The WPV recently increased its real estate exposure considerably, making its first foray into housing, participating in two Patrizia-run Southern German residential portfolios.The pension fund was also one of the buyers of a part of Tower 185.“We already have a 20% real estate allocation, which cannot be expanded very much anymore,” Korfmacher said.Korfmacher added that exposure to residential investment was now “quite substantial”, comprising approximately 16% of the real estate portfolio.He said the WPV also aimed to bring down its bond allocation to just over 50% – “already quite innovative”, particularly compared with insurance companies and most other German pension funds.He added that asset-allocation changes had been made within a relatively short period of time, as the WPV, “being a relatively small and fast-growing pension fund, has high inflows compared with the actual assets under management”.Korfmacher said it was of particular importance at the moment for the WPV to have the necessary in-house staff and expertise to “make the right investment decisions”.“Investing in alternative assets is not an area in which you should try to save money on in-house and/or external advise,” he said.“These investments need much more time for choosing the asset, or the hopefully right manager, and then you need to monitor the investment permanently.”He said the pension fund had increased staff in investment management and risk management significantly in recent years.In addition to a new head of asset management, among other hires, the WPV brought in Dajana Brodmann, former deputy head of alternative investments at the €53bn German BVK.The WPV’s portfolio is undergoing restructuring into a single German Spezialfonds, as well as two Luxembourg vehicles for real estate and alternative investments.These funds are constructed according to the new KAGB rules.The WPV will include any direct real estate investments it might make in future, as announced late last year, into the Luxembourg vehicles, Korfmacher said.He said categories such as core, core-plus or value-add were used “mostly for marketing”, and that it was more important to understand the opportunities or risks of a given real estate investment.He also said he mostly preferred “investing opportunistically in core assets”.Respecting indirect investments in Spezialfonds, he welcomed the SFIX index recently unveiled by IPD and BVI.He said the SFIX index was “on its way to becoming a benchmark for peer group comparison of managers” and “perhaps an additional benchmark for performance-related fees”.He added that it might be a future exclusion criterion if an asset management company failed to provide its data to the index.“It would be a question of comply or explain,” he said. The WPV, the €2.3bn pension fund for German auditors and chartered accountants, is “more or less looking at everything” focusing on real assets in its search for risk-adjusted returns, according to chief executive Hans Wilhelm Korfmacher.Korfmacher told IPE that high annual contributions allowed the pension fund to consider new investments, but, due an already high allocation to real estate, the pension fund has had to look at alternatives.As such, the scheme has moved to strengthen its in-house staff in the area. In October, Heiko Seeger joined the WPV from regional insurer Provinzial Rheinland as managing director and head of asset management, while Korfmacher also recently took on his role as chief executive. read more
AustralianSuper has acquired a 50% stake in a £270m (€325m) UK shopping centre from the BT Pension Scheme, as both institutions seek to build their global property exposures.The transaction involving thecentre:mk in Milton Keynes marks the Australian superannuation fund’s first direct property investment outside its domestic market, while reducing the BT Pension Scheme’s interest after nearly 40 years of ownership.AustralianSuper was advised by Henderson Global Investors, which received a mandate six months ago to invest in UK retail properties on its behalf.The institution has been developing an in-house investment team, led by Jack McGougan, with a view to reducing investment costs. It is also looking to invest outside its home market and recently hired Australian fund manager QIC to invest in US shopping centres.McGougan said the fund had been “monitoring the UK retail property market for quite some time” and that the debut deal was in line with its focus on “dominant” shopping centres.The 1.3m sqf prime retail space, which benefits from consumers nearby Oxford and Cambridge, has 220 retail units and is anchored by department stores John Lewis, House of Fraser and Marks & Spencer.It has been owned for nearly 40 years by the BT Pension Scheme, which is seeking to reduce its exposure to UK property and diversify globally.Chris Taylor, chief executive at Hermes Real Estate Investment Management, which advises the BT Pension Scheme on its real estate investments, said the sale of the 50% stake was “consistent with our strategic plan to continue to diversify our real estate portfolio internationally”.In the summer, the BT Pension Scheme halved its interest in a portfolio of eight London office buildings by selling a 50% stake to the Canada Pension Plan Investment Board (CPPIB) for £174m.In 2011, Hermes REIM launched a US real estate fund in conjunction with UOB Global Capital and Hampshire Real Estate Companies, for which the BT Pension Scheme provided £150m in seed capital.AustralianSuper is investing in the US retail market through an “open-ended mandate” with QIC, an Australia-based company that last year entered into a joint venture with US-based Forest City Enterprises to invest in eight regional shopping centres.AustralianSuper already owns a stake in the QIC Property Fund, which invests in shopping centres in Australia.It also awarded a “direct investment mandate” with ISPT in 2013 to invest in office and retail assets in its domestic market.The move to a more direct property investment strategy is part of a wider five-year plan to reduce investment costs.AustralianSuper has also established in-house investment teams for its infrastructure and Australian equities investments.The superannuation scheme was a direct investor in the IFM Investors-led consortium that acquired NSW Ports in Australia. read more
