Chris Ford (pictured), Towers Watson’s head of investments for the EMEA region, has been promoted to oversee the company’s global investment business.Ford, who has been at the firm for more than 20 years and took over the EMEA investments business in 2010, will replace Carl Hess, who is to become managing director for the Americas.Hess, who was appointed global head of investments in 2008, also joins the consultancy’s executive committee.Roger Urwin will remain as global head of investment content. Towers Watson said a decision on who would head its EMEA investment business had not yet been taken, and that the process of appointing a successor to Ford would begin shortly.He is to take on his new role with immediate effect, the company said.Hess replaces Jim Foreman as managing director of the Americas – Foreman will now lead the company’s expanded exchange solutions business.Ford was appointed head of the EMEA in November 2010 after a range of positions, and quick promotions, across Towers Watson.This included heading up the New York investment practice in 2000, after 10 years with the firm.He then became responsible for the investment strategy team in 2004, back in the UK, and joined the EMEA executive committee and the global practice management team in 2007 and 2008, respectively.Ford oversaw the separation of Towers Watson’s investment advisory arm and its fiduciary management business in 2011.On the announcement of Ford’s promotion, managing director of risk and financial services Tricia Guinn described him as an extremely talented individual well placed to succeed Hess.“Chris has proven himself to be very capable – both strategically and operationally – at propelling the business forward and delivering strong growth and excellent results for our clients,” she said.
PFA, Denmark’s biggest commercial pensions provider, has said it made a 21% return on holdings of Danish shares in the first half of this year, and expects the growth to continue in the second half.Jesper Langmack, director of the firm’s investment division PFA Asset Management, said: “It has been a really good first half for our investments in Danish shares, and this has been driven particularly by our investments in a range of big companies such as Novo Nordisk, Danske Bank and Coloplast.”The 21% return equates to a profit of more than DKK2bn (€134m) in absolute terms, said PFA, which has around DKK417bn in assets under management.The domestic equities market outperformed shares elsewhere in Europe, which rose by an average 6% over the same period. PFA customers with savings in unit-link product PFA Plus benefited in particular, Langmack said, with the allocation to Danish shares in its highest risk pool – PFA Plus profile D – having been raised to 18% from 8% at the beginning of 2013.Langmack said this allocation was increased because PFA took the view that several of the country’s largest stocks had the potential for high returns.Following the returns over the last six months, PFA now has a total of DKK15bn invested in Danish equities.Langmack said the second half would also see prices rise on the domestic stock market, albeit at a slower pace.“We expect the return on Danish equities to be in single figures for the second half of the year,” he said.
Oil giant BP has lamented the difficulty of engaging with its shareholders if voting intentions are only communicated immediately before or directly after an AGM.Emily Carey, head of governance, said the 2010 introduction of the UK Stewardship Code had seen many investors “stepping up and wanting more engagement”.But this engagement, she argued, also comes with a cost.“Interestingly, at the same, the votes are coming in later and later,” she said. “And also, disappointingly, we find that, if some investors aren’t voting with management, they don’t let us know until either the day of the meeting or the day afterwards, which makes engagement very difficult.” Failure to inform company management of intentions to oppose a shareholder resolution or abstain from voting is in breach of the Code, which says it is “good practice” to inform management of such a decision if a matter cannot be addressed through engagement.Carey, who was addressing a conference on engagement organised by the UK National Association of Pension Funds, spoke after the chairman of the Financial Reporting Council (FRC), Win Bischoff, warned against Stewardship Code signatories viewing it as a “tick-box” exercise.The former Lloyds Banking Group chairman said some signatories were “failing to properly comply with [the Code’s] requirements, or to adhere to the spirit of the principles”.“We see too often that managers have signed up to the Code just to ensure they are placed on owners’ shortlists,” he said.“It is obviously hard for us to know this conclusively, but the fact some signatories have failed regularly to update their statements implies that, for some, signing up is merely part of a tick-box process rather than a basis for good-quality engagement.“We need to find a fair, transparent means of encouraging managers to properly implement the Code.”Bischoff said the FRC had previously considered de-listing those signatories that failed to update statements on a yearly basis, something he said was “a drastic solution”.He later clarified that there was no intention on the part of the body to de-list those failing to file statements.During the same speech, the chairman also warned of the risk of European regulation on engagement.Discussing the proposed introduction of the Shareholder Rights Directive, he said: “If our principles-based system is found wanting, we will only have ourselves to blame if European legislation takes its place.”
