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​Asset managers must align with shareholder interests on ethics – survey

first_imgThe survey said there was “little doubt” that sincere attempts were being undertaken to bring about change in the way the financial industry conducts itself – largely led by industry-wide bodies.“A number of deep-rooted tensions, however, will make creating a strong culture a big challenge for the industry over the coming years,” the survey added.“While executives champion ethical conduct, they struggle to see the benefits of greater adherence to ethical standards, reporting that, in reality, it can hamper career progression in the industry as well as the firm’s competitiveness,” it said.The survey concluded executives still did not see the benefit of regular inter-departmental understanding as a means of improving performance.John Rogers, president and chief executive at the CFA Institute, said the industry still had “further to go on its journey” to improve ethical standards.“If we are to move the industry forward, it is incumbent upon everyone within the industry to align their personal and organisational values with those that serve client, shareholder and societal needs,” he said. “Aspiring to adopt these values will create more resilient firms and a stronger future for finance.”,WebsitesWe are not responsible for the content of external sitesLink to ‘A Crisis of Culture’ report More than half of executives at asset managers, insurers and other institutional investors believe flexibility on ethical standards is required to guarantee career progression.A survey sponsored by the CFA Institute found that more than two-thirds of respondents – working also in the banking and fund management sectors – said their companies had raised awareness of the importance of ethical conduct by all its employees.It also found that 56% believed improved ethical conduct would enhance the firm’s ability to withstand “unexpected and dramatic risks”.However, almost the same amount of respondents – 53% – agreed with the statement that adhering to technical standards too strictly risked stunting career growth.last_img read more

UK investors call for fund transparency, stewardship from managers

first_imgSome 49% said they would want to be invested with an investment manager that made a specific effort in ethical investing, even if this resulted in lower returns.Despite regular assertions to keep communications to members simple, and avoid complex information regarding asset allocation, 65% said they would appreciate information on investment allocations.More than 60% of respondents said they would be interested in information regarding how pensions were invested either generally, by industry, by country and in specific companies.Regarding fund performance, the majority of investors said they would want to see the performance of the investment fund on an annual and tri-annual basis, with a slight emphasis on more long-term performance.However, despite savers emphasising their preference for stewardship from their providers, only 15% would accept receiving information on voting records at annual general meetings.The NAPF said, with an average 71% of defined contribution assets invested in equities, now was time to understand the investor preference towards stewardship.The organisation began its own initiative to promote stewardship by asking asset managers to complete a ‘framework’ detailing their engagement policies.However, earlier this year, the NAPF was forced to name and shame managers that had not completed the framework, despite having signed up to do so.“The research findings presented within this report suggest the level of awareness as to how and where pension savings are invested is low,” the NAPF said.“However, there is a significant latent interest amongst pension scheme members in knowing more about where their savings are invested.”The research from the NAPF comes as the UK Investor Forum appoints its first chairman.The forum was a key recommendation of the 2012 Kay Review and aims to promote the value of long-term investing by enhancing institutional investor and company engagement. The majority of savers within pension funds would like to receive performance information and transparency over the markets and companies in which they are invested.Research from the National Association of Pension Funds (NAPF) – looking into what scheme members expected from their investments – found members ranked transparency as the second-most important issue after costs.Sixty-five percent of respondents said charges were important when their employers assessed investment and pension providers, although 48% said investment transparency was also important.Also, a majority of those surveyed said they would pay a 10% higher charge to their investment manager if they actively engaged in stewardship.last_img read more

