Strong Q3 returns help Swiss schemes improve funding

first_imgBut Peter Zanella, managing director at Towers Watson Switzerland, warned companies and pension funds “not to get lazy” and called on them to continue de-risking.In the latest Swisscanto Pensionskassen study (available in German and French), PPCmetrics highlights the growing risk of “misinterpreting” the ever-expanding body of second-pillar data.The Swiss consultancy said the risk-based funding level it developed painted a much more “heterogeneous” picture of the funding landscape.It said its data even identified a pension fund with 100% funding and a 0% risk-based funding level when technical parameters and demographics were taken into account.On average, the risk-based funding level is several hundred basis points lower than the other, but the consultancy took pains to stress the significance of the “heterogeneity”, with risk-based funding levels ranging from 0% to 175%, and most Pensionskassen near the 100% mark. Swiss pension funds have raised funding levels after posting 2% average returns over the third quarter.According to the latest Towers Watson Swiss Pension Finance Watch, the average return since the beginning of the year now stands at 5.7%.Compared with the quarter previous, the funding level for the consultancy’s benchmark model pension fund improved by 100 basis points to 99.1% over the period.Towers Watson also pointed to the slight decline in the discount rate and subsequently marginal increases in liabilities over the third quarter as a further boost to funding.last_img read more

QinetiQ DB scheme sees funding boost after sponsor sells US arm

first_imgThe QinetiQ pension fund, the closed UK defined benefit (DB) scheme of the engineering firm, is to see its funding boosted after proceeds from the sale of a subsidiary were promised the scheme.The QinetiQ Group said in a statement it had entered a conditional agreement to sell its US services division, to an American bidder, in a $165m (€120m) cash sale.The group confirmed at least £6m (€7.9m) from the sale would be committed to the fund as a one-off cash contribution.The £1.2bn fund was closed to future accrual in October last year, leaving it with a £24.8m deficit on an IAS 19 basis. This figure was less than half that of the deficit seen before the company moved to close the fund, transferring all 8,000-plus active members into a new defined contribution (DC) vehicle.QinetiQ told investors the move to plug its remaining pensions deficit stemmed from a desire to ensure it took account for its pensions obligations, while maintaining a strong, cash-generative, company.It said it was committed to “maintaining an efficient balance sheet”.The sale and cash contribution are part of several attempts the company has made to reduce the scheme’s deficit, and its impact on the balance sheet.In March 2012, after lengthy legal proceedings with the scheme trustees, the company won the right to shift pensions indexation from the generally higher retail prices index (RPI) to the consumer prices index (CPI).QinetiQ, a privatised former public organisation, forced through the switch on the back of a wholesale shift from RPI to CPI for public, and former public sector, pension schemes. The move shaved over £100m off the deficit.In 2012, the scheme also negotiated a recovery plan which included a £40m cash payment and a £13m per year contribution until 2018, including proceeds from a asset-backed contribution structure agreed using the company’s property.last_img read more

AP7 equity fund returns 31% on strength of stock-lending, derivatives

first_imgHowever, he warned that the high levels of return seen in recent years were far beyond what could be expected over longer periods of time. “Sooner or later, the stock market will go down, and savers will see their assets decline in value – how dramatically, no one knows,” he said, adding that a more realistic level of return over several decades was 7-8% a year.The equity and bond funds are the two main building blocks of AP7’s Såfa default fund option.Overall, Såfa returned 29.3% for savers in 2014, the pension fund said, which compared with the 15.1% produced by the privately run funds in the premium pension system.AP7’s equity investments narrowly beat the benchmark last year, while the fixed income fund ended the year just short of its yardstick.The benchmark index for equities returned 30.8% in 2014, and the fixed income index returned 2.9%.AP7 attributed the high level of return on equities in 2014 to developments in the equity markets over the year and the effect of leverage in its portfolio.The pension fund said it made use of its fund rules, which allow it to use derivatives within investment, by including equity futures and foreign exchange contracts in its investment management.OTC derivatives in the form of total return swaps were used to create leverage equating to an average of 53.3% or SEK103.9bn (€11.2bn) during 2014, and ending the year at 49.19% of the fund’s assets, according to the 2014 annual report.The fund’s active share lending programmes through custodian bank Bank of New York Mellon, which are also used to increase potential returns, yielded a net income of SEK33.9m in 2014, at a cost of SEK6m.Assets under management rose to around SEK253.5bn at the end of December 2014, up from SEK186.2bn the year before, with the vast majority – SEK235.7bn – in the equity fund, and SEK17.5bn in the fixed income fund. Sweden’s AP7 state pension fund produced a 31.1% return on its key equity fund in 2014, after returning 34% the year before.Returns were boosted by leverage in the form of derivatives that effectively increased the fund’s fire-power by more than 50%.AP7 – the AP fund that operates the default option for the country’s premium pension system – generated a return on its fixed income fund of 2.8% last year, up from 1.8% in 2013.Richard Gröttheim, chief executive at AP7, said: “If we look at asset management, 2014 was another exceptionally good year in which the value of Såfa savers’ assets grew by almost 30%.”last_img read more