Italian media reported that the European Investment Bank (EIB) might also be asked to contribute.The long-term fund would be closed and finance SMEs as well as infrastructure projects, particularly aimed at reducing the country’s ‘digital gap’.Stakeholders are exploring how to provide return guarantees to investors – a focal point in the discussion.There is also a proposal to give tax incentives to pension schemes that subscribe to the fund.According to MEFOP, a pension think-tank owned by the Ministry of Finance, Italian pension funds are exposed to the domestic economy almost exclusively through sovereign debt.Around 92% of their assets are invested in Italian government bonds.However, some Italian institutional investors are increasing their direct exposure to the domestic economy.Last month, three casse di previdenza – Inarcassa (engineers and architects), CIPAG (surveyors) and EPPI (industrial management consultants) – created ARPINGE, a special-purpose vehicle to invest in Italian infrastructure projects.The company is currently targeting around 50 projects worth €340m over a three-year period ending 2016.In other news, in a bid to stimulate consumer spending, prime minister Matteo Renzi’s government is considering raising salaries by handing back part of employees’ Trattamento di Fine Rapporto (TFR), the deferred termination indemnity pay set aside by employers and largely used to finance second-pillar pension scheme contributions.The proposal has come under fire by employer associations and trade unions.It is feared that releasing the contribution will put companies’ balance sheets under pressure and slow the growth of second-pillar funds.Fabio Ortolani, chairman of €4.4bn chemical sector fund Fonchim, said: “The government’s intention to hand back TFR puts Italians’ pension future at risk, as well as renders liquidity for small and medium companies difficult.“Scrapping one of the main sources of financing for pension plans, which would then be financed solely by employer contributions and voluntary employee contributions, would drastically reduce pension pots and in turn retirement benefits.”However, Italy’s central bank, Banca d’Italia, and the pension regulator, Covip, are open to the possibility.Banca d’Italia’s head Ignazio Visco, speaking yesterday after an ECB meeting in Naples, said the ECB’s LTRO initiative could be used to finance bank loans to SMEs lacking liquidity as a result of the missing TFR cushion.Rino Tarelli, chairman of Covip, told Italian media today that handing back the TFR to employees “should not be considered a taboo”, and that it could potentially be done without damaging the second-pillar system.The chief executive at Italian automobile giant Fiat, Sergio Marchionne, is also backing the government’s proposal.He was quoted as saying that, despite representing a cost for the company, the measure was necessary, as it provided employees with much-needed liquidity.Elsewhere, the €690m fund for employees of Banco di Napoli has launched a search for a manager to build a portfolio of renewable energy investments that have an “alternative bond-like” profile.The selected manager will take care of the €502 defined benefit pool of the fund, which is currently actively managed and has an equity exposure of 18%.The deadline for proposals is noon, 30 October.Further information is available here. Discussions between Italy’s government and pension funds about the creation of a fund to invest in Italian SMEs and infrastructure have stepped up a gear.Further details have emerged about the vehicle, which could have a target size of €3bn-5bn and, according to Italian media, could be launched before the end of the year through the 2015 budget law.The plan is being discussed by the Ministry of Finance, first-pillar casse di previdenza and second-pillar collective pension funds.Government-owned bank Cassa Depositi e Prestiti (CdP) is also involved in the design, as it would support the fund by acquiring a minority stake.