Wednesday people roundup

first_imgJ O Hambro Capital Management – The investment boutique has appointed James Elks as senior manager for institutional business. He joins from Martin Currie, where he was responsible for UK institutional and global consultant relations. He has previously worked at Investec, Bramdean Asset Management and Credit Suisse Asset Management.Nikko Asset Management – Nikko has hired William Low, former director of global equities at Scottish Widows Investment Partnership (SWIP), to head up a new global equities team. Low, who left SWIP in April following its acquisition by Aberdeen Asset Management, will be joined by six of his former colleagues, following the launch of Nikko’s Edinburgh office.Aon Hewitt – Craig Gillespie has been appointed to the UK investment consulting team. He joins from Towers Watson, where he has worked for the last 14 years. Gillespie has more than 20 years’ experience in advising financial institutions and UK pension funds on risk strategy.Barnett Waddingham – Simon Cohen and Rebecca Carse have been appointed to the investment consulting team. Cohen joins from JLT, where he was a director, while Carse – previously an assistant manager in Grant Thornton’s pension risk solutions team – joins from Barnett Waddingham’s Amersham office. State Street Corporation, BP Investment Management, BayernInvest, J O Hambro Capital Management, Nikko Asset Management, Aon Hewitt, Barnett WaddinghamState Street Corporation – Oliver Berger has been appointed senior vice-president and head of strategic market initiatives for Europe, the Middle East and Africa. In this newly created role, based in Frankfurt, Berger will be responsible for the development of State Street’s new initiatives and client solutions. He joins from JPMorgan Chase Group after 19 years, where his most recent role was head of prospect sales for the EMEA. Separately, Andreas Schmid has joined as vice-president in the asset owner solutions team based in Zurich, joining from RBC Investor and Treasury Services.BP Investment Management – BP’s £19bn (€22.7bn) pension fund has increased its in-house capacity, hiring new heads of fixed income and investment strategy. BP IM has named Ian Smart as head of fixed income and the Pension Protection Fund’s (PPF) Opkar Sara as head of investment strategy. Smart joined in June from consultancy Aon Hewitt, which he joined in December 2012 as senior researcher for bond managers. Sara also joined in June, after nearly five years at the PPF as principal fund manager, in charge of asset allocation and investment strategy.BayernInvest  – Oliver Schlick has told the supervisory board he will not stand for re-election as board member and CIO in February 2015 when his contract expires. Schlick has been on the board of the asset management subsidiary of German regional bank BayernLB since 2008. The supervisory board said it would finalise the hiring of a new CIO in early 2015.last_img read more

Joseph Mariathasan: Strategy selection vs manager selection

first_imgActive managers are on the defensive against the massive growth of passive exchange-traded funds, and the battle lines may be most fraught in global equities.The global equity universe is massive. There are 30,000 stocks to potentially invest in. It is beyond human capabilities to cover the complete universe using a fundamental approach, but global equity markets can be approached in numerous ways – through passive indexation, enhanced index and smart beta (is there a difference?), quantitative systematic strategies, broad fundamental active strategies, focused active strategies, market neutral hedge funds, 130/30, and so on.What are the trade-offs of costs versus excess returns for these strategies? Who takes the benefits – fund managers or the owners of capital? What should be an equitable fee structure?These questions are not only important for investors, but are also critical for fund managers as the answers ultimately determine their business strategy. For the largest multi-strategy firms they may be less relevant, as they can cover most – if not all – of the options. They justify this on the grounds that investors are ultimately trying to find solutions for different needs. Smaller boutiques focus on specialist areas. Mid-size firms, however, are facing challenges: the recent merger of Henderson and Janus reflects the pressures on these kinds of companies to cut costs as they face increasing challenges from lower-cost alternatives. Putting a framework to the range of options in the global equity space is a useful exercise not only in educating the investor, but also in helping to determine where the best trade-offs are likely to be between fees and potential returns.The simplest and cheapest approach to global equity investment is clearly via passive indices. Some consultants see them as particularly useful if exposures are undertaken synthetically via derivatives, as this allows better balance sheet management for pension funds enabling them to gain leveraged exposure to equities.Slightly more expensive would be smart beta products, which give tilts to factors that have rewarded for long periods of time. They are also providing a threat to many active managers who have been effectively just packaging up smart beta approaches and, as a result, many of the traditional diversified global equity portfolios are starting to shrink.Moving up the complexity scale and fees from smart beta would be quantitative managers, and there is a grey area between the two. Many quant managers have been running factor-based strategies for 20-30 years and been doing so relatively successfully. Large pension funds investing a couple of hundred million euros or more can hire quant managers for 25-30 basis points a year, while smart beta costs would be 15-20bps, with the more basic end at 10bps. Consultants argue that the extra sophistication you are getting from a quant approach over smart beta is quite significant. In return terms, you should be very well compensated for that extra 10bps of fees.A smart beta strategy would have 1,000 stocks, a quant manager would have 200, while a fundamental manager would have something between 30 and 80 depending on strategy. With each step you are reducing the number of stocks, increasing the tracking error and potentially increasing the return. Active managers would charge between 40-60bps for a developed global equity strategy. Adding emerging markets would add 5-10bps on top for all strategies.Beyond this lies the hedge fund world. A lot of firms are reacting to the new reality of the industry – essentially a lower cost base in a lower return environment. Fees in the long-only space have roughly halved for active managers over the past decade or so, but hedge funds have not reacted to or felt so much pressure to readjust. Hedge funds still justify very high fees with the promise of very high returns.That is coming under pressure and there has been a move out of hedge funds by a number of large asset owners. Investors need a very compelling reason to pay 2 and 20 to a hedge fund where you may end up paying 4% in fees, 10 times higher than a conventional manager.So where lies the best trade-off between fees and potential returns? It is worth taking a view on relative valuations. Certain strategies have done well in recent times but is there much point in trying to get a good deal with products that are close to capacity after a very strong run?In contrast, strategies that are out of favour – such as value strategies that have underperformed recently – may be worth considering. The managers have probably lost assets, but the style works (although it tends to go out of favour for long periods before coming back). For institutional investors, picking the right approach may be more important than picking the right managers.last_img read more