Aegon, TKP to launch low-cost pensions vehicle in Netherlands

first_imgThe aim is to cut implementation costs through the benefits of scale.However, the APF’s introduction has been postponed to 1 January 2016, as Jetta Klijnsma, state secretary for Social Affairs, needed more time to flesh out details of the legal proposals.Aegon pointed out that participating parties will not have to pay for a guarantee and claimed that the prospects for indexation were improved, although it acknowledged that the APF would be subject to the new financial assessment framework.Edixhoven said lower board costs would lead to an overall cost reduction for small and medium-sized pension funds of 30%. The APF – called Stap – will consist of three rings initially, each with its own indexation target and matching investment policy.TKP is to carry out administration for the APF’s clients, while TKP Investments will be responsible for fiduciary management, possibly together with several external asset managers.Aegon said the Dutch regulator would still need to screen the trustees, adding that none of them was employed by the insurer or TKP.Edixhoven added that Stap’s board would be entitled to change its administrator and asset manager if need be. Aegon and its asset management and pensions subsidiary TKP are to set up a ‘general pension fund’, or APF, in the Netherlands.Ten pension funds have already shown a “concrete interest’’ in joining the new vehicle, according to Maarten Edixhoven, director of pensions at Aegon Netherlands.He said five companies with insured pension arrangements were also considering the APF as an alternative, “as they face price increases of up to dozens of percentage points due to falling interest rates’’.An APF allows for multiple pension plans to be implemented within a single scheme, overseen by a single independent board, while ring-fencing assets.last_img read more

Wednesday people roundup

first_imgLombard Odier Investment Managers – Tammy McPherson has been appointed head of UK institutional business development. She joins from Aviva Investors, where she was head of insurance business development. Before then, she worked at ABN AMRO Asset Management, with a focus on insurance asset management. Separately, Anna de Jong has been appointed senior sales manager. She joins from Nomura, where she was executive director the quantitative derivative strategies and solutions department servicing the Dutch market. Before then, she held roles at Morgan Stanley, Merrill Lynch and FactSet Research Systems.BlackRock – Almar Rietberg has been appointed director, responsible for building up and maintaining client relations with Dutch institutional investors. Rietberg worked 11 years at Kempen & Co, where he was director institutional clients. Before then, he was an investment consultant at Towers Perrin for seven years.Willis Towers Watson – Kemp Ross has been appointed global head of delegated investment solutions in the investments business. He joins from Aon Hewitt, where he has held various roles since he joined in 2008. Most recently, he was a senior partner and head of solutions and operations for investment. Before then, he worked at Mercer for 15 years. Separately, Chris Massey has been appointed to the UK consultancy team as a senior strategic adviser, based in Edinburgh. He joins from PwC, where he held a variety of strategic consulting roles.TIAA Global Asset Management – The manager has hired two Europe-based managing directors for its real assets institutional distribution team. Per Frederiksen will focus on growing the institutional business in the Nordic countries, while Dan Greene will help lead efforts to develop and enhance relationships with global and regional investment consultants. Frederiksen joins from Dimensional Fund Advisors, while Greene joins from Invesco.BNY Mellon – Hani Kablawi has been appointed head of investment services for the EMEA region. Formerly head of asset servicing for the same region, Kablawi will lead the business strategy for investment services and continue to be based in London.CVC Capital Partners – Cathrin Petty is to join as a partner and head of European healthcare, based in London. She joins from JP Morgan, where she was head of healthcare for the EMEA region.CDP – Rick Stathers has been appointed to lead the investor research arm of the global disclosure charity. He joins from Schroders, where he was head of responsible investment. Before then, he was a consultant at Environmental Resources Management and a regulatory controller at Morgan Stanley. PIMCO, MAN Group, SPT, Allianz Global Investors, PGGM, Lombard Odier Investment Managers, Aviva Investors, Nomura, BlackRock, Kempen & Co, Willis Towers Watson, Aon Hewitt, PwC, TIAA Global Asset Management, Dimensional Fund Advisors, Invesco, BNY Mellon, CVC Capital Partners, JP Morgan, CDP, SchrodersPIMCO – Emmanuel Roman, former chief executive of Man Group, has been hired to lead US asset manager PIMCO. Roman will take over as PIMCO’s chief executive from Douglas Hodge, who will become managing director and senior adviser from 1 November. Roman comes to PIMCO from Man Group, which he joined when the firm acquired GLG Group in 2010. He went from being GLG’s co-chief executive, a role he held for five years, to COO of Man, and in 2013 was named Man’s chief executive. For its part, Man announced Luke Ellis, since 2012 the firm’s president, as Roman’s replacement.SPT – Fokko Covers has been appointed as a board member at SPT, the €1.8bn closed pension fund for dentists and dental specialists. He is to become a member of the scheme’s investment committee, as well as chairman of its outsourcing committee. Until recently, Covers had been chairman and director of the Pensioenfonds Elsevier, which has liquidated and joined the pension fund PGB.Allianz Global Investors – Lodewijk van Pol has been named head of client solutions in the Netherlands, as well as leader of the Benelux team of Allianz Global Investors. Van Pol has been head of fiduciary management at Lombard Odier. At the same time, Chris Wijdenes has been appointed as head of investments and operations at client solutions. He also worked at Lombard Odier, where was tasked with treasury, currency and cash management. Meanwhile, Ewoud van de Sande is to join as strategic asset allocation specialist. He comes from PGGM, where he focused on alternative investments and sustainability.last_img read more

