Physiotherapists scheme notes ‘debates’ with DNB over alternatives

first_imgThe Dutch pension fund for physiotherapists has said “constructive debates” are sometimes required to convince the country’s regulator that investments in more innovative asset classes are required.René van Pommeren, member of the board and the investment committee at the €2.5bn SPF Fysiotherapeuten, said the fund had occasionally been restricted in its asset allocation due to its funding ratio.However, he told IPE’s How We Run Our Money that the scheme’s fund-of-hedge-funds portfolio was divested, following a review, due to high costs – “one issue we like to keep under control”.“As part of this review, we decided to change the private equity and hedge fund portfolios in 2013,” he added. Instead, the fund has now invested 4% of assets in hedge funds and a further 2% in private equity.He said it had not always been easy to win the support of De Nederlandsche Bank (DNB) for its strategy, despite a current funding ratio of 105%, including its 2% unconditional indexation, being above the statutory minimum.“We do have constructive debates with the regulator about investments in innovative asset classes, such as private equity and hedge funds,” he said.Van Pommeren said that, while his fund relied on asset-liability models (ALM) for many aspects of its investment strategy, the approach was not always useful for alternatives, as the modelling relied on past data.“We also seek qualitative assessments – for example, through portfolio plans, in particular for alternatives where we do not have much reliable historical data,” he said.The DNB has previously warned the industry about an over-reliance on alternative assets.In a letter to the industry from mid-2012, the regulator’s head of pension fund supervision Olaf Sleijpen said: “The cost structures of alternative investments are not always in proportion to the added value of the asset class views.“The DNB has seen that this can lead to diversification benefits being overestimated and management and specific risk characteristics, such as tail and liquidity risks, being underestimated.”For more on the investment strategy of SPF Fysiotherapeuten, see How We Run Our Money in the current issue of IPElast_img read more

PFA boosts private equity investment as risk-return profile improves

first_imgPFA , Denmark’s largest pensions institution after ATP, has stepped up its investment in private equity in the first quarter, saying returns relative to risk are better in the sector than in the listed market.Reporting returns for the first three months of this year, the labour-market pensions provider said investment returns fell to 2.8% before pensions tax (PAL) for unit link products, down from 3.7% in the same period the year before.For with-profits pensions, however, investments produced a 4.0% return, up from 0.5% in the corresponding period in 2013.Jesper Langmack, director and head of equities at PFA Asset Management, told IPE: “We increased our private equity because we see better risk-reward compared to the listed market.” This year, PFA sold direct equity investments in health and roadside-assistance company Falck and commercial bank FIH at very good returns, he said. PFA invested in FIH in cooperation with ATP, and the two have also co-invested in DONG Energy. The DONG Energy deal, which also attracted funding from vehicles run by Goldman Sachs, was controversial at the time and led to a split in the coalition government. Langmack  was positive about the provider’s involvement in such deals alongside ATP. “As the leading investor together with ATP on the Danish market we get access to the best deal flow and normally exclusivity in the process, so we can de-risk the transaction in the process to minimise the tail risk.”“Furthermore, our clients are moving from defined benefit to mark-to-market products, so the capital consumption is much lower, allowing PFA to buy more risky assets than before,” he said.The investment deals with DONG, FIH and Welltec gave PFA a global footprint in the market, Langmack said, adding that this provided the institution with further access to good deals.At the same time as expanding its private equity investment, PFA has increased its holdings in Danish equities, Langmack said.“We are now the largest Danish shareholder on most Danish large caps,” he said.As examples of this, he said the pensions provider now had DKK4bn (€536m) in Novo and DKK2.5bn in Mærsk.“As well as this, we have increased our investments in high-dividend European equities to more than €1bn as part of our new strategy, producing high and stable returns of 6%,” Langmack said.This year Danish equities had outperformed global markets by 17%, he said.PFA also reported that contributions fell to DKK6.35bn in the first quarter from DKK6.67bn in the same period the year before.The reason contributions were down year-on-year was in part due to the regulator’s announcement in the Autumn of 2013 that there would be new rules on the transfer of pensions from with-profits products to unit link pensions, it said.This had kept the market for transfers on hold, it added.The draft law on how transfer sums should be assigned came into force on May 15, 2014, PFA said, adding that the company has since re-opened the option for customers to switch savings internally from with-profits products to its unit link pension product PFA Plus.Ongoing contributions, however, rose by nearly DKK200m in the first quarter compared to the first quarter 2013 to DKK4.48bn, PFA said this growth reflected the many new companies and organisations that had decided to switch to PFA as pension provider in 2013 and 2012.Total assets slipped to DKK408.1bn at the end of March 2014 from DKK417.5bn at the end of December.The solvency ratio increased to 254% at the end of the quarter from 240% at the end of 2013.last_img read more