Denmark’s Tryg launches branded pension product with Danica

first_imgThe move follows a series of changes made by Danica to its business so far this year, after it finalised the sale of the Swedish arm of its business in May. Danica Pension boss Ole Krogh Petersen says the deal with Tryg will bring digital development opportunitiesDanica Pension also recently integrated SEB Pension’s Danish business after buying it last year. It now functions under its new name, Danica Pensionsforsikring.Tryg said the deal with Danica was a natural progression of its partnership with Danske Bank, which was set up a few months ago and is scheduled to begin operations on 1 JulyJohan Kirstein Brammer, executive vice president of Tryg, said that the company would be able to advise customers on insurance and pensions under one roof. He added that the integration would bring economies of scale, savings on administrative costs and a reduction in prices for its customers. Tryg, Denmark’s biggest insurance company, is partnering with Danica Pension to launch its own branded pension product in Denmark: Tryg Pension.The two firms also have plans to launch the product in Norway to cover customers of Danica Pension’s parent company Danske Bank.Ole Krogh Petersen, Danica Pension chief executive, said: “Tryg is one of the Nordic region’s most innovative insurance companies and is advanced in digitisation.“It gives us some unique digital development opportunities across industries that in the long term can benefit both our and Tryg’s customers.”last_img read more

Chart of the Week: Global passive assets hit €8.3trn

first_imgThe share of global assets managed through passive strategies has grown from 17% to 22% in this year’s Top 400 Asset Managers survey carried out by IPE.However, the share of ‘passive’ global assets is still below its high point of 26% in 2016.Global active and passive assets (%)Chart MakerActively managed global assets are growing at a higher rate, according to the IPE survey. The compound annual growth rate of ‘active’ global assets for the past five years was nearly 7.9%, compared with a rate of 5.2% for passive assets. IPE Top 400 Asset Managers: Your source for institutional market intelligenceIPE offers unrivalled intelligence on over 400 global asset managers covering over 100 categories of products, strategies, asset classes, and key data areas. The data set is available to buy with a variety of purchase options.For more information please contact iperesearch@ipe.com. Further readingTop 400 Asset Managers 2019: Cultures Change Is asset management a technology business, a people business, or both?Artificial intelligence: Let me tell you what you really think How are managers deploying natural language processing to analyse management sentiment in earnings calls?center_img At a European level, 80% of institutional assets managed were through active strategies, according the survey. This was down from 83% last year, indicating that passive strategies are gaining ground among European institutional investors.European institutional active and passive assets (%)Chart MakerThe growth rate of passively managed institutional assets in Europe for the past five years was 6.3%, compared with a 7.5% rate for actively managed assets.In this year’s IPE Top 400 survey, the ratios of active and passive assets were calculated from the total figures for actively managed and passively managed assets across the whole universe of managers that were surveyed. This means the sample varies slightly year-on-year due to mergers between managers and other events.Passive assets, 2015-19 (€trn)Chart MakerClick here to download the complete Top 400 table last_img read more