M&A the key to asset manager survival, report says

first_imgAcross Europe, a similar picture emerges, according to a separate report from Moody’s Investors Service, the credit rating arm of the US financial services company.Within its own survey group of 21 European asset managers, net inflows over the course of the second half of 2017 soared to €135bn – “equivalent to 1.5% of AUM at the beginning of the period”, Moody’s said. Over the same period in 2016, the groups posted net inflows of €30bn.Overall, AUM for the managers surveyed increased by 6.6% over the course of the last six months of 2017.Yet pressures remained, not least in terms of costs, both companies warned. Size, particularly in terms of AUM, remained critical.“If you look at profit margins by size you see a barbell – a U-shaped curve,” said Dean Frankle, principal at BCG.One on the one side, there were managers with $800bn-$900bn (€670bn-€750bn) under management reporting high margins, similar to boutique players at the other end of the size spectrum, he said.“But those $400bn-$500bn asset managers – who are certainly big, but not as large as the biggest – are not,” Frankle continued. “If you’re investing in new things, such as artificial intelligence, then a trillion-dollar firm can afford, in absolute dollar terms, a lot more than you can.“What you are seeing is that the big are getting even bigger and that is placing even more strain on the middle managers.”There were two solutions, Frankle said: either become more niche “or look to M&A to try to address your growth opportunities”.The fund management industry has seen a wave of mergers and acquisitions over the past few years.Last year, Janus Capital Group merged with Henderson Global Investors, and Amundi, Europe’s largest asset manager by AUM, snapped up Pioneer Investments for €3.5bn. However, consolidation proved positive for total management fees, with the overall level sharply higher over the last six months of 2017, according to Moody’s.Among the group tracked by Moody’s, total fees earned grew by 12.7% in the final six months of last year, compared with the first half.“About half of the increase in fees we recorded was due to the acquisition of asset managers previously outside of Moody’s surveyed group, for example the Janus-Henderson merger and the acquisition of Pioneer by Amundi,” said Marina Cremonese, senior analyst at Moody’s.“However, the other half is down to market appreciation, higher performance fees, as well as positive net flows.”As companies have sought to bolster revenues, smart beta strategies also reported a notably strong year. BCG’s report revealed that AUM within smart beta had grown by 30% a year since 2012. However, at $430bn, overall assets remained just 0.5% of the global total.Asset managers were looking more keenly at the margin on high-volume products such as exchange-traded funds, which can have very low fee structures, said Nicolas Rabener, managing director at FactorResearch.“They are not a high-profit-margin product, so smart beta, where you can charge 30-50bps depending on what you are issuing, is much more profitable,” he said. Asset managers have had a “banner year” in 2017 with strong net inflows and stellar fund performance, but concerns remain over rising costs and growing regulatory and compliance pressures, according to two new reports.According to Boston Consulting Group (BCG), assets under management (AUM) at the 30 global fund managers it tracks grew by 14% over the course of the year.Net new flows also peaked at an “extraordinary” 4.3%, “the highest they’ve been in the 10 years since the global financial crisis”, BCG noted in its report, The Hidden Pressures on Asset Managers.Since 2013, net flows have increased by an average of just 1.5% a year.last_img read more

