Speaking during a conference call, he also said he saw CANDRIAM positioned in a “sweet spot”, able to take advantage of a number of market opportunities.“We are small enough to continue to be flexible, to continue to focus on the local position in each country in Europe – we have 11 operations today – to have this dedicated team with a lot of proximity, and our entrepreneurial spirit and the company culture will remain the same,” he said. However, Abou-Jaoudé also said the backing of “one of the strongest financial groups” would grant it the resources and strength to achieve new objectives and targets.Addressing the two years between DAM’s announcement that it was seeking a buyer and the eventual acquisition by NYLIM, he said: “Clearly, after this period of uncertainty that last two years now, with the change of ownership plus uncertainty over our parent company, this new start, this fresh start will help us to regain business.“We can see the momentum is already in place internally. And, in terms institutional clients, consultants and third-party distributors, there is a lot of interest that is coming over the last 10 days after we signed.”DAM first announced it was up for sale in 2012, it entered exclusive, but ultimately fruitless, talks with Hong Kong’s GCS Capital in late 2012.Over last summer, FinEx Capital then made a bid for the company, but the firm eventually began exclusive talks with NYLIM, culminating in the €380m transaction.CANDRIAM said it would look to build on experience in corporate and high-yield debt, biotechnology, socially responsible investment and European and quant equity strategies.As of the end of December, DAM managed €73bn in assets. Dexia Asset Management (DAM) has rebranded following its recent sale to New York Life Investment Management (NYLIM), and is hopeful that with a new name and new corporate parents, it will be able to have a “fresh start”, its chief executive has said.In a statement, Naïm Abou-Jaoudé said the new name, CANDRIAM, was an acronym of what it regarded as its core company values – conviction and responsibility in asset management.“These two values drive everything we do,” Abou-Jaoudé said. “They are the roots of our expertise, our innovative ideas and a great discipline in our investment processes.”The chief executive acknowledged that the €380m acquisition by NYLIM ended a “period of uncertainty”, and that it might be a while before it can attract new business again.
More than half of Swiss pension funds will “disappear” in the coming decade, according to a newly formed group of industry experts seeking to lend a voice to the French-speaking part of Switzerland in the debate over the future of second-pillar system.The Group de Refléxion is made up of union representative Aldo Ferrari, who is also a member of the top supervisor OAK, consultant Bernard Perritaz, actuary Stéphane Riesen, lawyer and professor Jacques-André Schneider and actuary Fabrice Welsch.In its first statement, it predicts “massive consolidation” in the second pillar and argues that this will ultimately be in pension fund members’ interest.“Over the next 10 years, half of all Swiss Pensionskassen will disappear,” it says. The group also argues that there should be only one type of Pensionskasse, and that the wholly insurance-based model should “vanish”, as it is “doomed to fail eventually”.In the wake of the cost debate in the second pillar and the low-interest rate environment, insurers have faced scrutiny over allegedly non-transparent cash-flows and cost structures.The Group de Refléxion also spoke out against the “individualisation” of the second pillar, claiming that increasing individual choice for pension fund members contradicted the solidarity principle.Meanwhile, the Swiss government sparked a heated debate in the industry with a proposal to forbid lump-sum payments from a Pensionskasse on retirement.Based on claims that some people were exhausting their retirement funds too quickly and then drawing on emergency funds, the government wants money saved in the mandatory system to be paid out in monthly payments only.But the Swiss pension fund association ASIP warned against changing the system without reliable statistics or information on whether lump-sum payouts were really being misused to a considerable extent.Elsewhere, the government changed the funding of the top supervisory body Oberaufsichtskommission (OAK), as the authority reported a major surplus in funding in its second year of existence.In 2012, after its first year of operation, the OAK reported a CHF1.6m (€1.3m) surplus and in 2013 a surplus of CHF2m.
