According to the final guidelines, managers will have to report on the portfolio concentration of alternative investment funds.Key elements of this include reporting the breakdown of funds’ investment strategies, the main markets and instruments in which they trade, the total value of assets under management and turnover of each fund, as well as the principal exposures and the most important portfolio concentration of the funds.The key elements of the additional level of reporting the authority is now proposing include the funds’ risk measures, their liquidity profile and their leverage.ESMA said the guidelines clarified AIFMD provisions on required information, which would help achieve a more comprehensive and consistent oversight of the activities of alternative investment fund managers.The authority also said it was publishing technical supporting material that would make managers’ reporting easier, such as a consolidated reporting template, detailed IT guidance for filing of the XML and the XSD schema.The guidelines will now be translated into the official EU languages.When these translations are officially published, national regulators will have two months to confirm whether they comply or intend to comply by incorporating the guidelines into their supervisory practices, the EU authority said. The European Securities and Markets Authority (ESMA) has published final reporting guidelines for the Alternative Investment Fund Managers’ Directive (AIFMD), along with a new proposal for another level of mandatory reporting.ESMA said it had published an opinion proposing the introduction of additional periodic reporting for alternative investment funds (AIFs), to include information such as the Value-at-Risk of the funds, or the number of transactions carried out using high-frequency algorithmic trading techniques.The authority published final guidelines on the reporting obligations under the AIFMD, which require managers of AIFs to report certain information to their national supervisors.The directive covers hedge funds, private equity and real estate funds and came into force in July.
The European Insurance and Occupational Pensions Authority (EIOPA) is looking to put a “stronger emphasis” on occupational pensions next year by implementing new technical standards and conducting further work for the revised IORP Directive.As part of its work programme, the Frankfurt-based authority said it intended to implement a first technical standard on the reporting of information of prudential nature by national supervisors in 2014.The authority also plans to conduct “extensive advisory work” as part of the upcoming legislative proposal for the revised IORP Directive.EIOPA said it would continue to work on the creation of a Europe-wide approach to personal pensions, with a clear focus on consumer protection. Carlos Montalvo, EIOPA’s executive director, said the work programme was “ambitious”.“Our priorities are driven by supervisory and regulatory convergence, enhancement of financial stability and promoting a leading role in consumer protection, which is key in our daily work,” he added.“We have made strategic choices in each of the different areas of work. And we need to keep developing the organisation, to ensure that in all these areas we can make a difference for Europe and its citizens.”EIOPA’s working programme is in line with the authority’s request for more independence.Earlier this year, it called on the European Commission to strengthen the authority’s operational independence, reinforce its independent role towards national authorities and enhance its mandate and powers.EIOPA’s plans also come at a time when the European Commission is supposed to launch a legislative proposal for pillars two and three – which focus on governance and transparency issues, respectively – of the IORP II Directive sometime this autumn.However, the Commission, which originally sought to launch its proposal at the end of this month, recently decided to postpone its plan, according to sources close to the situation.
Norwegian pensions firm Oslo Pensjonsforsikring (OPF) produced a return of 8.8% in 2013, with strong returns from higher-risk assets boosting overall investment profits. The return was marginally higher than the 8.6% generated the previous year. Delivering full-year results, the local authority pensions provider said: “In 2013, the return was created in asset classes that are normally associated with higher risk, unlike the year before, when it came from several sources.” Returns on Norwegian and foreign listed shares were 13.7% and 30.9%, respectively, it said. Hedge funds, private equity, convertible bonds and high-yield bonds returned more than 10%. However, returns on money market investments and bonds were marked by low returns, OPF said. The company made a profit for the full year of NOK522m (€62.7m), compared with NOK446m in 2012. OPF said it completed its accumulation of reserves to meet new requirements relating to longevity risk from the Norwegian FSA, making a NOK375m provision in 2013 for increases in life expectancy.Total assets rose to NOK62.5bn by the end of December 2013 from NOK56.4bn the year before.Meanwhile in Finland, Varma ended 2013 with a return of 9% and said the country’s solvency rules had allowed it to invest profitably.The result compares with a 7.7% investment return reported the year before.Risto Murto, president and chief executive at Varma, said: “The period after the financial crisis has been good in terms of investments, despite the uncertain economic situation, and at the same time, the national solvency legislation has given us the opportunity to invest assets profitably.” The good investment returns produced meant the firm’s solvency was at an all-time high, he said.Total investment assets rose to €37.7bn at the end of December 2013, up from €34.4bn a year before.Solvency capital increased to 31.6% of technical provisions from 28%.Equities produced the highest returns among asset classes, finishing the year with a return of 21.8%, up from 14.5% the year before, the company said.In particular, Finnish listed equities fared well, with a 33.7% return after 2012’s 21.3%.Fixed income investments generated just 1.2%, down from 4.4%.Varma said these investments were burdened by its cautious risk policy, with government bond holdings focused on those bonds with the best credit rating.In the course of last year, Varma said it increased the proportion of equities in its portfolio and cut the fixed income weighting.Real estate investments returned 3.1% compared with 4.5% the year before, with 2013 returns in this asset class affected by fair value depreciations applied during the year, Varma said. Hedge funds returned 8.8% up from 6.8%.