Germany seeks to simplify infrastructure investments for pension funds

first_imgBut he stressed that any instruments financing infrastructure should serve merely as a means to the end of financing occupational pensions – not the other way around.“We would love to take on our share of responsibility for the further development of infrastructure, but only if it is in the interest of employees and employers, as they are focusing on security and sufficient returns in occupational pension plans,” he added.Stiefermann agreed there were “too tight shackles” for pension funds with respect to institutional investment in infrastructure and said greater regulatory flexibility would be welcomed.Similarly, the German insurance association GDV said it was willing and able to help the government finance infrastructure projects, but, as with the aba, it said it required security and sufficient returns for these investments.According to GDV figures, approximately €3bn of the €1.4trn in the portfolios of German insurers is currently invested in infrastructure.Alexander Erdland, president at the GDV, argued that infrastructure should get its own regulatory risk category, to preserve “room for manoeuvring”.A commission installed by the government in late August – which also includes insurer representatives – estimated that Germany would need around €7.2bn annually over the next 15 years for infrastructure investments, in addition to funds already earmarked.Meanwhile, a survey by infrastructure specialist Yielco has found that most German institutions (70%) already have plans “in a drawer” to increase infrastructure investments and want eventually to achieve an allocation of about 3%.The three-year analysis (2011-14) of 350 German institutional investors also found that 50% of the already invested assets came from insurers, followed by Versorgungswerke as the second largest group of investors.According to the survey, all institutions planned to widen their focus globally, yet felt hindered by regulatory challenges.For more on German institutional investors’ thirst for infrastructure, see the October issue of IPE German finance minister Wolfgang Schäuble has announced he will check whether there are “unnecessary regulatory hurdles” for institutional investors when it comes to infrastructure investments.At the same time, transport minister Alexander Dobrindt confirmed that he aims to increase public/private partnerships for public infrastructure to avoid having to take on more loans.The country’s institutional investors, meanwhile, largely welcomed the announcements, albeit with some reservations.Klaus Stiefermann, managing director at the pension fund association aba, told IPE: “We always welcome considerations around investment opportunities for occupational pension plans to find new ways of financing occupational pensions in the interest of all stakeholders.”last_img read more

ECB move provides ‘toxic cocktail’ for pension scheme funding

first_imgThe impact on pension scheme funding as a result of the European Central Bank’s (ECB) quantitative easing (QE) needs to be managed and considered, consultants say.Yesterday, Mario Draghi, ECB president, announced a €1.1trn programme to purchase euro-zone sovereign bonds in a bid to boost economic growth and stave off inflation.However, as additional capital flows into sovereign bond markets across the currency union, historically low yields will be squeezed even further – affecting the discount rate used in pension fund liability accounting.Research by Mercer in Ireland found deficits in defined benefit (DB) schemes for companies on the Irish Stock Exchange, and semi-state companies, increased by €10bn over 2014 as yields across Europe and the UK fell over the year. “Yesterday’s announcement will further increase liabilities and, in many cases, deficits,” the consultancy said.“The impact of QE, including falls in bond yields and the weakening of the euro, will cause further challenges for plan sponsors and trustees alike. Funding proposals, already facing pressure, may go off-track and need to be re-cast.”Aon Hewitt global head of asset allocation, Tapan Datta, said the cocktail of ECB capital moving into bond markets – lowering yields and forcing funds to look elsewhere – was almost toxic.“It could be worse if equity markets were weakened, but this has not happened,” he said. “It would have completed the damage that has been done to funding levels.”With funding levels, particularly in UK pension funds, now lower than they were five years previous, Datta said it gave credit to arguments for trustees to take liability risk management more seriously.However, he said, on the other side, many of the developments have been unexpected, and nobody predicted oil prices would fall 60% and 10-year UK Gilts to still yield less than 1.5%.“This is a rare market eventuality, which has caught a lot of people on the hop,” he added.Mercer UK partner Alan Baker said there was no real impact currently, but that this was because QE had already been priced in by markets.For UK pension funds, however, the outlook for funding was less rosy.“There will now be a downward pressure on UK Gilts with a shift from investors in euro-zone bonds,” he said.He said they would also be supported by a growing UK economy, which would also be boosted by economic growth for its euro-zone partners.“It is not entirely clear which one is going to win,” he said.“For European pension funds, the QE will not help them right now, as rates will be pushed down and stay down.“But in the long-run it demonstrates the bank will to do something and stimulate the European economy, which will be a good for them.“It is to some extent positive, but it is painful time now.”In the Netherlands, Mercer and Aon Hewitt both warned of significant negative funding effects for pension funds as a result of the expansionary monetary policy.last_img read more