Accounting roundup: EFRAG discussion paper gets mixed response

first_imgEFRAG, which advised the European Union on accounting matters, issued a discussion paper in May last year setting out possible alternative accounting approaches to the current model in International Accounting Standard 19, Employee Benefits.A number of jurisdictions in Europe say they are struggling to accurately value hybrid pension promises using the IAS 19 projected unit credit approach.This is because IAS 19 forces them to project their benefit promise forward using an asset-based rate of return and discount back using a high-quality corporate bond rate.In response, EFRAG has suggested three accounting models: the capped asset return approach, the fair-value approach and the fulfilment value approach.The capped-asset approach involves measuring the pension liability at the higher of the IAS 19 obligation:with the expected return capped at the level of the discount rate, orassuming the level of the minimum guaranteed return.Among those supporting EFRAG’s proposal for a so-called capped-asset return approach was the London-based Association of Consulting Actuaries.In a response dated 15 November, the body’s accounting committee chair Warren Singer wrote: “We believe this approach has the advantage of addressing in a pragmatic and easy to implement way the internal measurement mismatch currently caused by inconsistency between the estimated cashflows for these benefits and the discount rate under IAS 19.”Meanwhile, Belgian insurer Assuralia also gave its backing to the model.Assuralia said that “several insurance undertakings in Belgium already follow this approach or a similar one”, and went on to add that its comparability with existing IAS 19 requirements mean it will be cheap to implement.However, other European voices were more muted in their response.The Confederation of Swedish Enterprise warned in its response that the real problem with IAS 19 is the discount rate and said that “none of the proposals should be further developed.”Furthermore, as previously reported by IPE, no German respondents supported the proposals in the discussion paper.Thomas Hagemann, Mercer Germany’s chief actuary, said: “The feedback was very interesting for me from what I’ve read, because it seems that no one supported either of the two more complex approaches.“When it came to the capped asset approach, there were really two points of view in the comment letters. First, there were those such as the ABA, IVS and DRSC [in Germany] who said they supported it – but with changes – and others who rejected it outright.”IASB poublishes planned 2020 consultationsThe International Accounting Standards Board has released an update setting out its planned consultations this year.The briefing shows that the board plans to launch its five-yearly agenda consultation in the second half of 2020, as well as an exposure draft detailing potentially wide-ranging changes to IAS 19’s footnote disclosure requirements.EU adopts IASB’s amendmentsThe European Union has formally adopted the IASB’s recent amendments to its three financial instruments standards.The changes affect IAS 39, Financial Instruments: recognition and measurement, International Financial Reporting Standard 9, Financial Instruments, and IFRS 7, Financial Instruments: Disclosures.The amendments give companies limited exemptions from the hedge-accounting requirements in both IAS 39 and IFRS 9 so they do not have to discontinue and resume hedge accounting just because an interest rate benchmark in a hedging instrument changes as a result of interbank offered rate reform. The European Financial Reporting Advisory Group has received a largely mixed response to its discussion paper setting out three possible approaches for dealing with so-called hybrid or asset-return dependent pension promises.In summary, of the 13 responses received by the end of the consultation period, only the capped-asset approach secured support among constituents, with no respondent backing the competing fulfillment value approach and the fair-value approach.An EFRAG spokesperson told IPE: “The next step for the EFRAG Secretariat is to prepare a summary of the feedback received and present it at the EFRAG [Technical Experts Group] meeting.“In early March, EFRAG TEG will discuss the possible ways forward.”last_img read more

A Bunya home with a mini ‘Wet n Wild’ line up for the gavel

first_img >> FOLLOW EMILY BLACK ON FACEBOOK<< With resort-like appeal this property offers everything from a waterslide to a tennis court.“The feedback has been it’s a tranquil setting, resort style feel, a safe environment for a family to grow, all within 30 minutes’ (drive) to the CBD,” he said.According to the realestate.com.au listing, 8 Ernest Court, Bunya the property is an “entertainer’s dream”, featuring an 8x8m Balinese-inspired hut and north-facing pool with waterfall and spa. The outdoor entertaining area with built-in pizza oven is one of many places to entertain.According to CoreLogic the current owners purchased the property in 2005 for $905,500.The property is one of nearly 70 Brisbane homes going under the gavel this weekend. This Bunya home has it all — architectural design, ample parking and loads of room to entertain.“You’ve got your own outdoor projector screen, you’ve got a waterslide — you know it’s like a mini Wet and Wild,” Mr Crompton said.More from newsParks and wildlife the new lust-haves post coronavirus16 hours agoNoosa’s best beachfront penthouse is about to hit the market16 hours agoHe said 44 groups had inspected the property, who were impressed with its resort-like qualities, including the tennis court and pool area. Ray White Samford sales agent Brett Crompton said it would be like owning your own “Wet n Wild” amusement park. Adding to the fun, this billiards room is the perfect place to wind down.Other features include a terrazzo benchtop and dual Blanco overs in the kitchen, separate formal dining room with bar and fireplace, billiards room and outdoor entertaining with a wood fired pizza oven.The five-bedroom home, which will go to auction this Saturday, October 15 at 10am, is set on a 6102sq m lot and offers parking for up to six cars. AUCTION ACTION: 8 Ernest Court, Bunya will go under the hammer on Saturday, October 15 at 10am.SLIP and slide into this property at Bunya, which comes complete with everything you’d expect from a five-star resort.last_img read more