UniCredit, the Italian bank, is looking to merge asset management arm Pioneer in a deal with Banco Santander’s subsidiary business to create one of Europe’s largest managers.Spanish bank Banco Santander has reportedly agreed to discuss the merger of the two businesses after selling half of its stake in Santander Asset Management to private equity investors last year.A statement from the Spanish bank confirmed it had entered discussions with UniCredit.A spokesman said Banco Santander – alongside its fellow private equity owners of Santander Asset Management, Warburg Pincus and General Atlantic – are looking at the integration of the company with Pioneer Global Asset Management. “As of today,” he added, “no agreement has been reached about the potential structure or terms of this potential transaction. Santander will inform the market at a later stage in case an agreement between both parties is reached.”Milan-based UniCredit has been looking to shift Pioneer from its books for some time, and saw the collapse of a sale to French asset manager Amundi during the euro-zone crisis.The Italian bank had been evaluating bids for Pioneer before entering exclusive discussions with Banco Santander for the potential merger.Other bidders were reportedly from the private equity space.According to local media reports, private equity firm Advent International and a consortium comprising CVC Capital Partners and Singapore sovereign fund GIC were other potential bidders for Pioneer.The move by UniCredit and Banco Santander comes as European banks look to offload asset management businesses to shore up capital reserves in the light of new EU regulation.The merged entities would create a business with close to £300bn (€382bn) in assets under management, with both Pioneer and Santander Asset Management reporting AUM of close to £148bn in 2014.According to reports, under the new arrangement, UniCredit, Banco Santander and private equity owners Warburg Pincus and General Atlantic would each own one-third of the merged business. read more
“In part,” the report says, “this reflects the admin difficulties faced by some schemes in offering access to drawdown, but, by-and-large, schemes are actively choosing to do this because they feel it is right for their members.”Some schemes are re-designing the entire default design to create a blended or three-pronged approach targeting income drawdown, annuities or cash.Creating a blended approach may be difficult, but scheme managers need something that can be used by members whatever their intentions, according to Spence Johnson’s report.One scheme manager said: “It would be just as appropriate for staggered cash withdrawals, and it would be suitable for those targeting post-retirement investment.”Others opted for changing the default to match income drawdown entirely.However, the research said the schemes were generally resistant to the idea of profiling members to create a default option for them.The idea of a default retirement system gained momentum as the changes came into force due to concerns that unguided members would make bad decisions.However, one scheme manager said profiling members for defaults was fundamentally flawed.“You can have two people on the same salary with the same pot size, living in the same street, but one of them has got inherited wealth, while the other has a massive mortgage. It is simply too hard to know enough about them to accurately profile their decision making.”The Centre for Policy Studies recently suggested the UK government should create a default decumulation system for DC members that automatically shifts un-engaged members into a income drawdown/annuity hybrid.However, pensions minister Steve Webb dismissed the idea entirely, suggesting that creating a default system undermined the idea of providing freedom of choice.The idea that savers will need some form of default option, even if designed by scheme trustees, did gain support from the National Employment Savings Trust.MPs charged with scrutinising pensions policy and the National Association of Pension Funds also voiced their support. The future of defined contribution (DC) pension fund design could stick with annuity targeting, as research shows waning support for default retirement options among UK scheme managers.Research from the DC Investment Forum (DCIF), a collective of DC asset managers, found that some of the UK’s largest company pension schemes were making no dramatic changes to their offerings despite the passing of the April changes to the system.DC savers in the UK are no longer forced to purchase an annuity at retirement and can now access alternative income products or withdraw their savings as cash – a development that upsets default retirement systems designed for annuity matching.The research, conducted by Spence Johnson, said a near majority of those interviewed were keeping DC designs already in place before the changes to the system were announced in March 2014. read more