ATP sets sights on alternative risk premia with new long-term guidelines

first_imgATP, which runs Denmark’s labour-market supplementary pension fund, announced the new long-term guidelines for its investment portfolio and said that while the change was not radical, the new mix was less weighted to rates and inflation factors and more towards alternative risk premia.The DKK705bn (€94bn) pension fund has set the guideline as part of its portfolio construction overhaul, which focuses on a set of four underlying risk factors that assets represent, rather than grouping each of those assets into one of five risk classes.The guideline only concerns ATP’s investment portfolio, or the return-seeking part of its overall assets, which consists of its bonus reserves worth approximately DKK100bn.The bulk of the pension fund’s assets are held in its hedging portfolio, designed to back the pension guarantees it gives. The new long-term guideline for the investment portfolio allocates 35% of its investment risk to each of the “equity” and “interest-rate” factors, and 15% each to the “inflation factor” and “other factors” groupings, according to information in the pension fund’s annual report.It said the guideline should be seen as a long-term anchor for risk allocation, and that the actual portfolio allocation might deviate from the guideline at any given time due to market conditions. Carsten Stendevad, chief executive at ATP, told IPE: “While the portfolio construction approach is new, the changes in relative risk weights are not dramatically different.“Compared with the old guidelines, it means less risk weights to interest rates and inflation factors, about the same to equity, and more to other premiums, which includes illiquidity premiums and liquid alternative risk premiums.”Emphasising that the guideline did not have to be adhered to in the short term, he said ATP was actually deviating from the guideline by quite some distance at the moment.“Right now, we have 22% of our risk in the interest-rate factor and half in equity,” he said.“In a normal market environment, we would expect to be much closer to the guidelines, but, given where rates are now, this is where we are.”The new guideline represents risk weighting and thus cannot be seen in terms of traditional asset allocation percentages, and does not indicate proportions of capital, he said.As an example, he pointed out that equities were four times riskier than bonds.Stendevad first unveiled details of the new investment strategy during his keynote speech at last year’s IPE Conference & Awards in Barcelona.For more on ATP’s investment strategy and changes implemented since Stendevad arrived in late 2013, read his recent interview with IPElast_img read more