Major Swiss pension funds outline losses after ‘sobering’ 2018

first_imgAargauische Pensionskasse (APK), Switzerland’s 20th largest pension provider, indicated a provisional net investment loss of more than 2% for 2018.Earlier this month Publica, Switzerland’s largest pension investor, reported a provisional loss of 3.2% for 2019.Aargau pension fund’s real assets allocations soften equities blowAPK, the pension fund for the canton of Aargau, said investments in the majority of its asset classes fell in value – although mortgages, real estate and infrastructure allocations made a positive contribution to the result for 2018.Its funding ratio would likely have fallen below 100% compared with the beginning of 2018, it said.APK’s board had decided that the interest rate on active members’ accrued savings would be 1% in 2019, which is the minimum level set by the government for mandatory pension accrual in Switzerland. Last year, the rate was 1.25%.Reserves halved by investment lossesAccording to the quarterly Swisscanto pension funds monitor, Swiss pension providers’ reserves almost halved in 2018 as a result of investment losses. On average they fell from 14.4% to 7.7%.However, private sector pension funds were still in surplus, with their coverage ratio estimated at 107.7%.The average coverage ratio at public sector funds that need to be fully funded dropped from 107.8% to 101.5%, while at public law funds with a state guarantee the average fell from 83.5% to 78.6%. The latter group of pension funds need to be 80% funded by 2052.The estimated 2018 performance for pension providers in the Swisscanto sample was a loss of 3.5%.Switzerland’s worst year since 2008According to an industry index compiled by UBS, last year was the worst year for performance since the global financial crisis for Swiss pension funds.December was the worst month, with all pension funds’ investments declining in value. The best monthly result of the providers in its sample was an average decline of 0.7%, while the worst was a fall of 4.2%.Credit Suisse’s index showed Swiss pension funds suffering heavy losses in the fourth quarter of last year. The index fell by 3.5% in that period, in particular as a result of performance in October (-1.4%) and December (-2.2%).Equities accounted for the lion’s share of the negative performance in the fourth quarter, according to Credit Suisse.Domestic equities weakened performance by 1.4% and foreign equities by 2.2%. Bonds delivered a mildly positive performance contribution of 0.2%.Real estate also had a slightly positive impact of 0.1%, although this was offset by the decline of alternative investments by 0.1%. Mortgages had only a minor impact on the overall result.According to Willis Towers Watson, which calculates a funding index for corporate pension plans in Switzerland, the coverage ratio fell 7.7 percentage points from 110% as of September to 102.3% as of the end of December.A decline of this magnitude was last recorded seven years ago, according to the consultancy. The pension fund for Swiss retailer Migros recorded a loss of 1.9% on its investments in 2018, its first negative annual result since 2008.The only positive results of a “sobering” year for investments came from allocations to domestic and international real estate and Swiss franc “nominal value” assets, it said.A high allocation to real estate of 32.5% could not offset losses on the equity markets, which collapsed at the end of the year, it added.With €20bn of assets under management, Migros Pensionskasse was the fifth largest pension fund in Switzerland last year, according to IPE’s most recent Top 1000 European pensions guide.last_img read more

Swisscanto-PFS deal to create CHF15bn provider

first_imgReto Siegrist, chief executive officer of Swisscanto Vorsorge until now, is moving to a management position at PFS. Some 35 Swisscanto employees are moving to PFS as part of the deal.Zürcher Kantonalbank is not selling the part of Swisscanto that provides services related to certain personal pension arrangements, and Swisscanto is also holding on to its well-established regular Swiss pension fund study publication.PFS Pension Fund Services was established in 2002 by the Swiss pension fund for SAirGroup, the holding company for Swissair and affiliated companies. It is majority owned by employees and partners. On its own it has CHF9bn in assets under management.Swisscanto was jointly owned by Switzerland’s cantonalbanks until Zürcher Kantonalbank acquired it in late 2014. Zürcher Kantonalbank is selling Swisscanto Vorsorge’s second pillar pensions administration business to PFS Pension Fund Services in a deal that will create a CHF15bn (€14bn) provider.Zürcher Kantonalbank is taking a 20% stake in PFS and “will remain closely connected to the business,” it said.The transaction is due to close at the end of June. The financial details are not being disclosed.In a statement, the two parties said the combination of the businesses would allow for benefits of scale. The combined business would have around 80 employees and 60 pension provider clients with CHF15bn in assets under management.last_img read more