CIO Stefan Ros previously said of the fund’s interest in risk premia: “The hedge fund industry in general is very expensive, so we’ve tried to be creative and look for alternative strategies that can achieve what the hedge funds do but with significantly lower costs.”Hansson added that the fund also selected a real estate manager but had yet to finalise the paperwork for the appointment.As a result, SPK has now appointed managers for all of its planned alternatives portfolios.Hansson called the new asset allocation the “biggest change in the history of the fund”, with holdings in 10 asset classes rather than the previous two.It plans to allocate 20% of assets to alternatives – spread across infrastructure, property, hedge funds and alternative risk premia – with 30% in equities and the remaining half of the fund in fixed income. Sparinstitutens Pensionskassa (SPK) has appointed two new managers as it moves into infrastructure and grows its exposure to alternative risk premia.The SEK24bn (€2.6bn) fund for the Swedish banking sector recently overhauled its investment strategy, moving away from an approach that had 70% of assets in fixed income and the remainder in equities.Peter Hansson, the fund’s chief executive, told IPE JP Morgan Asset Management would be in charge of its infrastructure portfolio, accounting for 4% of assets.Ramius Alternative Solutions has also been put in charge of SPK’s 8% allocation to alternative risk premia, complementing the previous appointment of Brummer & Partners.
Axiom Alternative Investments – Gildas Surrey is set to join the asset manager as a senior analyst and partner at the beginning of June. Surrey will be based in the London office. He joins from BNP Paribas, where he was a senior analyst in the European banking sector. He also worked at Citigroup and Merrill Lynch.Hermes Investment Management – Ben Patton has been appointed associate director in the investment manager’s real estate debt team. Based in London, Patton will be responsible for the origination and execution of commercial real estate debt transactions. He will report to Vincent Nobel, head of Hermes’ real estate debt platform. Prior to joining Hermes, Patton was vice-president of corporate banking at Barclays Real Estate. Scottish Widows, AMP Capital, Pinsent Masons, Axiom Alternative Investments, HermesScottish Widows – Emma Watkins is set to join the UK insurer as director of bulk annuities as the firm sets up a new business unit. Watkins is currently a partner at consultancy LCP, where she advises pension schemes on bulk annuity deals. She joins Scottish Windows, the insurer owned by the Lloyds Banking Group, on 1 June. She will lead the development of the firm’s new bulk annuities business. Watkins joined LCP from US insurer MetLife, where she led business development for its then bulk annuity business.AMP Capital – Damien Stanley has joined the infrastructure manager as a principal, based in the London office. Stanley will join the infrastructure equity team, reporting to head of origination for Europe Simon Ellis. Stanley was previously chairman of the UK subsidiary of Whitehelm Capital and has also been head of infrastructure investment advice for the EMEA at Morgan Stanley.Pinsent Masons – Ben Fairhead and Julian Sladdin have been promoted to partners in the law firm’s pensions disputes department. The promotions will take effect on 1 May. Fairhead is a litigator in pensions disputes including professional negligence and regulatory disputes. Sladdin specialises in dispute resolution in the Higher Courts with a particular focus on public law challenges.
