The Hoogovens scheme reported a net return of 3.5% for 2013, with a 3.5% loss on its matching portfolio being more than offset by the 11.5% of its return portfolio.Both main portfolios are almost equally divided between the scheme’s assets under management.Its matching portfolio suffered from the effect of rising interest rates on AAA government bonds and interest swaps, but also from negative results on inflation swaps.However, its positions in covered bonds delivered a positive result due to a falling risk premium on Spanish paper, according to the pension fund.It attributed the result of its return portfolio – consisting of equity, fixed income and property – mainly to equities, which returned 16.1%, as well as “strongly performing” hedge funds.Over the course of last year, the pension fund replaced part of its fixed income and property holdings with equities.It also reported a combined return of 1.9% on property and infrastructure, adding that the fixed income investments on its return portfolio returned 7%.Funding at the Hoogovens scheme improved by 6.1 percentage points to 117.3% in 2013.The board said it decided to keep the pensions contribution unchanged at 29% of the pensionable salary, including 4.4 percentage points for indexation purposes.Costs for pensions administration increased by €26 to €165, as the board had to adjust its IT systems to new pension arrangements.Asset management costs also increased – by 0.11 percentage point to 0.38% – as a consequence of performance-related fees for a number of external managers, the pension fund said, adding that it spent 0.08% of its assets on transactions.The Stichting Pensioenfonds Hoogovens has 9,605 employees, 4,070 deferred members and 15,500 pensioners. The board of the €6.7bn pension fund for steelworks Hoogovens has said it would adjust its risk profile and pensions target as it can no longer fully achieve its current long-term targets. In its 2013 annual report, the pension fund conceded it was unlikely to meet its self-imposed six-year limit on suspending indexation during “lean years”.Currently, the indexation in arrears totals 9.63% for workers and 12.7% for pensioners and deferred members.The pension fund has decided to grant all participants a 1% indexation on 1 July, as its funding – 118% at April-end – had been above the required 117.1% for three consecutive quarters.
AXA Real Estate has launched an Italian fund for two AXA insurance companies.AXA Assicurazioni and AXA MPS have both committed to the new fund, which has an initial investment capacity of €350m and could invest up to €700m in European commercial real estate directly or through funds.The fund, although initially dedicated to the two insurance groups, could also attract investment from other AXA or non-AXA entities.AXA Assicurazioni, which currently has a portfolio of Italian real estate, is looking to increase its exposure to the asset class having sold properties in 2007 and 2008. AXA MPS, meanwhile, is new to the sector.The as-yet unnamed fund, which has a legal life of 20 years, is structured through an SGR (Societa Risparmio Gestione).Head of AXA funds, Laurent Lavergne, told IPE sister publication IP Real Estate that Italian regulation made it impossible for the two insurance companies to enter into a joint venture without going down the SGR route.The fund, he said, would look to diversify investment across all sectors in Italy, with the option of also investing abroad.Milan and Rome office properties, as well as retail in large Italian cities, would be considered by the fund, Lavergne said.“We expect offices and retail will be the dominant sectors for the fund, but we may look at other assets, such as hotels, logistics,” he said. “In some of Europe’s markets, there are too many people chasing the same assets, but that’s less the case in Italy, where we believe we can find the right returns.”The fund was launched at same time as a €44.5m acquisition was made in Milan.The U10 prime office building was sold to the fund by developer Brioschi Sviluppo Immobiliare.Lavergne said AXA would ideally look to invest in approximately 10 well-let assets in the €20m-35m range and did not rule out buying a portfolio for the fund, which has no defined investment period.He said: “We don’t want to compromise, but why not if it’s a good-quality portfolio? We need to be very selective. It’s an opportunistic approach, whereby we look for the right asset with the right risk/return profile.”AXA REIM SGR also manages the Caesar Fund and the Core Italian Properties Fund (CIPF), reserved for Italian institutional investors.CIPF is fully invested in Italian office, retail and logistics properties.