Mixed bag of homes to go under hammer

first_imgREAL ESTATE: The kitchen in the house at 15 Arinya Rd, Ashgrove, before the renovation.More from newsParks and wildlife the new lust-haves post coronavirus16 hours agoNoosa’s best beachfront penthouse is about to hit the market16 hours ago This house will be the first to go under the hammer on SaturdayRay White Ascot agent Kate Francis said there had been some interest in the property, mostly from local buyers. The auction will be held onsite at 8am.“We have two registered bidders but are expecting three or more by the day,” she said. Also going under the hammer is Villa 605 at 12 Parkside Circuit in Hamilton. Designed by award-winning architects, Arkhefield, the property is expected to draw in buyers looking for luxury near one of Brisbane’s most popular lifestyle precincts. 12 Gladesville St, Kenmore, was once home to the British consulateSPRING has sprung, with over 100 homes to go under the hammer over the weekend.The first cab off the rank on Saturday will be a four-bedroom house at 21 Long Street, Hendra. Villa 605A 1930s time capsule that was renovated and transformed in to the ultimate dream home will go under the hammer at 1pm on Saturday. The front of the house at 15 Arinya Rd, Ashgrove, after the renovation.A seven bedroom house at Sunnybank is also expected to draw a crowd when it goes under the hammer at 10am on Saturday. It is being marketed by Place Sunnybank.center_img The kitchen in the house at 15 Arinya Rd, Ashgrove, after the renovation.Queensland Sotheby’s International Realty agent Tyson Clarke said there had been plenty of interest in 15 Arinya Road at Ashgrove.“We have a few registered bidders a few days out,” he said. “They love the style and the renovation.“People are even asking if they can buy the furniture. They have nailed the styling.” This Sunnybank house has seven bedroomsOn Sunday, the first big auction event of the spring selling season will kick off at 10am.Almost 50 properties are scheduled to sell at Ray White Queensland’s Brisbane Auction Spectacular at the Brisbane Convention and Exhibition Centre.“We will be conducting 104 auctions this weekend, with 48 of those going under the hammer at the Ray White Brisbane Auction Spectacular,” Ray White Queensland chief auctioneer Mitch Peereboom said.Going under the hammer is the former British Consulate home at 10-12 Gladesville Street in Kenmore — a house that would suit the needs of the world’s most famous spy.The 1763sq m property housed the England cricket team on numerous occasions and, as rumour has it, also welcomed Prince Charles and Princess Anne.Ray White Toowong agent Kris Matthews said buyers should take advantage of the opportunity to own something of real history. “How many people can say they own a property lived in by a British consulate for 32 years? This property is truly steeped in history,” he said.“The granny flat — that provides true separation for families — was built in response to 9/11, to allow two Australian Federal Police officers to live on-site. “This property has it all. Close to amenities, only 10kms from the CBD and with a large slice of history attached, we expect an exciting auction day.”Another property — 100 Oriel Rd, Clayfield — is on the market for the first time in three decades. 100 Oriel Rd, Clayfield.The 2034sq m estate includes manicured gardens, sparkling infinity pool, alfresco terrace, pavilion and championship-size tennis court.last_img read more

Cupcake queen’s sweet $1.69 million deal

first_imgThe outdoor entertaining areas. From the air. The pool area.The busy mother-of-two, who splits her time between the Coast, Los Angeles and New York has released cook books and earlier this year was launching a video creation app.More from news02:37International architect Desmond Brooks selling luxury beach villa15 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoMrs Strachan listed her palatial Tallebudgera home she shares with her husband and their two young sons back in February.The self-confessed “city girl” said the property gave the family a taste of life on the land.“We have tons of edibles on the property,” she told the Gold Coast Bulletin when it first hit the market.“There are 27 types of fruit and vegetables, like plums and pears and nectarines.” Entertain in style. The living areas.Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 1:58Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -1:58 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p360p360p216p216pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenWhy location is everything in real estate01:59center_img My Cupcake Addiction followers would also recognise the kitchen – one of three at the property – that is used as the studio for the show and where the couple spend hours each week cooking, baking and styling. Elise Strachan – creator of MyCupcakeAddiction – has sold her Gold Coast home.CUPCAKE queen Elise Strachan – who boasts more than 10 million social media followers – has sold her palatial QLD luxury home.Her Hinterland home has sold for a sweet $1.69 million.The global success story, along with husband Alec, runs online product My Cupcake Addiction that boasts more than 10 million followers across various platforms. The residence features a $10,000 feature mirror at the entrance to the living area, a converted second garage set up for a home studio or dual living, to the home cinema and bar.There’s also a modern, open-plan cabana that was installed just before Mrs Strachan and her husband and sons moved in two and a half years ago and a resort-style pool.Property records show the property sold in August for $1.69 million through LJ Hooker agents John Fischer and Ilona Barry.last_img read more