The strategy was proposed by the executive board and approved by the supervisory board on 1 December.In a statement, FRR said efforts by the World Health Organisation, governments and civil society to deal with the “scourge” of tobacco consumption could eventually weigh on the performance of tobacco companies.It also believes engaging with companies will not lead to progress “because the whole purpose of engagement would be to demand that they should stop their activities altogether”.“For this reason, FRR has decided to exclude the tobacco industry from its portfolio,” it said.On its decision on coal companies, the reserve fund said it had already reduced its exposure to high-carbon sectors, especially those exposed to coal, which is accountable for more greenhouse gas emissions than any other fossil energy source.FRR said that, after the international agreement on climate change reached at the UN Conference of Parties (COP21) in Paris last December, “governments, and also investors, are increasingly calling coal into question as being incompatible with the objective of limiting global warming to 2°”.FRR will still invest in companies that generate more than 20% of their turnover – or their electricity, steam or heat production – from coal if they employ carbon capture and storage processes or “have formally announced their commitment and have begun to take action in this direction”.The fund said the two exclusion strategies would be rolled out in 2017.The coal exclusion decision contributes to portfolio decarbonisation efforts that have been underway at FRR over at least the past two years. Individual and institutional investors representing more than $5trn (€4.7trn) of assets under management have committed to divesting from fossil fuels, according to a recent report.FRR’s announcement comes a day after the local authority pension fund for the borough of Southwark in London pledged to sell its investments in fossil fuels. Fonds de reserve pour les retraites (FRR), France’s €37.2bn pension reserve fund, will no longer invest in the tobacco industry or certain coal companies.Further, next year, it will launch €5bn of ESG-based passive equity mandates as part of the implementation of the new strategies. The exclusion strategy will be applied to the fund’s existing bond mandates, so that, by the end of 2017, it will have been applied to almost 95% of the “overall scope” of FRR’s assets, according to the fund.It yesterday announced that it decided to exclude, from its equity and bond portfolio, investments in tobacco-producing companies and companies for which more than 20% of turnover is derived from thermal coal extraction or coal-fired power generation. read more
More precise language about ESG investing and a more thorough conversation about the purpose it plays in portfolios may be the key to bridging the “gulf” between how professional and individual investors view its role and impact, according to Natixis Global Asset Management.In a report based on a set of investor surveys it carried out last year, the asset manager said it found a “distinct split” in the views of professional and individual investors that challenges conventional thinking about environmental, social, and governance (ESG) investing.Individuals believe the environmental, social, and ethical records of the companies they invest in are important, said Natixis, while professionals at institutions and within “the investment community” were more sceptical about the efficacy of these strategies, for example having concerns about performance measurement.The professional investors included in the survey were managers of corporate and public pension funds, foundations, endowments, insurance companies and sovereign wealth funds. “The real disconnect between the two populations may be based more on semantics than impact on investment performance,” said the asset manager.ESG might be associated by many with ‘negative screening’ – excluding certain sectors from portfolios – Natixis said, without considering other strategies.“For every negative screen, there can be another, potentially positive, opportunity to access return potential in companies that adhere to positive environmental, social and governance policies or within sustainable investing themes that are playing out across the global economy, and that’s something negative screening may struggle to capitalize on,” it said.It surveyed defined contribution pension plan participants in the US last year and found that three-quarters wanted more socially responsible options included in their retirement plans.This suggested ESG could be a catalyst to increasing retirement plan participation, according to Natixis.However, it said the views of professional investors “who have not followed the evolution of ESG” could pose a challenge to implementing such strategies.An ESG ‘mind-shift’Matthew Shafer, executive vice president of international distribution at Natixis, said: “We need to ultimately get past the mindset that ESG is merely the act of blocking out companies through negative screens.