As a result, industry-wide pension funds would be able to transform themselves into, or join, the new general pension fund (APF) vehicle, something that is currently prohibited.Unions, however, objected to the proposal, saying they feared “considerable consequences for the market for pensions provision, the relationship between the social partners and the pension fund, as well as the existing governance structure”.In their opinion, mandatory participation should be in any discussion about a new and sustainable pensions system.Klijnsma said the government would launch legal proposals if she managed to hit upon a broadly supported solution.In her letter to Parliament, the state secretary, citing DNB figures, also confirmed that 45 pension funds were liquidated last year, leaving a remaining total of 320 schemes, including 57 mandatory industry-wide pension funds. Jetta Klijnsma, state secretary at the Dutch Ministry of Social Affairs, is to measure the level of support for replacing the current mandatory participation in a pension fund with a system that gives participants the ability to choose their pensions provider.In a letter to Parliament, Klijnsma said she would look into the matter in co-operation with companies, workers and the pensions sector.She said objections raised by the unions, after the Dutch government suggested it might decouple the concept of compulsory participation from pension funds, had sparked the inquiry.The government previously suggested participants would be given the option of compulsory pensions saving with a pensions provider of their choice.
Vliegend Personeel, the €8.2bn scheme for pilots, said it failed to meet the required financial buffers by 1 percentage point, after its policy funding dropped to 117.9%.Cabinepersoneel reported quarterly returns of 3.2%, 1.8% and 0.6% on fixed income, equity and real estate, respectively, and said its interest hedge added 1 percentage point to its return of 3.4%The pension fund’s return year to date is 7.2%.Algemeen Pensioenfonds KLM, the €7.9bn scheme for ground staff, posted second-quarter and first-half returns of 3.5% and 6.9%, respectively.During the last quarter, its fixed income, equity and real estate portfolios returned 4.1%, 1.9% and 0.5%, respectively.Funding, as of the end of June, stood at 101.7%.The pilots pension fund produced second-quarter and first-half returns of 2.6% and 4.2%, respectively, while its coverage ratio stood at 112.5% as of the end of the quarter. In other news, Vervoer, the €23bn sector scheme for private road transport, has returned 15.8% year to date.As a result, its funding increased by 1.3 percentage points to 99%.The €3.3bn Pensioenfonds TNO, meanwhile, has returned 8.2% on investments year to date, attributing the result largely to its fixed income holdings, which returned 12.2%.It incurred a 2.9% loss on equities, however, while producing neutral results on property and private equity.The research institute’s scheme said its interest and currency hedges had contributed 0.9% and 0.2%, respectively, to its first-half performance.It closed the second quarter with a funding of 105.6% and a policy coverage of 107.9%. KLM’s three main pension funds generated returns of up to 3.5% over the second quarter on the back of positive results on all asset classes.The investment returns, however, failed to offset the negative impact of falling interest rates on liabilities, resulting in a slight drop of the schemes’ coverage ratios.By contrast, their policy funding – the 12-month average of their coverage, and the main criterion for rights cuts and indexation – fell by almost 3 percentage points.As a consequence, Cabinepersoneel, the €2.7bn pension fund for cabin staff, saw its policy coverage decrease to 102.8%, causing a funding shortfall.
Sponsors with large UK pension deficits should be allowed to override any indexation provision and only offer increases in line with the consumer prices index (CPI), LCP has urged.Proposing the government end the “legal lottery”, the consultancy estimated FTSE 100 firms would see a £30bn (€35bn) reduction in their liabilities if they were able to switch to CPI, rather than the retail prices index (RPI) for all future indexation.The recommendation came as LCP estimated the largest listed firms had pension deficits of £63bn by early August, following the Bank of England’s re-launch of quantitative easing, a significant increase from the £46bn estimated shortfall in June when assets stood at £582bn.However, while advocating the change, LCP partner Bob Scott said the switch to the traditionally lower level of indexation should only occur subject to certain safeguards. “The safeguards are important as they should not automatically allow a profitable company with a large pension surplus to increase that surplus by reducing benefits,” he said.