PKA poaches PFA’s sales chief to spearhead commercial push

first_img“I am quite sure Søren is the right man for PKA to do this task,” Frydenberg said.Bang Palfelt has been head of PFF & organisations at PFA since 2014 and was previously head of clients, specifically in charge of sales and advice to companies, organisations and pension funds, according to his profile on networking site LinkedIn.PFA confirmed his most recent role, but a spokesman said the firm had no other comments on Bang Palfelt’s move.PFF is the pension fund resulting from the merger several years ago of the labour-market pension schemes FunktionærPension and Dansk Erhverv Pension, which covers clerical workers and is run by PFA.PKA, which runs three labour-market pension funds in the social and healthcare sectors, has said that, with its new, more flexible pension product PKA Private, it wanted to attract private employees, the self-employed and corporate pension schemes.Its first aim is to win as customers the 10,000 private employees and self-employed people who are members of the trade unions behind PKA’s pension funds.But it says it is also ready for other companies, pension schemes, institutions and non-governmental organisations concerned with the social and healthcare sector. PKA, the DKK250m (€33.6m) Danish labour-market pensions provider, has hired a sales expert from the country’s largest commercial pension fund, PFA, to lead the new drive to win customers both individually and within corporate contracts it announced last week.Søren Bang Palfelt, who has been responsible at PFA for sales and advice to companies, organisations and pension funds, will start his new job at PKA on 1 December.Tomas Frydenberg, executive director in charge of membership matters, said: “PKA is open for everyone in the social and healthcare sector, and, for many years, we have delivered some of the market’s best returns and lowest costs.”PKA had a clear ambition to provide pension products that matched all needs, he said, adding that it was better that PKA did this rather than one of its competitors because it had many years of experience with precisely this sector of the labour market.last_img read more

​AP7 seeks managers for almost €2bn of active alpha mandates

first_imgSweden’s AP7 pension fund, which manages the default option within the state Premium Pension System, has launched a search for external managers to run up to SEK20bn (€1.9bn) of active alpha managed assets.In an EU tender notice, the fund — which currently has a total of SEK423bn of pension assets in its equity and bond funds — said it foresaw creating between six and 10 mandates.The pension fund said: “The objective of the tender is to render discretionary asset management services for active alpha management.”AP7 has been preparing for this tender for almost a year, with the new mandates part of the diversification effort that has been happening in the equity fund since 2017, as CIO Ingrid Albinsson told IPE back in February. The tender is divided into five lots including four for long-short equities management.The equities mandates cover four regions: US, Europe, Japan and global/multi-region.The fifth lot is for currency management, according to the EU tender notice.AP7 said it only envisaged inviting between one and three candidates for each of the five lots.The deadline for receipt of tenders or requests to participate is 26 December at 5pm Swedish time. The procurement process is being run by the Swiss firm PPCmetrics.The mandates will last for 36 months, after which there will be the option of two extensions of two years each, according to the notice.AP7 said all information about the tender was provided in the procurement guidelines, and instructions as to how to request the documents were on its website.last_img read more

Vervoer replaces Robeco with Achmea for fiduciary management

first_imgCommenting on the outcome of the search, Willem Brugman, the pension fund’s director, insisted that Vervoer did not have a single complaint about the service provision by Robeco, which has been its manager since 2012.Since then, Robeco has been taken over by Japanese financial services group Orix, saw several board members leave and divested its manager selection subsidiary Corestone in a management buy-out.In an interview with IPE’s Dutch sister publication Pensioen Pro, Brugman said his scheme switched to Achmea for fiduciary management.“Achmea focuses on this activity, whereas Robeco is an asset manager also offering fiduciary services,” he explained.Brugman highlighted that the decision to leave Robeco had been difficult, as both service provision and results were fine, and added that the Rotterdam-based manager had been in the race until the last moment.He said the selection criteria were cultural match, quality, continuity of service provision and the scope of the proposition.“We concluded that continuity would be better guaranteed at Achmea, as it is a fiduciary manager also offering asset management.”Brugman added that the pension fund believed Achmea would keep investing in all aspects of integrated asset management as – contrary to Robeco – it already had several pension fund clients of a similar scale as Vervoer.Brugman further made clear that Achmea would also be able to carry out Vervoer’s investment administration, and could make it fit for reporting to, for example, supervisor De Nederlandsche Bank, a service Robeco did not offer.“This would unburden our own administrative bureau,” he said.The director further said that the pension fund had decided to not divide its fiduciary mandate across several managers.“The management of interest and currency hedge, for example, is that important that we want our fiduciary manager to be as close to it as possible.”Brugman declined to provide details about financial aspects of the transition.He said that the transition risks included the move of the interest and currency overlay.“The other investments, most of which are placed with other managers than Robeco, won’t change for the time being,” he said.The mandatory sector scheme covers the pensions of workers in the road haulage, private bus and taxi transport, inland waterway and crane hire sectors.It has 670,000 participants and pensioners. Vervoer, the €28bn Dutch sector scheme for private road transport, has chosen Achmea Investment Management as its “integrated asset manager” as of year-end.The industry-wide pension fund, which is dropping pure play asset manager Robeco, said Achmea could provide “a full service solution and already had several customers of a similar scale”.The services to be outsourced to Achmea are the selection and monitoring of asset managers, the management of interest and currency overlay as well as the management of collateral for derivatives transactions.Vervoer made clear last year that it would start exploring the options for what it calls “integrated asset management”. The planned retendering of the fiduciary management contract was revealed in April 2018. last_img read more