Swedish buffer fund AP4 has invested €125m in two engagement funds from GO Investment Partners (GO), seeking exposure to European and Japanese small cap firms.The SEK260bn (€29bn) investor committed €75m to the GO European Focus Fund, a constructive activist investment fund, which seeks to add significant value for clients by acting as a catalyst for corporate change in quoted small and mid-cap European companies.Launched in 2005, it has assets under management of €500m, and achieved annualised net returns of 6.6% between inception and the end of March.AP4 has also invested JPY7bn (€48m) in the TMAM-GO Japan Engagement Fund (JEF), doubling its initial investment made when the vehicle was launched in March 2012. Mats Andersson, chief executive, AP4, said: “AP4 is delighted to make these investments into funds that we feel make a difference. Improving the performance of companies and making them more sustainable fits very well with AP4’s long-term investment philosophy.”He added: “Our experience with the Japan Engagement Fund has been excellent, with returns far outstripping the market, and we have seen real change at Japanese portfolio companies. We look forward to more of this in Japan, and also now in Europe.”According to GO, the fund aims to engage with small and mid-cap Japanese companies to improve valuations by addressing strategic, financial and governance issues.The fund has returned 36.0% net per year since launch, compared with 21.2% for its benchmark.Steve Brown, chief executive, GO, said: “The backing of AP4 is a powerful endorsement of our constructive approach to improving companies. There are excellent opportunities in both Europe and Japan right now, and we look forward to capitalising on these for the benefit of AP4 and our other investors.”
Elsewhere, the UK’s Pensions Infrastructure Platform’s (PIP) Multi-Strategy Infrastructure Fund (MSIF), its inaugural in-house fund, has made its first equity investment.The PiP was set up in 2011 and is backed by the Pensions and Lifetime Savings Association as a method of channelling pension fund investment into UK infrastructure.The MSIF, which is targeting a £1bn capital raise, had by its first close in April attracted £125m from the West Midlands Pension Fund, Strathclyde Pension Fund and others.The PiP said MSIF bought a portfolio of 31 individual wind turbines from Ingenious Infrastructure and AGR’s Golden Square Energy joint venture. Predictable revenues linked to the UK’s feed-in tariff, combined with guaranteed availability under long-term operation and maintenance contracts, will provide investors with 20 years of inflation-linked cash flows to help meet long-term pension obligations, the PiP said.JP Morgan Asset Management has cut the charges on its JPMorgan Life Diversified Growth Fund from 75 basis points to 40bps. It has also adjusted its target, now aiming to deliver “cash plus 4% over a market cycle”, the asset manager said in a statement.The move follows a scathing review of the asset management sector by the Financial Conduct Authority, which criticised “weak” price competition among actively managed funds. While JP Morgan did not reference the review, it said the changes aimed to “maximise competitiveness”. The fee cut was made possible by JP Morgan using its in-house Research Enhanced Index strategies for its underlying equities exposure. “The REI strategies seek to deliver consistent excess returns at low active risk by managing an index-like portfolio designed to source the majority of alpha from stock selection,” the company said.Meanwhile, the Pension Protection Fund (PPF) has made changes to calculations it uses to assess schemes for entry into its protection and to charge a levy for existing schemes.Following a consultation, the PPF has updated its mortality assumptions, adjusted the yield indices it uses to “better match average liability durations” and introduced separate discount rates for pensioners and non-pensioners. The Aggregate Industries Pension Plan has secured a £135m (€158.5m) buy-in with Just Retirement covering more than 750 members of the construction materials supplier’s pension scheme.It follows a £210m buy-in completed in 2010 and means the pension scheme has insured half of its liabilities.Ian McGown, head of pensions and reward at Aggregate Industries, said: “In uncertain economic times, Just Retirement was able to offer attractive financial and commercial terms.”Charlie Finch, partner at LCP and lead adviser on the transaction, said: “A series of buy-ins provides a cost-effective de-risking strategy in an uncertain world. The plan has now insured half of its liabilities, timing the buy-ins to benefit from market opportunities as they arise.”