“They could, however, provide relief to a company with a large deficit where the trustees agreed it was in the members’ interests for benefits to be reduced.”LCP’s call came the same day as latest CPI data was released, which showed inflation running at 0.6% in July, up by 0.5 percentage points compared to June. This compared to a 0.3 percentage point increase in RPI to 1.9%.Charles Cowling, director of JLT Employee Benefits, said the inflation data amounted to a “Brexit double-whammy”, as it added to the pressure facing funds due to increasing deficits due to uncertainty following the vote in June.The suggestion funds be allowed to amend the level of indexation comes months after such a move was proposed to reduce the deficit within the British Steel Pension Scheme (BSPS), which faces entry into the Pension Protection Fund as its sponsor, Tata Steel, seeks to sell its UK assets.At the time the consultation was announced, the Pensions and Lifetime Savings Association (PLSA) warned against “bespoke” regulatory changes, and said it would be “inconceivable” for the government to not offer such a solution to the entire DB sector.The previous government considered a statutory override of trust deeds in 2010, but then-pensions minister Steve Webb ruled out such as step as it could see member trust in schemes “severely damaged”.,WebsitesWe are not responsible for the content of external sitesLink to LCP 2016 Accounting for Pensions report
The latter is a new team, headed by Fabrice Susini. It consists of an alternative pan-European SME lending platform. BNP Paribas AM, which rebranded from BNP Paribas Investment Partners just over a week ago, said the platform would enable it to offer clients access to scale in direct lending “by providing a powerful origination engine to ramp up SME loan funds”. The global loans team is headed by Vanessa Ritter, while the real assets, SME lending and structured finance team is headed by Laurent Guenier.BNP Paribas has hired heads for all of these areas bar structured finance in the past three months. It hired Philippe Deloffre and Karen Azoulay as heads of real estate debt and infrastructure debt in March and April, respectively, while Christophe Carrasco joined as head of SME lending in May. The structured finance team is led by Stéphane Blanchoz. David Bouchoucha, who is leading the new private debt and real assets group, said: “Private debt and real assets are increasingly becoming an essential part of investors’ asset allocation, because they bring steady income and diversification of credit exposure.“Within this area we aim to provide value to our clients through a unique ability to source assets by combining the BNP Paribas Group’s origination with innovative external origination channels; a robust process based on strong credit analysis, quantitative techniques, and ESG.” BNP Paribas Asset Management has created a private debt and real assets investment group.It brings the asset manager’s teams for real estate debt and infrastructure lending together with its SME lending and structured finance teams.BNP Paribas has combined investment teams for syndicated loans, direct loans, and private bonds that finance corporates or real assets.The three teams involved are: real assets, SME lending and structured finance; global loans; and “SME Advanced Solutions”.
JP Morgan Asset Management131,707Manager MiFID II requires asset managers to unbundle the cost of investment research from that of trading securities, which in turn requires an explicit price for research to be set. So far the vast majority of managers have decided to absorb research costs onto their balance sheets, with just Fidelity and Amundi among Europe’s biggest providers currently planning to pass the cost on to clients.A spokeswoman for Amundi told IPE the firm had not made a final decision on the matter, although CEO Yves Perrier has given a strong signal that the company was leaning towards passing the costs on.Respondents to the CFA survey predicted an average annual cost of 10 basis points for equity research, and 3.5 basis points for fixed income, currencies and commodities. However, the CFA noted that there was a “wide range of responses”.CFA members working at providers running more than €250bn were more likely to expect their employer to pick up the cost of external research (67%), while 42% of those working for managers with less than €1bn expected this.Overall, 53% of respondents expected their employers to foot the research bill, with 15% expecting them to pass it on to clients. One in five were unsure and 12% expected a mixed attribution of costs.The CFA added: “Respondents raised concerns over a possible competitive disadvantage for smaller firms, echoing industry fears that the changes could result in the loss of some small businesses and further industry consolidation in favour of major global organisations.”Who pays? How Europe’s top institutional managers will pay for researchIPE is tracking asset managers’ decisions on the unbundling of MiFID II research costs based on our annual list of the Top 120 European institutional managers.So far, 49 managers have declared their intentions, with just four planning to charge clients directly. Amundi and its subsidiaries Pioneer and CPR will charge clients, as