report.After a two-year review, Australia’s Productivity Commission this week released a 571-page draft report – Superannuation: Assessing Efficiency and Competitiveness.“We have had compulsory [superannuation] for nearly 30 years, but its architecture is outdated,” said Karen Chester, deputy chair of the commission. “The system suffers from two structural flaws – unintended multiple accounts and entrenched underperformance.”The review could lead to what sections of the Australian media have called “the biggest shake-up” yet in the industry. This could include an unshackling of the retirement system from workplace bargaining agreements between employers and unions. A key issue during the review was the country’s AUD500bn default system. The commission rejected a bid from bank-owned retail funds to abolish this system.It said the default segment of super funds outperformed non-default funds, generating average net returns of about 7%. However, some workers were exposed to the costly risk of being defaulted into an underperforming fund.“With default funds being tied to the employer and not the employee, many members end up with another account every time they change job,” Chester said. One-third of accounts (about 10m) were “unintended multiples”, and the excess fees and insurance premiums paid by members on those accounts amounted to AUD2.6bn every year, the commission reported.“These problems are highly regressive in their impact – and they harm young and lower-income Australians the most,” Chester said.While most members were in funds that deliver good investment returns, millions were in funds that persistently underperformed. Over an average member’s working life, being stuck in a poor performing default fund could leave them with almost 40% less to spend in retirement, according to the commission.“Fixing these twin problems of entrenched underperformance and multiple accounts would lift retirement balances for members across the board,” Chester said. “Even for a 55-year-old today, the difference could be up to AUD60,000 by the time they retire. And for today’s new workforce entrants, they stand to be AUD400,000 a head when they retire in 2064.” Productivity commissioner Angela MacRae said the commission proposed a package of changes focused on delivering for all members and “to modernise the system and deliver the best possible returns and products”.Among its proposals was that Australian workers should get to choose from a ‘best-in-show’ list of high-performing funds identified by an independent expert panel. The bewildering 40,000-plus investment options currently on offer should be streamlined to make it easier for members to select, the commission said.In addition, it called for the 112 funds managing less than AUD1bn to merge with bigger, better-performing funds.“Evidence of unrealistic economies of scale, persistent underperformance and an entrenched large number of small funds raises the question of why there have not been more fund mergers, given the likely benefits for members,” said the report.
Investec Asset Management has launched an alternatives platform in Luxembourg to cater for EU-based institutional investors.The platform is designed to offer investors access to a range of strategies under the Alternative Investment Fund Managers Directive (AIFMD), with offerings tailored to specific client groups.The first product on the platform is an unconstrained multi-asset credit fund, run by Jeff Boswell and Garland Hansmann. The pair already manage roughly $400m (€342m) in the strategy through other vehicles.Investec also planned to launch a defensive version of the strategy aimed at German institutional investors, a spokeswoman for the asset manager said. John Green, global head of client group, said: “This move underlines our commitment to providing our European clients with solutions tailored to their specific requirements – an example being investors’ dual requirements for yield enhancement and capital preservation given uncertain markets.“Our multi-asset credit strategy actively manages exposure across the credit spectrum to build a diversified portfolio which aims to be high-yielding yet comparatively defensive, with low volatility and low sensitivity to interest rates.”Investec’s existing Luxembourg fund range includes 47 products with more than €31bn in assets.The spokeswoman said the move was unrelated to its Brexit preparations. Similarly, she said the firm had no specific plans to add staff in its Luxembourg office.Companies including M&G and Columbia Threadneedle have transferred assets out of UK-based funds to Luxembourg in preparation for the UK leaving the EU in March, while several other asset managers have expanded their resources in offices in Ireland or Luxembourg.AIFMD is a European directive covering hedge funds, real estate, private equity and other alternative investment categories.Access IPE’s November 2017 Credit Special Report here.