“It is clear that there are substantial opportunities for ESG [investing] and both individuals and institutions will agree that demographics shifts, burgeoning industries and sustainable growth initiatives are attractive on both an investment level and a social level. If enticing investors to save more by offering ESG elements is the catalyst that solves the savings crisis, then we need to start thinking ESG is here to stay.”Shafer later told IPE a “good mind-shift” around the concept of ESG investing was already taking place to varying degrees across all investor types.For example, six in 10 of institutional investors surveyed by Natixis last year predicted ESG would become standard practice for their organisation within the next five years.A little over half said they believed an ESG strategy could help mitigate risk and generate alpha.“This is a clear shift even from five years ago, although it should be noted that there is still a high percentage of respondents who did not share this view,” said Shafer.The institutions responding to the survey ranked reporting on financial and non-financial performance as the top hurdle to successful implementation of ESG measures. Natixis GAM noted that major “fund ratings bureaus” and research organisations were introducing tools for monitoring and measuring ESG factors.“We need tools that are accurate and with which professionals are comfortable using to measure various metrics, including performance,” said Shafer. “When this is in place we are then likely to see a greater change in attitude to ESG.” read more
The Pensions Regulator (TPR), pension scheme trustees and the wider financial services industry should all work to develop social impact investing in the UK, according to a government-appointed advisory group.Companies, the government and professional bodies also had a role to play, the advisory group said in a report on social impact investing in the UK.The group comprises senior representatives from across the investment and savings industry, including Mark Fawcett, chief investment officer of UK master trust NEST, and Saker Nusseibeh, CEO of BT pension scheme-owned Hermes Investment Management.With respect to pension scheme trustees, the advisory group said they should work with employers and pension providers to develop best practice for better engaging scheme members with their investments and encouraging them to register on their pension platforms. “This should lead to better alignment with members’ non-financial values, with social impact investments as potential fund choices providing they have an appropriate risk/reward profile,” it said.“As product track records mature, we also envisage growth in social impact investing as a natural part of default funds.”Earlier this year the Law Commission said there were no legal or regulatory barriers to pension schemes making socially responsible investments.TPR and other regulators and statutory bodies, such as the Financial Conduct Authority, should continue to build capability in relation to social impact investing so that the strategy would be embedded in regulatory frameworks and understanding, the group’s report said.The role the FCA was expected to be able to play was set out in greater detail in a letter from Elizabeth Corley, vice chair of Allianz Global Investors and chair of the advisory group. Topics included the regulatory regime for fund structures and perceived restrictions for allocation to illiquid assets. Social impact investments are often made via illiquid assets.The financial services industry should work with the asset management trade body (the Investment Association) and professional bodies to develop good practice and set common standards.The industry should also support co-investment, and convene a follow-on group to allocate responsibility for taking forward specific actions and monitor progress.The group said the UK, despite having been a pioneer in social impact investing, was failing to keep pace in enabling individuals to make such investments.It found several reasons for this, but said none were insurmountable and suggested the UK was faced with fertile conditions for growing social impact investing.“There are strong foundations in place,” it said, “including deepening investor demand and a growing social impact environment, strongly supported by the government.“Financial market participants are also eager to do more, and the UK’s strong record on environmental initiatives and corporate governance and reporting augurs well for the development of standards over the coming years.”The advisory body’s report can be found here.Shining a light on impact investments’ financial performanceInvestors wanting to know more about the financial performance of impact investing may wish to turn to a new report published by the Global Impact Investing Network (GIIN).According to the GIIN, it provides a comprehensive review of more than 12 studies on the subject to date, describing each study and synthesising findings across available research by asset class as well as bringing to the fore implications for the impact investing industry. The focus is on private equity, private debt and real assets.Findings include that impact investors targeting market-rate returns can achieve them, with the distribution of impact investing fund returns across private market strategies similar to what is seen in analogous conventional markets. The research also found many impact investors took a portfolio approach to building an impact investment strategy across multiple asset classes. The full GIIN report can be found here. read more