The Church Commissioners – the investment arm of the Church of England – have announced returns of 14.4% on their £6.7bn (€9.3bn) portfolio for 2014.Slightly lower than the 15.9% delivered in 2013, the return is still well ahead of the fund’s target of inflation plus 5%.The endowment fund – which helps finance the Church’s activities, as well as pensions arising from pre-1998 service – revealed that the star performer was property, delivering an overall return of 27%, with double-digit returns across all sectors.Returns came predominantly from capital growth, including realised gains on sales. The Commissioners attributed this to taking a truly long-term approach and having stewardship of a well-diversified and high-quality set of investment property portfolios.Commercial property (4.7% of assets) returned 48.3%.A landmark transaction was the sale of a 64.2% beneficial interest in the Pollen Estate, Mayfair, London, to Norges Bank Investment Management and The Crown Estate for £381m, the Commissioners’ biggest-ever property deal.Strategic land – which provides development opportunities and makes up 2.3% of the portfolio – delivered 23.4%, while indirectly held property (4.7% of the portfolio) returned 18%, largely from care home investments in the UK and real estate holdings in the US.Meanwhile, equities performed less strongly than in 2013, returning 7.8%, although this was still ahead of the 6.8% benchmark.Returns were, however, helped by a bias towards global markets away from the UK – 10.9% of assets in domestic, compared with 24% in global equities.Global mandates returned 11.2%, compared with 0.7% from the UK holdings.The endowment fund used market strength to take profits from its global holdings, adding to defensive equity.A specialist smaller company manager was added in Brazil, after a period of significant weakness in that market.Private equity, however, made 15.8%, and the Commissioners plan to expand the fund’s 3.7% allocation over the next few years.Fixed income, which includes investments in US high-yield bonds and emerging market debt, returned -0.5% in 2014.The portfolio was reorganised during the year to protect it from a changing interest rate environment, and the low weighting will be continued.However, the private credit portfolio, started in 2012, returned 10.2%.In 2014, exposure was increased to seek higher returns and better diversification.Exposure was also increased for timberland and forestry, which delivered a total return of 22.3%.Timberland purchases in Australia, the US and the UK made the Commissioners the largest private owner of forestry in the UK.The Commissioners have also published a responsible investment review, setting out progress made in their socially responsible investing.There are already investment exclusions such as arms, pornography, gambling, tobacco and high interest-rate lending, and certain restrictions have recently been introduced for investing in companies active in the alcohol industry.The Commissioners are also an influential member of the “Aiming for A” investor coalition, which led a successful bid to obtain increased disclosure from BP on its climate change strategy at the company’s AGM last month.A similar resolution will be proposed at Royal Dutch Shell’s AGM next Tuesday.At end-2014, £299m (4.5%) of the Church Commissioners’ fund qualified for inclusion in the Low-Carbon Investment Registry maintained by the Global Investor Coalition on Climate Change, including £253m in sustainably certified forestry.A further £284m (4% of assets) is in listed equities run by Generation Investment Management, co-founded by former US vice-president Al Gore, all of whose investments must meet sustainability criteria.