BlackRock has appointed Gavin Lewis to lead its offering for the local government pension scheme (LGPS), a new role. Lewis joined the asset manager at the beginning of the month from Vanguard, where he was most latterly head of UK institutional. At BlackRock, he will report to Sarah Melvin, head of UK.Before joining Vanguard in 2016 Lewis was at UBS, and before that at Russell Investments. He is a member of The Diversity Project, which seeks to promote an inclusive culture in the investment profession.Melvin said LGPS pension funds had “a unique set of investment requirements with distinct servicing needs”. Source: Chis McAndrewGuy Opperman, pensions minister“People need certainty and clarity when it comes to their retirement income,” said the minister. “Companies should be taking steps towards equalisation, such as correcting records and deciding upon a preferred methodology.”Last month the Pensions Administration Standards Association (PASA) published guidance on methods pension schemes could use.In October last year, the UK’s high court ruled that GMPs were in breach of gender discrimination laws as they were payable to men and women at different ages. As a result, pension funds have to recalculate benefits accrued between 1990 and 1997, which some are still paying.According to a survey carried out by the Association of Consulting Actuaries over the summer – before PASA’s guidance, in other words – 64% of employers running defined benefit schemes said it would take more than two years to fully equalise pensions for the effect of unequal GMPs in their schemes.‘Administrative complexity and time’ was ranked as the top of six challenges linked to GMP equalisation. The survey drew 308 responses from employers of all sizes running more than 510 different schemes. In January consultants XPS Group said the cost of implementing the GMP ruling for most schemes in its sample would be less than 1% of liabilities.The concept of GMPs was introduced as a way of ensuring that DB scheme members were no worse off if their scheme decided to opt out of the state second pension, an earnings-related addition to the UK’s basic state pension that was scrapped in 2016. GMP is the minimum pension the DB schemes who contracted out had to provide for their members. “Gavin’s experience is a perfect fit to enhance how we collaborate with our clients across these schemes, deliver solutions the meet their needs and serve their members,” she added. However, since 2018 the balance of the levy has been in deficit. There is now a cumulative deficit of more than £16m, estimated to reach £50m by 2020.Expenditure has risen from around £40m during 2013-14 to over £60m by 2018-19, while revenue has remained more or less the same.The government said the increase in costs had been caused by significant changes in the pensions industry and regulatory landscape, leading to increased activities by the levy-funded bodies.The Department for Work and Pensions (DWP) has now launched a consultation on four different options for increasing the levy:* A holding increase of 10% of 2019-20 rates on 1 April 2020, with further increases from April 2021, informed by a wider review of the levy;* A phased increase in the levy over the three years from 1 April 2020;* A phased increase over around 10 years commencing 1 April 2020;* A phased increase over around 10 years commencing 1 April 2021.The DWP is also proposing a one-off increase to the annual levy contribution paid by schemes with between two and 11 members, which have been unchanged since 2000. The consultation closes at mid-day on 15 November.Equalise GMPs, minister urgesUK pensions minister Guy Opperman has warned pension schemes that they need to begin the process of correcting the gender inequalities linked to guaranteed minimum pensions (GMPs).Noting that the government had published guidance on GMP equalisation six months ago, he said it was time for pension schemes to act. Gavin LewisThere are 87 pension funds in the LGPS in England and Wales. According to recently released government statistics, the market value of the funds was £287.2bn (€333bn) at the end of March and the total membership was 5.9 million. One of the biggest LGPS developments in recent years has been the asset pooling by the local authority pension schemes, with eight pools having been established. DWP consults on levy increaseThe UK government is planning to raise the rates of the general levy on occupational and personal pension schemes from April 2020.The levy part-funds the activities of The Pensions Regulator, The Pensions Ombudsman and the Money and Pensions Service.The levy rates were last increased in the 2008-09 fiscal year. They were then reduced by 13% in 2012-13, remaining at the same level for most pension schemes since then. A new, lower, levy rate for schemes with 500,000 members or more was introduced in 2017-18.