PMT following a different policy than PME is unusual, as both metal schemes have outsourced their investments to MN, and have been hinting at a possible merger for several years.PMT said it wanted to monitor carbon emissions closely, but preferred engagement with high emitters as a way to achieve reductions.The pension fund explained that it favours an “inclusive energy transition”, which takes into account the effects on staff.It added that it considered exclusion an ultimate remedy for companies that haven’t introduced a climate strategy within two years.Recently, PME said it wanted to reduce carbon emissions by 25% through engagement with the 10 highest emitting companies in its portfolio.If the dialogue fails, it could lead to exclusion of these firms as of next year, according to PME. Dutch pension fund PMT does not intend to set a target for the reduction of carbon emissions from its equity holdings, going against a trend among the largest schemes in the Netherlands.A spokesman for the €67bn pension fund for the metalworking and mechanical engineering industry explained that its investment policy was closely linked to its sector, with comprises 33,000 employers of predominantly production companies, but also garages and fitters.“The industry is carbon-sensitive, with many firms emitting CO2 as well as using fossil fuels,” the spokesman said. “Our rank and file comprises of companies that are ahead in energy transition but also firms that are about to start a transition to low carbon management.”Since 2015, civil service scheme ABP, healthcare pension fund PFZW, metal scheme PME, and BpfBOUW, the pension fund for the building sector, have decided to reduce carbon emissions in their portfolios by up to 50% by 2020.
Jesper Kirstein told IPE the main reason his company had decided to split into two in this way was to enable it to be seen as an alternative provider of balanced mandates and project work alongside the main asset management firms.“We feel that as an investment management company we can approach investors we wouldn’t otherwise have been able to,” he said.As things stand, some of the largest investors, for example Danish local authorities, have not seen Kirstein as an alternative to traditional asset managers when putting investment mandates out to tender, he said.“The move also makes it easier to communicate our different value propositions to the clients and avoid misunderstandings of our interests,” Jesper Kirstein said.In future, Kirstein will only advise asset managers, he said.“It’s better for potential conflicts of interest, even though we have addressed this problem before with the code of conduct we wrote, which was signed by the board,” he said.Kirstein used to, among other activities, advise small and medium-sized institutional investors on investment strategy and selection of managers.Most of Spektrum’s clients will be Danish, but the new firm will continue to pitch for Nordic business outside Denmark, Jesper Kirstein said.“Denmark is our main priority,” he said.Spektrum has 12 staff and is providing on-going advice for portfolios with a total value of €4.4bn, the firm said. Danish pensions and investment consultancy Kirstein is splitting into two separate companies as it launches an investment management business.The new company Spektrum Fondsmæglerselskab (fund brokerage) came into being on 1 September as an affiliate of Kirstein.Spektrum will advise and manage portfolios for institutional investors. Kirstein founder Jesper Kirstein will be its chief executive, Andreas Weilby its chief operating officer, and former governor of the Danish National Bank Bodil Nyboe Andersen will become chairman of the board.Kirstein, meanwhile, will continue to advise Danish and international asset managers, the firm said. Anne Mette Lytzen has been appointed as its chief executive, and Jan Willers its COO.
Reporting its financial results, Varma said it generated a 7.8% return on investments for the full year, up from 4.7% in 2016.Total assets under management grew to €45.4bn, up from €42.9bn a year earlier.The growth was not enough to preserve Varma’s long-held position as the largest Finnish pensions insurance company. Its rival Ilmarinen – which has just merged with the smaller Etera – reported earlier this month that its investment portfolio had risen in value to almost €45.8bn at the end of 2017.Local government pension fund Keva is still the most asset-heavy pension fund in Finland, with total investments valued at €50.9bn at the end of September 2017.Varma reported that all asset classes had ended 2017 with positive returns.Directly held unlisted equities and co-investments produced the highest return, generating 18.5%, even though this was lower than the 23.7% return from the asset class in 2016.Listed equities, meanwhile, returned 11.6%, up from 4.5% the year before. Fixed-income investments returned 3.7%, while Varma’s allocation to private equity funds gained 7.9%.Reima Rytsölä, Varma’s CIO, said: “The pick-up in the global economy led to booming equity markets worldwide, and the strong return on Varma’s investments had a direct correlation with the economy.”He predicted brisk economic progress would continue, “unless the wings of growth are clipped by central banks’ tightening monetary policy”. Finnish pensions insurer Varma has slashed the carbon footprint of its listed equities, corporate bonds and real estate portfolios by around a quarter over the past two years.In preliminary results for 2017, the €45.2bn pension provider said carbon generated by its listed equities had fallen 27% in 2017 from the 2015 baseline, while emissions related to its corporate bonds and real estate had declined by 22% and 18% respectively.Varma said: “This result was achieved, for example, by focusing on low-emissions industries and by avoiding emissions-intensive industries such as energy and mining.”The firm said its goal was to bring the carbon footprint of its holdings down and to develop the portfolio to conform with the targets of the Paris climate agreement.