Property, infrastructure and emerging market equities are likely to be boosted by a global focus on climate change mitigation, research conducted by Mercer and backed by the World Bank has concluded.The in-depth report, also backed by government departments in the UK and Germany, examines four potential scenarios that include governments succeeding in limiting temperature increases to 2°C, a 3°C scenario and two where the average temperature is 4°C above the pre-industrial average.The first two scenarios – labelled transformation and coordination – are likely to see “positive” additional returns for both infrastructure and emerging market (EM) equities, according to the report, ‘Investing in a time of climate change’.It says further gains can also be expected from real estate, as the asset class benefits from changes in the technology sector. However, the report also warns that agriculture and timber are the two real-asset sub-classes most likely to be affected, either positively or negatively, depending on which of the four scenarios occurs.The report adds: “Developed-market sovereign bonds are not viewed as sensitive to climate risk at an aggregate level (they are driven by other macro-economic factors), with exceptions, such as Japan and New Zealand.”The report says developed-market global equity is likely to be affected, irrespective of which of the four scenarios occurs, with the coal sector predicted to see average annual returns falling from of 6.6% to 5.4% over the next 35 years.While the report warns that coal returns could fall as low as 1.7% per annum over the 35-year timeframe, other sources of energy – such as renewables – stand to benefit.“Renewables have the greatest potential for additional returns,” it says.“Depending on the scenario, average expected returns may increase from 6.6% p.a. to as high as 10.1% p.a.“Oil and utilities could also be significantly negatively impacted over the next 35 years, with expected average returns potentially falling from 6.6% p.a. to 2.5% p.a. and 6.2% p.a. to 3.7% p.a., respectively.”The Mercer report accepts that it could be difficult for investment committees to take on board individual or even sector-specific “winners and losers”, noting that it would require the committee to engage with asset managers directly.It suggests that investors adopt low-carbon indices, or that “more sustainable” variations of the existing broad market indices be adopted for passive mandates “to provide investors with the means to hedge climate exposure”.The consultancy said the recommendations within the report – supported by asset owners and managers worth $1.5trn (€1.3trn), including the UK’s Environment Agency Pension Fund and AP1 – would be re-examined in 2016, with partner investors seeing how the recommendations affected their portfolios.,WebsitesWe are not responsible for the content of external sitesLink to Mercer’s ‘Investing in a time of climate change’ report
He said it was an important addition to PGGM’s growing portfolio of green energy investments, which have now reached a total value of around €900m within the infrastructure asset category.PGGM’s total infrastructure investments now amount to €5.6bn.The new wind farm, which will become fully operational this summer, will provide energy for 340,000 homes, PGGM said.The project is part of the German government’s Energiewende policy to move the country quickly to low-carbon electricity production.The wind farm has been built by German utility EnBW, which is keeping a 50.11% stake in the project.EnBW will also maintain the power facility.Under current German regulations, Baltic 2 will benefit from around 11 years of fixed energy prices and another nine of downside protection when it sells electricity at market prices.Roeters van Lennep said Germany still needed a lot of capital to fulfil its Energiewende ambitions, and that PGGM wanted to contribute. “Our clients fully support investments in the energy transition,’’ he said. PGGM said high wind speeds in the farm’s location in the German part of the Baltic Sea meant the 288MW installation was expected to generate more than 1,200 Gwh of green power a year.This will replace electricity now generated by conventional power stations and create CO2 offset of 900,000 every year, it said. Dutch asset manager PGGM is buying a big stake in a German offshore wind farm, co-investing with Macquarie Capital in a deal it says will give a good financial return as well as fit in with its clients’ aims regarding sustainability. PGGM said it was investing in the new German offshore wind farm Baltic 2 alongside Macquarie Capital, which agreed to buy a 49.89% stake in the project earlier this year.Frank Roeters van Lennep, head of infrastructure at PGGM, said: “With Baltic 2, we will realise a good financial return, and, with our investments, we can take a next step in helping to make Europe’s energy infrastructure more sustainable.”A spokesman for PGGM declined to disclose the exact size of its stake or what it paid but described the stake as “substantial”.