Philips Pensioenfonds, the €17.8bn pension scheme of the Dutch electronics giant, will share in a total payout of $400m (€365m) to be made by Pfizer, after the US pharmaceutical company settled a securities fraud class action by investors who claimed it made false statements to them.After nearly five years of litigation, both sides reached a tentative agreement last January to settle the case for $400m plus accrued interest.The deal was finally approved by the district court for the Southern District of New York last week.Claims from class members are still being processed, so the precise amounts to be allocated to investors are not yet known. But Philips Pensioenfonds, as lead plaintiff in the lawsuit, is likely to be one of the biggest beneficiaries.In a class action in the US, the lead plaintiff is appointed by the court, which generally chooses the party that has suffered the greatest economic loss. And, according to Robbins Geller Rudman & Dowd (RGRD), lead counsel for the class of Pfizer investors, not all class members are likely to claim, resulting in higher per-share distributions.In the lawsuit, investors alleged that Pfizer had illegally promoted Bextra, an anti-inflammatory drug, and several other drugs ‘off label’ to boost sales.Off-label marketing is the promotion of pharmaceutical products for uses unapproved by the US Food and Drug Administration.Pfizer and its officers were alleged to have concealed from investors that the company was earning substantial revenue from this illegal promotion, and was subject to an extensive government investigation.Materially false and misleading statements were claimed to have been made to investors between January 2006 and January 2009 (the ‘class period’).Furthermore, investors claimed that false financial results and reports were filed with the US Securities and Exchange Commission that did not sufficiently account for, or disclose, probable loss contingencies resulting from Pfizer’s off-label marketing, as required by Generally Accepted Accounting Principles.Three days after the end of the class period, Pfizer announced it had agreed to pay $2.3bn to settle allegations by the US Department of Justice that it had engaged in off-label marketing.That day, Pfizer’s share price dropped from $17.45 to $15.65.Mike Dowd, partner at RGRD, said: “We are very pleased the court approved the settlement providing a $400m recovery for Pfizer investors. “In granting the approval, the court found that the settlement and the plan of allocation – i.e. the formula for how the recovery will be shared among the class of Pfizer investors – was fair and reasonable.” The precise allocation to class members will be determined over the next few months.
The French government has launched an award to promote and recognise best practice in climate-related disclosure by investors under new mandatory reporting requirements.The ministry of the environment is partnering with the 2° Investing Initiative (2°ii), a French multi-stakeholder think tank, on the award initiative.Its main purpose, according to a statement, is “to foster the emergence of best practices on climate change reporting, consequently providing food for thought for existing international initiatives on climate-related disclosures for investors, and setting the bar for French investors”.The criteria for the award have yet to be decided, but they will be based around the reporting requirements introduced by Article 173 of France’s “loi sur la transition énergétique pour la croissance verte” (LTE), the law on the energy transition for green growth. The law is believed to be the first to introduce mandatory disclosure on climate change by institutional investors, and the launch of the award seems in keeping with the French government’s apparent efforts to maintain, if not intensify, the momentum behind the COP21 climate agreement reached in Paris in December.The award will be presented at a ceremony in November, to be hosted by Ségolène Royal, the environment minister.In other news, French insurer AXA Group has announced that it will no longer invest in tobacco and will be selling all of its “tobacco industry assets”, currently valued at some €1.8bn.The insurer will offload immediately all of its equity holdings in tobacco companies, worth around €200m, and refrain from making any new investments in bonds issued by tobacco industry companies.It will hold on to the bonds, valued at around €1.6bn, it is already invested in until they mature.In a statement, Thomas Buberl, who will become chief executive at AXA in September, said the decision to divest “has a cost for us, but the case for divestment is clear. The human cost of tobacco is tragic – its economic cost is huge.” In divesting from tobacco, AXA follows in the footsteps of other institutional investors that have to one degree or another turned their back on the industry – large ones such as the Norwegian oil fund and smaller ones such as the pension fund of the London Borough of Croydon.In a contrasting move, however, CalPERS, one of the world’s largest pension funds, is reconsidering whether it should invest in tobacco again after research estimated it missed out on up to $3bn (€2.6bn) of returns. In Germany, meanwhile, 42% of institutional investors surveyed by asset manager Union Investment do not expect the global climate agreement reached at the December UN conference in Paris (COP21) to have notable consequences on the capital markets. Alexander Schindler, responsible for institutional business at Union, said “this result is surprising” given that tougher climate change mitigation requirements have valuation and risk-management implications for investors that “cannot be underestimated”. However, the majority of surveyed investors – 203, with around €3.5bn in assets under management – expect the political drive to reduce greenhouse gases to influence the capital markets. The sustainable investment survey, carried out between February and April, found that 21% of German institutional investors take climate change into account in their investment policies.Of those that don’t, 24% said they planned to do so over the next five years.