will Fidelity as part of a global overhaul of its equity fund fee structure.For updates/queries relating to this list, please contact [email protected] updated: 21 November 2017 BlackRock911,955Manager Kempen Capital Management32,274Manager Aberdeen Standard Investments393,759Manager Newton Investment Management43,719Manager J O Hambro Capital Management14,773Manager Notes: AUM figures relate to European institutional assets only, and are expressed in euros. Data from IPE’s Top 400 Asset Managers survey, correct to 31 December 2016.This article has been amended to clarify that Amundi has yet to fully confirm its intentions regarding research cost unbundling. State Street Global Advisors304,949Manager Deutsche Asset Management230,789Manager Allianz Global Investors91,402Manager Insight IM537,983Manager Invesco34,004Manager Credit Suisse AM215,458Manager Erste Asset Management37,606Manager Schroders139,634Manager Hermes Investment Management33,423Manager Fidelity International23,281Client Robeco Group80,105Manager CBRE Global Investors41,000Manager More than three-quarters of European investment professionals expect to source less research from external providers after MiFID II is implemented in January, according to a survey by the CFA Institute.The poll of 365 CFA members from across Europe found that 78% expected to source less research from investment banks, while 44% said they would beef up their internal research capabilities.Rhodri Preece, head of capital markets policy for EMEA at the CFA Institute and author of the report, said the organisation supported the aims of MiFID II but warned “the rules are not a panacea”.“Some respondents were concerned about unintended consequences, including a decrease in the availability of research and a reduction in research coverage,” Preece added. CompanyAUM (€m)Who pays? Muzinich & Co24,648Manager AXA Investment Managers125,466Manager Janus Henderson Investors40,997Manager BlueBay Asset Management18,565Manager Record Currency Management48,552Manager RBC Global AM31,441Manager Investec Asset Management21,142Manager CPR Asset Management27,536Client Vanguard Asset Management61,837Manager Legal & General IM792,950Manager NN Investment Partners36,382Manager Northern Trust AM67,379Manager First State Investments11,282Manager Union Investment63,812Manager UBS Asset Management169,643Manager Pioneer Investments34,059Client Amundi309,169Client Barings25,894Manager MFS Investment Management24,643Manager Unigestion14,968Manager Morgan Stanley IM76,776Manager TwentyFour AM9,175Manager Aviva Investors42,856Manager Franklin Templeton Investments19,440Manager Columbia Threadneedle Inv.63,545Manager HSBC Global AM90,636Manager Goldman Sachs AM223,210Manager T Rowe Price11,759Manager Baillie Gifford & Co52,857Manager Russell Investments24,922Manager Vontobel Asset Management51,276Manager
The procurement of long/short risk premium mandates, however, was part of a regular process at AP7, she said, with the fund having had the mandates in place since 2005. Ingrid Albinsson, AP7Albinsson told IPE a year ago that the fund was considering the use of risk factors for diversification purposes.Asked how much of the portfolio AP7 would allocate to these risk-factor mandates, Albinsson said this had not yet been fixed.“The procurement is in an early stage and the allocation has not been decided, more than the fact we will be looking for one to three mandates as described in the procurement information,” she said.The risk-factor investments will focus on equities and currency exposure, she added.AP7 operates a large equity fund – mostly a passive global portfolio with an extra 25% of market exposure through leverage, and a smaller fixed-income fund. The two funds are combined for individual savers using a life-cycle approach.The passive global part of AP7’s equity fund is managed by external managers, and on top of this, it has a number of private equity and what it calls “active alpha” managers.The deadline for applications in response to the tender for advice is 8 March.In May 2017, an IPE focus group poll showed most European pension funds in a sample had allocated funds to strategies using risk-factor investing concepts. Swedish national pension fund AP7 has put out a tender for advice on “active alpha” procurement as the fund prepares to add risk-factor investments to its portfolio for the first time. AP7, the SEK430bn (€43.1bn) default provider of the premium pension portion of the country’s state pension, said it was looking for between eight and 12 managers to run strategies in three categories.These categories are long/short equity, long/short risk-factor strategies and risk-reducing strategies. AP7 is looking to allocate five to 10 mandates in the first category, between one and three mandates to the second and between one and three for the third category.The pension fund’s CIO Ingrid Albinsson told IPE: “The specification of risk-premium mandates in the search is part of the diversification effort that has been going on since last year in the equity fund.”