Cazenove Capital, the wealth management arm of Schroders, has been awarded a combined £33.5m (€36.6m) investment mandate from three charities that earlier this year held what they billed as the “ESG investing Olympics”.The competition was a first-of-its-kind open tender, with the charities telling would-be investment managers to “impress us” on social and environmental integration and impact.With Cazenove emerging as the winner, Friends Provident Foundation, the Joffe Charitable Trust, and the Blagrave Trust will become cornerstone investors in a new best-in-class multi-asset sustainability fund to be launched in December.Sixty proposals were received from a wide range of managers, with five invited to present to an auditorium of mission-led investors in March. In a statement, Friends Provident Foundation said the proposals were assessed for intentional social and environmental impact, high standards of ESG integration covering exclusion, engagement and its escalation, voting record, in-house expertise, and impact reporting.“Our trustees were torn between choosing an ‘evolving incumbent’ or a ‘new disruptor’ and decided on the former,” said Colin Baines, investment engagement manager at the foundation.“We were impressed with Cazenove’s proposal, which meets our new, challenging, investment policies, was well received by attendees in March, and offers the potential to achieve scale and influence the wider market.”Kate Rogers, co-head of charities at Cazenove, said: “The ESG ’investing olympics’ set an amazing example of collaboration and transparency, breaking new ground in sustainable investing.“We look forward to continuing in this spirit, working with the charities to use their investments for good and developing best practice in impact investing.”She said the upcoming new fund had a clear intention to generate both a competitive financial return and a positive impact on “people and the planet”.One of the reasons why the charities took the approach to manager selection they did was to “send a market signal regarding asset owner demand for investment with purpose and expectations for ESG integration and impact”.According to Friends Provident’s statement, the runner-up was EQ Investors. It said the charities also recognising its strengths and commended “their ‘best in class’ credentials as a boutique impact manager and ‘new disruptor’”.The foundation said that analysing the 60 proposals showed that fossil fuel divestment was becoming commonplace, integration of ‘S’ issues in stock selection as comparatively less developed, and policy and practice on shareholder engagement escalation were weak.The foundation will cover these trends and market gaps in more depth in a report scheduled for the autumn.Looking for IPE’s latest magazine? Read the digital edition here.
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 2020North Shore is enjoying a flurry of buyer activity with a new section under comstruction at the moment with bigger size blocks, close to school and park.Stockland North Shore Project Director Andrew Astorquia said the release was created to meet increasing demand for larger lots and the Airlie 186 tailor-designed to make the most of the space. “With four different residential villages, we pride ourselves on providing product for the entire market and these lots are an example of catering to those wanting more land and a premium house with street appeal at incredible value for money” he said.“The increased frontages enable buyers to create their ideal home while providing the flexibility to include room for a large shed or to house the boat or caravan.“The Airlie 186 is a great design for the lots providing buyers with a grand frontage while maximising the usability of the back yard. “We have seen increasing demand for larger lots with four sites in the Pasco release already snapped up.” The AP Williams and Co Airlie 186 house and land package is on offer now for $405,600 for a 665 sqm lot including landscaping. The Pasco land release is situated in the Sunhaven village near Sunhaven park and a short walk to the new North Shore State school. It features 14 lots starting from $165,000. For information visit stockland.com.au/northshore North Shore is enjoying a flurry of buyer activity with a new section under comstruction at the moment with bigger size blocks, close to school and park.FOR families in search of more room, Stockland is offering new large lots at its North Shore community with plenty of space for your ideal home as well as a boat, pool or shed.The Pasco land release, at North Shore, features 14 lots up to 1004 sqm with 19 metre wide frontages, giving buyers plenty of room to build their perfect life. North Shore have partnered with local builder AP Williams and Co to design a home specifically suited to get the most out of these new larger lots. The four-bedroom, two-bathroom house is dubbed the Airlie 186 and features a wider frontage with living areas at the rear to take advantage of the large back yards.
Mr Crosland builds houses as a hobby so he takes his time designing them. Picture Glenn HampsonThey were inspired by his idea of a dream home with lots of natural materials including concrete, glass and raw timber.“The last one I did had a similar feel … but this one I’ve taken to the next level,” he said.“Everything has been hand-picked and made for the house.“Even the pendant lights over the kitchen benches are hand-blown glass.“If you’re looking for your dream home, this is what I made them for.”More from news02:37International architect Desmond Brooks selling luxury beach villa12 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoHe always builds two houses in each project – one to live in and one to sell.However, both in his last project at Broadbeach Waters sold as he had so much interest in them.MORE NEWS: What makes this house so popular? Nick Crosland has designed two villas on Monaco St. Picture Glenn HampsonSTICKING to a budget is low on the list of Nick Crosland’s concerns when building lavish Gold Coast trophy homes.It is a hobby for the Highgrove Bathrooms boss so he likes to splash plenty of cash on the best products the market has to offer.“I didn’t get into building because I wanted to make a profit, I got into it because I wanted to be creative,” he said.A pair of luxury villas on Monaco St are the latest of his three projects. 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 MORE NEWS: Live happily ever after in charming cottage Inside one of the Broadbeach Waters homes Mr Crosland designed and built. This time though, he wants to be able to enjoy the fruits of his labour.“The one that’s going on the market is basically finished,” he said.“The second one we’re still finishing, it’s about two weeks behind.”The property is due to hit the market in coming days through LJ Hooker agent Rebecca Gannon.Pick up a copy of the Gold Coast Bulletin on Friday to see the Coast’s top 50 dream homes.