The partnership’s proposal shows that the 10 funds* involved will initially pool assets across 22 portfolios.This would appear to be a considerable consolidation of portfolios across the participating funds.Each fund will retain decisions over its asset allocation, while the choice of underlying fund managers and structure of the portfolios will be made by the Brunel Company, a regulated company to be established by the Brunel partnership.The participating funds envisage that the pooling of assets will achieve net savings of £13m (€16m) per year by 2021, with the potential to increase to £70m per year in the longer term.The £13m of projected net savings exceeds base asset management fees at at least one of the funds in the Brunel partnership, with the Environment Agency Pension Fund (EAPF), for example, reporting £10.2m of base fees for fund managers for the financial year ending 31 March.The next step for Project Brunel is to develop a full business case and establish the Brunel Company, with authorisation by the Financial Conduct Authority targeted for March 2018 at the latest.“We expect a further confirmation from the government in October that they are ‘content we continue’ with our proposal,” said the Brunel partnership in an update. “Meanwhile, we continue to push ahead in developing the project.” The 10 UK local government pension funds that will form the Brunel Pension Partnership will initially pool assets in 22 portfolios, according to highlights from the grouping’s recent submission to the government.The local government pension scheme (LGPS) asset pools that are being formed had a 15 July deadline to submit pooling proposals to the government.A team from the project to form the Brunel partnership met with a panel of government officials and independent experts a month before the deadline and was given the thumbs-up to proceed along the lines they had been pursuing.Meetings with a government overview panel were due to be held for each asset pool being proposed by the local government pension schemes, according to a document from the Brunel partnership.
It said the three pillars of Denmark’s pension system — the unfunded state pension (Folkepension), statutory funded scheme ATP and the labour-market pension schemes and private pensions — were a good foundation for the future, but that there were areas where the “good and secure” pension system needed to be strengthened.Under the proposal, the mandatory pension contributions will start at a level of just 0.25% in two years’ time, rising gradually to 2.0% by 2025.The 2025 Plan covers a wide range of political issues, from long-term unemployment to student finance and migration control.The pension proposals will now be discussed among the political parties in Denmark as well as the other stakeholders in the labour-market and wider economy.Per Bremer Rasmussen, chief executive of Forsikring & Pension (F&P) the Danish pensions and insurance industry association, said: “It should be no secret that we are not happy about compulsory savings.”“Basically, I think that the conditions for pension savings should be made so good that it makes good business sense for everyone to save,” he said.Bremer Rasmussen added that social partners had taken responsibility for retirement provision by making it a key element within existing collective bargaining agreements, he said.“I recognise, however, that the politicians have the desire to get everyone on board the pensions bus,” he said.Bremer Rasmussen said he expected it would be possible for many companies to offer the new product.The governing Liberal Party (Venstre) will need broad support from other parliamentarians and civil society to pass the proposals, as it currently rules with a one-seat majority with the backing of three other political parties.The government’s plan also addresses a problem that the country’s pension industry has long wanted addressed, namely that many Danes have no incentive to save for a pension later in their working lives because of the way social benefits are calculated.The government said a special pension scheme would be introduced, which can be used by people with five years or fewer until state pension age.Up to DKK50,000 (€6,700) can be paid into the scheme, with contributions being non-tax deductible, but the pension payout being tax free.Pensions paid out through this annuity product will not be offset against social benefits.As well as this, the government plans to give an extra tax allowance for people on incomes between DKK300,000–535,000 paying into a deductible pension scheme.The tax allowance will apply for pension contributions of more than 8%.Bremer Rasmussen said it was very important that it was made attractive for everyone to save for retirement.“So I am happy that the government has recognised the problem and it doing something about it,” he said.Labour-market pensions provider PKA also welcomed the fact the government was tackling the problem. “The initiative is a step in the right direction by finding solutions to the challenges the pensions sector is in,” it said.PKA said it would follow the political negotiations that would now begin with interest. Denmark’s oft-lauded pension system is set to expand its funded coverage further still under a new plan set out by government to make it compulsory for nearly everyone of working age to contribute to a scheme.The proposal, published as part of the government’s long-awaited 2025 Plan covering a range of policy areas, suggests introducing compulsory pension savings of 2% of work income for all people in Denmark aged over 25, who are saving less than 6% of their income into a pension.The scheme is to cover benefit recipients, employees as well as self-employed people, and the mandatory contributions to it will in principle be paid to ATP, according to the wording of the plan.Launching the proposal, the finance ministry said: “Today there are around 750,000 adult Danes who have no savings for their old age, or not enough.”