The Glasgow-based Strathclyde Pension Fund has allocated £820m (€933bn) to a range of infrastructure, absolute return and real estate debt funds as it continues to implement its new investment strategy.The investment committee for the £20.8bn UK public sector pension fund approved investments of £200m in the Ruffer Absolute Return Fund and £500m in the JP Morgan International Infrastructure Fund at a meeting last month.In addition, the panel gave the go-ahead for a £50m investment in Equitix Fund V – a fund investing in small and mid-market core infrastructure and energy efficiency assets in the UK – and a £50m investment in Greencoat Solar II Fund, which targets UK ground-mounted solar photo voltaic farms.The committee also approved a £20m investment in GAM Real Estate Finance Fund II – a fund of domestic commercial real estate loans. These new investments are part of the pension fund’s ongoing diversification process, which involves reducing its equities exposure and building up allocations to private debt, emerging market debt, global credit and UK infrastructure.The shift is aimed at rebalancing the portfolio towards the pension fund’s short-term and long-term enhanced yield allocations.In March, the Strathclyde Pension Fund announced it had sold 10% of its equity exposure in December 2017 – cutting more than £1bn from a passive equity mandate run by Legal & General Investment Management – and bringing its equity weighting down to 57.5%.Strathclyde is about to start tender exercises to identify suitable managers for new investment allocations to private debt and real estate debt, with the mandates to be announced towards the end of this year.The pension fund also said it had made a 1.8% investment loss for the quarter ending 31 March 2018, with a return for the financial year of 6%.With a value of £20.8bn at the end of March, the fund’s estimated funding level was 105.6%, it said. read more
A company signed up with one of Ireland’s largest private sector pension schemes has been convicted and fined in a prosecution brought by the Pensions Authority.The regulator this week announced that a district court last week convicted Rock Solution Options, a precision drilling, blasting and rock splitting company, for failing to comply with a statutory request it had made.The regulator had sought information and documentation detailing deductions made from employees’ wages for contributions and payments to the trustee of the pension scheme, the Construction Workers’ Pension Scheme, as a result of allegations that the money was not being paid across to the trustee.The company was fined €4,000 and the two directors of the company at the time the request was issued were also convicted and fined €5,000 each. Brendan Kennedy, chief executive officer at the Pensions Authority, said: “This conviction should act as a warning to all employers and company directors that the Pensions Authority treats a failure to respond to a request for information by the authority very seriously.“The authority has a responsibility to enforce this requirement and regards non-compliance as a serious matter.”In Ireland companies operating in the construction sector have to enrol employees with the Construction Workers’ Pension Scheme unless they find a better alternative scheme. The construction industry in Ireland was badly hit by the financial crisis in the late 2000s.As at the end of 2018, more than 7,000 employers were adhering members of the scheme, according to its latest annual report. It had €1.5bn in assets under management. read more
Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 9:24Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -9:24 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD288p288pAutoA, 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 Rate1xFullscreenCoreLogic Brisbane Housing Market Update – August 201809:25 The three bathroom, double car space apartment at 1001/87 Mooloolaba Esplanade, Mooloolaba, was on the market for just over three weeks before the deal was sealed, agent Simon Guilfoyle of G1 Property — Mooloolaba told The Courier-Mail.More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours ago Stunning backdrop for the bedroom.“This is the highest price fetched for this building. It’s possibility the second highest along the Mooloolaba Esplanade … It was a NSW family and it was on the market for 26 days,” he said.CoreLogic records show the highest price fetched for an apartment in the area was $4.5m for a 448 sqm three bed apartment. Most other high pricetags in the area were for houses including one on Neerim Drive that sold for $4m three years ago and another on Carwoola Crescent that fetched $3.9m five years ago. Multimillion-dollar view. Where to buy and sell in Brisbane Brisbane home with a wartime secret Apartments hit new high For those who may be tired of the ocean, there’s always the building’s pool.“Mooloolaba is coming into its own. In terms of new buildings of 10 stories or higher, there’s only been three in the last 12 years, so it’s stock that’s tightly held. We need more new stock.” FOLLOW SOPHIE FOSTER ON FACEBOOK The unit was approximately 274 sqm big.“It’s a phenomenal building and the quality of the product is the best in Mooloolaba. They are rarely traded as well,” Mr Guifoyle said.Factors helping drive up the price included the apartment’s size at approximately 274 sqm, views across the water, and the fact that stock in the area was tightly held. The media room at the unit at 1001/87 Mooloolaba Esplanade, Mooloolaba.A BUILDING record in one of Queensland’s coastal hot spots has been smashed with the sale of a three bedroom unit for 10 times the suburb median.A Toowoomba family sold their three bedroom apartment in the prized Sea Pearl building for $4.4 million yesterday, a rare feat for units in the area.The median unit price in Mooloolaba was $405,000, with the area considered a high demand zone by realestate.com.au. read more
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