The lawsuit – dubbed the “‘Flash Boys’ case”, after a best-selling book that exposed the practices of high-frequency traders (HFTs) – revolves around so-called “dark pools”, a trading venue where investors can trade stocks almost anonymously, preventing large block orders from influencing the market.Within a dark pool, investors do not have to contemporaneously reveal their buy or sell orders to others.The orders are therefore less likely to be picked off by HFTs looking to beat investors slower to react to new information.However, the lawsuit alleges Barclays not only allowed HFTs to trade in its own dark pool (Barclays LX) but encouraged them with unfair perquisites over other traders.The plaintiffs said the presence of so many predators within the pool meant institutional investors trading there suffered harm because share prices were influenced to their detriment.Meanwhile, Barclays’s marketing literature was claiming that very little of the trading within the dark pool was “aggressive”, when in fact, by May 2014, this kind of trading made up more than 30% of the activity, according to Barclays’s own analysis quoted in the court papers.The plaintiffs accused Barclays of deceit by concealment, unfair competition and false advertising.Furthermore, they claimed the exchanges rigged their markets in favour of the HFT firms, by offering products which shave infinitesimal fractions of a second off the time it takes to receive and respond to information from the exchanges.AP1 estimates it lost around SEK275m (€29.4m) over five years.However, the judge found the exchanges to be immune from the lawsuit, saying: “The SEC [which regulates the exchanges] has ample authority and ability to … address any improprieties by the exchanges.”He also said the plaintiffs failed to adequately plead that Barclays committed any manipulative acts, “and their claims do not allege reasonable reliance [on Barclays’s statements]”.An appeal has been lodged, but AP1 has now said it will step down as lead plaintiff if the appeal is heard in the courts, although it will remain as a passive member of the class if a court certifies it.Ossian Ekdahl, head of communication and ESG at AP1, said the main reason was the management time that would have to be spent on the case.“Up until now,” he said, “we have not spent too much time on the case, but if we take it further, the amount of time needed will be significant.”But he said no monetary considerations were involved, as AP1’s lawyers are paid on a no-win, no-fee basis.Ekdahl added that, besides recovery of presumed losses, AP1’s involvement in the lawsuit was also motivated by a desire to uphold fair trading standards for all market participants.“All institutions and individuals who have purchased US equities have suffered losses because of the actions taken by the firms,” he said.“Because AP1 is a major player in many of the world’s stock exchanges, it is important for us to promote exchange trading functions in a beneficial and fair way, so that no players can enrich themselves at the expense of others.” Swedish buffer fund AP1 has stepped down as lead plaintiff in a US class action against 40 securities brokers, high-frequency traders and exchanges, in view of a possible appeal, after a New York judge dismissed the case.Jesse Furman, US district judge, Southern District of New York, said the lawsuit, which was consolidated from five separate cases, was primarily a matter for the financial market regulators.Other lead plaintiffs include the City of Providence Rhode Island, and the Plumbers and Pipefitters National Pension Fund.Defendants include Barclays Capital, the New York Stock Exchange, Nasdaq and Bats Global Markets.
Barclays Treasuries NetherlandsAAA2.50%7.411 Barclays USD Government-related Developed-15%4.543 Barclays Treasuries GermanyAAA20%7.30 100%6.222.7 Barclays US TreasuriesAAA25%5.80 TOTAL Barclays Treasuries ItalyBBB2.50%6.795 Barclays Treasuries BelgiumAA2.50%8.229 Barclays Treasuries IrelandA-2.50%6.245 An undisclosed European pension fund is tendering a $600m (€552m) global government bond mandate using IPE Quest, with an element of active investment possible.The mandate could be split in two, with each manager running $300m.According to search QN-2145, the client wants a passive or semi-passive investment process, against a customised Barclays index.According to the tender, the process would be semi-passive in that the manager(s) would have to replicate the benchmark in terms of its country, ratings and maturity bucket breakdown but could deviate from it in the government-related part of the portfolio with respect to issuers. Barclays Treasuries SpainBBB2.50%6.4100 Barclays Treasuries AustriaAA+2.50%7.618 Barclays EUR Government-related Developed-15%5.740.7 The pension fund expects a maximum tracking error of 1%.Interested parties should have experience with managed/segregated accounts as an investment vehicle. Applications should show a comparable strategy to the one the pension fund is requesting.The deadline is 19 January. Conference calls with long-listed portfolio managers will most likely be held in the week starting 29 February, and onsite due diligence in the week of 25 April.The IPE 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 [email protected] “If regarded as useful, a customised index could also be used for the government-related,” the Quest search states.Applicants should have at least $5bn of government bonds under management, and $20bn in overall assets under management. They should have a track record of at least five years, although eight years is preferred.Performance should be stated to 31 December, gross of fees.The breakdown of the customised index can be found below. Deviations of absolute +/-1% from the country allocation are permissible and +/-5% of the benchmark weight in terms of the rating allocation, while the duration deviation is capped at 0.25.Benchmark: Customised Barclays Index; Source: tendering client, IPE RatingWeightingDurationSpread Barclays Treasuries FranceAA+10%7.427
The two batches of mandates represent a €600m allocation to domestic private debt, in turn part of a €2bn allocation to French illiquid assets that FRR has been focussed on implementing over the past two years.Mandates for a further €600m are in the pipeline, €200m being for venture capital and €400m for private equity funds-of-funds.It is also increasing its allocation to infrastructure and real estate. FRR has had a busy start to the year, having also announced the outcome of a large tender relating to its move to systematically integrate environmental, social, and governance (ESG) criteria in the management of its passive equities portfolio. Three asset managers will be splitting the €5bn mandate pot. Fonds de Réserve pour les Retraites (FRR), France’s €36.3bn pension reserve fund, has awarded its second €300m batch of French private debt mandates.The mandates have been awarded to BNP Paribas Asset Management and Schelcher Prince Gestion and are for 12 years, with the option of a two-year extension.They are for the creation and management of dedicated funds specialising in private placements (Euro PP) issued by small to medium-sized companies in France.The mandates come on top of €300m in private debt mandates that FRR awarded earlier this month, this time for acquisition-related debt.
The European Commission must act to ensure all pension funds are exempt from having to “unnecessarily” pay value-added tax (VAT) on contracted management services, according to two major pan-European advocacy organisations.In a joint paper, PensionsEurope and the European Association of Paritarian Institutions (AEIP) called for EU legislation to be amended as it did not contribute to the equal treatment of pension schemes within the bloc and undermined “the freedom of contract of pension providers and paritarian institutions”.Paritarian institutions are institutions jointly established and managed by employers and trade unions on the basis of collective agreements, and generally for the purpose of social protection.AEIP and PensionsEurope called for all pension fund participants, regardless of the character of the schemes or the member states in which the services were received, to be freed from “unnecessary VAT burdens”. They emphasised that the exemption of management services to pension plans must be clear and that non-discriminative policies were vital for maintaining a level playing field within the EU.Under the current interpretation of the VAT Directive, the Brussels-based lobby organisations said, similar pension schemes in different countries were being treated differently for tax purposes with regard to the management services they procured.The current regime also did not provide enough guidance for increasingly commonplace hybrid pension plans, PensionsEurope and AEIP said.Alexandra Kaydzhiyska, permanent representative from AEIP, said the VAT Directive had not kept up with developments in the pensions landscape.“It is time to update the rules to ensure that all pension funds are exempt and that they respect the principles of non-discrimination and neutrality,” she said.PensionsEurope CEO Matti Leppälä suggested the current situation was at odds with efforts to boost funded retirement provision in Europe.“Saddling pension funds with an unnecessary and arbitrary VAT burden makes them less attractive and ultimately undermines the objective of achieving adequate and sustainable pensions across Europe,” he said.ECJ case law problemsAEIP and PensionsEurope argued that, without amendments to the VAT Directive, pension providers and paritarian institutions faced having to go to court in order to prevent VAT burdens, when other considerations should prevail.The ECJ case law, said AEIP and PensionsEurope, “ultimately results in distinctions between pensions plans and its providers that are explainable from the lack of political decision making and judgment on a case by case basis but are by no means derived from proper and thoughtful decision making”.There have been several landmark decisions by the European Court of Justice (ECJ) in recent years relating to pension fund VAT claims: in 2013 it ruled on a case relating to UK workplace defined benefit schemes and in 2014 on one involving Denmark’s ATP in its capacity as a provider of defined contribution plans.Further reading:Lack of VAT guidance for DB pension funds ‘beggars belief’Dutch government rules out easing pension fund VAT rules