Axioma – The data analysis group has hired George Patterson as managing director for corporate strategy. He was previously CIO for multi-asset investments at Bank of Montreal Global Asset Management. He will lead Axioma’s new corporate strategy team to focus on “identifying buyside trends and market opportunities to expand the company’s footprint and accelerate growth”, Axioma said.Vontobel Asset Management – Gregor Hirt is to join the Swiss asset manager as head of multi-asset solutions on 1 July. He will also join the firm’s investment committee. He was most recently global chief strategist for multi-asset at UBS Global Asset Management, and before that was the firm’s CIO for global investment solutions in Europe and Switzerland.Robeco – The Dutch asset management company has named Juan Carlos Briones as consultant relations director, based in London. He joins from Pimco where he was a senior vice president in the US giant’s consultant relations group.BTIG – The American fund management group has hired four new managing directors for its fixed income team. Anthony Guido will focus on high yield sales, and was previously a high yield trader at investment bank Jefferies. Jay Sommer also joins from Jefferies, and specialises in bankruptcies, restructurings, liquidations, and fixed income special situations. Steven Jones has joined as high-yield credit strategist from US Bancorp, where he was managing director and energy desk analyst. Jeffrey Walsh will focus on high yield sales and trading, and was previously managing director of high yield sales at Canaccord Genuity.HQ Capital – Heiko Dimmerling has been appointed chief operating officer at HQ Capital, the private equity and real estate manager. He joins from private equity firm Triton, where he was a partner and managing director. He has taken over the role from Georg Wunderlin, who became CEO at HQ Capital last year.Markov Processes International – MPI, which provides investment performance analysis tools, has appointed Bijan Foroodian as managing director for EMEA. He was previously chief investment officer at Inflection Point Capital Management, an investment consultancy firm. Willis Towers Watson, Principal Global Investors, Axioma, Bank of Montreal, Vontobel, UBS, Robeco, BTIG, HQ Capital, Markov Processes InternationalWillis Towers Watson – The consultancy giant has promoted three staff to global heads within its manager research team. Chris Redmond has been named global head of credit and diversifying strategies, a newly created role. He has worked at Willis Towers Watson for 13 years, most recently as global head of credit research.Nimisha Srivastava has been promoted to global head of credit. She joined in 2014 and was previously head of manager research for Europe, the Middle East, and Africa (EMEA). Paul Jayasingha is now global head of real assets, having previously been global head of real estate. He has worked at Willis Towers Watson for more than 19 years. Srivastava and Jayasingha report to Redmond, as does Sara Rejal, who was appointed global head of liquid diversifying strategies in October last year.Principal Global Investors – The $411bn (€381.5bn) asset manager has opened its first office in Switzerland and appointed Martin Bloch to lead its expansion in the country. The US-headquartered firm now has four offices in Europe, including London, Amsterdam, and Munich. Bloch joins from Robeco, where he was country manager and head of sales for Switzerland.