Kraus – chairman and CEO of Aperture – argued that the asset management industry was “long overdue for disruption” with “too many active managers managing too much money”.“Fixed fees and a lack of real capacity constraints have long incentivised managers to grow assets under management rather than pursue outperformance,” he said. “This structure has led to years of poor performance that has eroded client trust in active management. We intend to change this by aligning manager and client incentives around outperformance…“It’s our belief that investors would rather pay for performance than pay regardless of whether or not they get any, and the only way to do that is to disrupt the long-held model of fixed fees based on AUM in asset management.”Tim Ryan, CEO of Generali Asset Management, added: “Aperture Investors is another important milestone in Generali’s multi-boutique strategy launched last year.“We believe that innovation is not only a key lever for our long-term success but also an opportunity for Generali to guide the process of change as a leader in the insurance and financial industry. Aperture Investors offers us the ability to develop a new model that addresses manager incentives while also leveraging invaluable know-how in our sector.”AMX adds fixed income, crosses $6bn thresholdThe Asset Management Exchange (AMX), an “open architecture” service provider for asset managers, has hit $6bn in assets after UK insurance group RSA added assets from two of its pension schemes.AMX provides back office services for asset managers in order to reduce their operating costs and improve efficiency for asset owners. Since its launch last year, the service – backed by Willis Towers Watson – has been adding equity and hedge funds to its platform. RSA’s Sal Pension Scheme and Royal Insurance Group Pension Scheme have transferred $750m of assets run by Brandywine Global, an affiliate of Legg Mason. It is the first time AMX has added fixed income assets.Nick Deahl, head of trustee investment at RSA, said the transaction “provides the opportunity to achieve… efficiencies as well as support innovation in the marketplace”.He added: “We share AMX’s goal of reducing inefficiencies in the pooled fund industry, along with achieving greater cost transparency and operational simplicity.”Oliver Jaegemann, global head of AMX, said the platform had signed up more than 40 pension fund clients since its launch, which he argued demonstrated “the appetite in our industry to embrace new, innovative measures to save on time and costs”.Fund managers available on AMX include Lindsell Train, Lansdowne Partners, Veritas, Systematica Investments and Fulcrum Asset Management. Italian financial services group Generali has backed a “disruptive” asset management startup led by former AllianceBernstein CEO Peter Kraus.In a statement, Generali said it would provide up to $4bn (€3.4bn) of “strategic investment capital” for Aperture Investors’ first products, which operate a “unique” charging structure.Aperture has lined up credit and equity funds priced initially in line with exchange-traded funds. Fees for both the company and the individual asset managers would only rise if managers beat their benchmarks, the company said.The firm has also implemented a ”deferral mechanism”, which it said meant “unearned compensation” could be returned to investors.
Pieter Omtzigt, CDAAt the time, Koolmees said that pension funds were entitled to reclaim wrongfully paid benefits in case of mistakes, while promising to give the issue a more thorough assessment when future legislation for pension communication was evaluated.Omtzigt’s motion also stipulated that the pensions statement should mention how flexible pension rights were, and that rights cut were possible if pension funds were significantly underfunded.However, liberal party VVD and right-wing religious party ChristenUnie – both members of the four-party governing coalition – opposed the motion.“It ignores the conditional character of pension claims and would make rectifying mistakes impossible,” argued Roald van der Linde, MP for the VVD.He said he was concerned that the result would be a number of disclaimers on the uniform pensions statement – “exactly something we don’t want”.The Pensions Federation, which represents the country’s pension funds, said it wanted to retain the possibility of rectifying administrative errors “at least for mistakes made elsewhere”.Such mistakes shouldn’t come at the expense of the collective nature of a pension fund, the industry organisation said.Rogier de Haan, ombudsman for Omroep MAX, the broadcaster for over 50s that ran a programme about the issue, said he wanted to bring the case to court together with a group of affected members.In the opinion of pensions lawyer Jim Kaldenberg, such a claim could be successful, given existing precedents. Last week, Omtzigt asked Wouter Koolmees, the minister for social affairs, how it was possible that participants could not have legal guarantees for pensions that had already been paid. The Dutch parliament wants pension fund annual statements to be legally binding, removing the risk that pension funds can reclaim benefits they have paid out in error.A large majority supported a motion to allow pension fund members to derive legal guarantees from their statements. It was tabled by Pieter Omtzigt, MP for the Christian Democrats (CDA).The motion was triggered by civil service scheme ABP’s attempt to adjust benefits incorrectly paid to approximately 1,000 participants. As many as 700 received too much.ABP had established the payments based on data provided by social security body SVB, which later turned out to be incorrect.