Gold Coast cottage sells after almost 50 years in one family

first_img45 Milton Ave, Paradise Point. 45 Milton Ave, Paradise Point.Mr Hill said it was a “great price” for the street.“The property two doors down sold six weeks ago for $630,000,” he said.The highest price paid on the street was $795,000 in 2017 for a luxury villa at No. 54. 45 Milton Ave, Paradise Point sold for $682,000.STEP back to the 1970s in this Paradise Point cottage.The three-bedroom cottage on a 506sq m block on Milton Ave sold under the hammer for $682,000.“ It was one of the first houses on the street,” Ray White Sovereign Islands agent Matt Hill said. Walking distance to the Broadwater and cafes and restaurants.“The family built the house and grew up there. “The two sons moved back to Brisbane while the mother stayed on in the house until she passed away.”The property, complete with wallpaper, an original kitchen and Hills hoist clothesline, went to auction last weekend.More from news02:37International architect Desmond Brooks selling luxury beach villa17 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoIt attracted a small crowd keen to see what life was like almost 50 years ago. Everything is in original condition.“We had 11 registered bidders and the property sold for five per cent above the reserve price so it was a great result,” he said.“A local buyer bought ended up buying it.“He is a builder but will actually have family living in there for the time being. “It won’t be knocked down for some time.”last_img read more

Gold Coast suburb fastest growing housing market in Queensland and No. 2 in Australia

first_imgPimpama has claimed second place on Australia’s housing hot spot list. Gainsborough Greens is just one of many new housing developments in the area.A GOLD Coast suburb has been dubbed the fastest growing housing market in Queensland for a second year running.Pimpama has claimed second place on Australia’s housing hot spot list.The list of 20 of the nation’s strongest markets was revealed this week in the Housing Industry of Australia’s latest Population and Residential Building Hotspots report.An area qualifies as a hotspot if at least $150 million worth of residential building work wasapproved in 2016/17 and its rate of population growth was faster than the national average. Tribeca’s Symphony development is another new one at Pimpama.Mirvac’s Queensland Residential general manager Warwick Bible said buyers were flocking to its latest development at Pimpama, Gainsborough Greens.“Gainsborough Greens is among the Gold Coast’s fastest selling residential communities, with new homeowners attracted to the area’s open space, park facilities and strong sense of community,” he said.“Gainsborough Greens residents enjoy access to 6km of walking and bicycle tracks, an easy commute to Brisbane and Gold Coast CBDs, and a short drive to several schools, making it an attractive place to put down roots and raise a family.” STAND OUT FROM THE CROWD THE AUCTION RESULT NO ONE SAW COMING Pimpama was ranked number one in the housing hot spot list last year after it saw its population grow at a rate of 35 per cent during 2015/16 and $340 million worth of building approvals.But the Mickleham-Yuroke area of Melbourne has knocked it from the leading position with population growth of 35.3 per cent and $222.9 million in building approvals. Pimpama has been dubbed the fastest growing housing market in Queensland. Photo: David ClarkPimpama’s population grew by 30.8 per cent and had more than $352 million worth of residential properties approved during the past financial year.Other Queensland suburbs to make the list were Coomera, South Brisbane and Ipswich’s Springfield Lakes, ranked 12th, 16th and 17th respectively.More from news02:37International architect Desmond Brooks selling luxury beach villa16 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agocenter_img Restaurants at Pimpama. Photo: David ClarkHIA senior economist Shane Garrett said the south eastern corner was the focus in Queensland.“Population growth in the south east has accelerated over the past year, indicating that Queensland is starting to see solid employment gains,” he said.“Coomera is also a regular on the hot spots list, joined by South Brisbane where the apartment boom has resulted in significant approvals and population growth.”last_img read more