Source: twitter.com/MLP_officielTwo political groupings have dominated French politics since 1958: the centre-left socialists and the centre-right republicans. This pattern has remained constant for decades, even though the parties that represent each camp have gone through various incarnations.This time around, neither group is represented in the second round of the presidential elections. François Hollande, the socialist incumbent president, was so unpopular he did not even seek re-election. Benoît Hamon, the socialist candidate who stood in Hollande’s place, only managed to get about 6% of the vote in the first round.Meanwhile, François Fillon, the republican candidate, came third with less than 20% of the vote. That left the second round as a battle between Macron and Le Pen.Despite the fact that Macron is essentially a moderate candidate, the importance of this shift is huge. Even if he wins the second round – which is far from inevitable – there is no going back to the old system.This leaves the way open for a far more fluid politics. Investors will be operating in a new political environment over the coming years.Support for Macron could evaporate as fast as it emerged in such an uncertain climate. That could open the way for the Front National or for other, possibly new, political forces to emerge.There is no return to the past for French politics. Source: twitter.com/EmmanuelMacron Such a blinkered perspective is a particular problem for those – such as pension fund investors – who should be taking a longer-term view. Their focus should be the likely trends over the next few years, rather than short-term fluctuations in equity prices, bond yields, or the euro. IPE deputy editor Daniel Ben-Ami on the new-look politics of Europe’s second most populous countryRegardless of what happens in the second round of the presidential elections the old French political set-up has shattered.That will be the case even in the likely event that Emmanuel Macron is elected president on 7 May. The two camps that have dominated French politics since the establishment of the Fifth Republic in 1958 have lost their grip.Many commentators have missed the significance of this shift because they are fixated on the dangers of a victory for Front National’s Marine Le Pen. While such concerns are understandable, they have led many to miss the bigger picture.
The founder of the Transparency Task Force (TTF) has demanded a public apology from the UK asset management trade body over a “misleading and offensive” press release about cost transparency.In an email to Investment Association (IA) chief executive Chris Cummings – also copied to the chief of the UK financial regulator and prime minister Theresa May – Andy Agathangelou said the trade body should “take action and admit that it has been completely wrong about hidden fees for a long, long time”.The dispute dates back to a press release from the IA in 2016, which argued that accusations of hidden fees in asset management were unfounded. The release referred to hidden fees as “the Loch Ness Monster of investments”.Agathangelou, founding chair of the TTF, which campaigns for cost transparency, wrote to Cummings after the pair appeared on a BBC radio programme about investment fund transparency last night. Agathangelou wrote: “In light of the admission you made in yesterday’s programme and in light of the fact that MiFID II has now completely disproven the assertion that there is no evidence of hidden fees… I believe that now is the right time for the Investment Association to take action and admit that it has been completely wrong about hidden fees for a long, long time.”According to research published earlier this week by Scottish consultancy The Lang Cat, newly disclosed transaction costs under MiFID II showed fund fees for some of the most popular UK funds were significantly higher than previously indicated. The difference ranged from a few basis points to 85%; the sample size was 20 funds.In the BBC radio programme, the IA chief executive said the language used by the industry association in the 2016 press release was “regrettable”, but added: “That decision was taken before I arrived and there is nothing I can do to change that.”Cummings later agreed that “100% of [IA] members are 100% behind full transparency of costs and charges”.Speaking to IPE shortly after the Loch Ness Monster press release was published, the IA’s then-chair Helena Morrissey said the association had “inadvertently but understandably upset people”.Responding today to Agathangelou’s message, the IA said: “The Investment Association is now under new leadership and is wholly focused on delivering on the issues that consumers and our industry care about, such as providing full transparency on costs and charges.“A successful example of our work in this area to date includes developing a new cost disclosure template with the Local Government Pension Scheme Advisory Board as part its Code of Transparency, which was successfully implemented last year.”“We are also working closely and productively with transparency campaigner Chris Sier as part of his role as chair of the FCA’s independent working group, to design a new template on cost disclosure which will be rolled out later this year. The group has made excellent progress on this initiative so far and the results will be consulted upon soon.”