AREC 2019: How being a loser helped Barbara Corcoran conquer the real estate industry

first_imgEntrepreneur Barbara Corcoran spoke on day two of AREC 2019.BEING a self-confessed ‘loser’ at school helped prepare entrepreneur and industry leader Barbara Corcoran for life in the real estate industry.She was nothing special as a young woman — got straight D’s in high school and college and had gone through about 20 jobs by the time she was 23.But having become accustomed to rejection is one of the reasons she is now one of America’s most successful entrepreneurs.Corcoran told more than 3000 delegates at the Australasian Real Estate Conference on the Gold Coast on Monday to stop wasting time worrying about rejection.“I think I’m the most resilient person I’ve ever met, but I wasn’t always,” she said.“I had a huge advantage coming into the real estate deal because when I was in school, I was a horrific student.“As a horrific student, I was a loser and so I was accustomed to not being liked or made fun of.”She was used to the rejection that comes with the job but acceptance and praise always came as a surprise, which was ultimately what drove her. jessica.brown@news.com.au More from news02:37International architect Desmond Brooks selling luxury beach villa11 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoCorcoran quit her job to start a small New York City real estate agency in her early 20s — that has since become a $5 billion business.She is also the author of bestseller Shark Tales: How I Turned $1,000 into a Billion Dollar Business! and host of top podcast Business Unusual with Barbara Corcoran.Sometimes rejection still gets to her but she doesn’t waste too much time feeling sorry for herself.“When you get hit in the gut or somebody sends you a bouquet of flowers, which is a nice way of saying you lost the deal … what I always felt was, ‘well, you know what, let me take about five minutes to feel sorry for myself’,” she said.“(I’d think) ‘I hate that customer, I hope they hate the apartment they bought’, but then I would just say, ‘all right, you had your two minutes of pity, get up and get going’.”She said some of her best accomplishments have come on the heels of failure.“I think there’s power in ignoring what you’re afraid of and just do your own thing better,” she said.Most importantly, she encouraged everyone to ditch the toxic people.“I really encourage (my agents) to drop losers because losers will strain your body and your soul and make you feel like you want to quit the business,” she said.“You really have to enjoy what you’re doing.” MORE NEWS: AREC 2019: real estate the talk of the towncenter_img MORE NEWS: AREC 2019: how to hack the rock star attitude Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:51Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:51 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p432p432p270p270pAutoA, 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 Rate1xFullscreenStarting your hunt for a dream home00:51last_img read more

WoodMac: majors weighing investment in renewables

first_imgOil and gas industry majors are pushed to reconsider their strategies in the future as wind and solar energy are set to play a major role in the energy market. This presents a threat to legacy oil and gas operations, but also an opportunity to diversify and future-proof portfolios, consultancy Wood Mackenzie said.A niche energy market now, renewables will be much bigger by the middle of the next decade, as oil and gas demand growth slows.The value proposition is also competitive versus some upstream investments, with long-life cash flow a key attraction, according to WoodMac.The consultancy notes that the majors have already taken the first steps to move beyond the core oil and gas business into wind and solar power, as well as energy storage.However, a large number of players are still considering their options and are yet to make significant moves into renewables.“A potential tipping point for the shift into wind and solar could be an anticipated decline in the Majors’ hydrocarbon production. With new resources needed to sustain volumes beyond 2025, wind and solar could step in to the breach if discovered resource commercialisation, M&A and exploration fail to deliver, or economics weigh against continued development,” WoodMac said.Although portfolios of industry majors will not change for decades there is a substantial opportunity in investing in renewables.“At current costs, achieving the same market share the Majors have in upstream oil and gas would require US$350 billion in wind and solar investment out to 2035. While this seems an unlikely scenario, renewables could account for over one-fifth of total capital allocation for the most active players post-2030,” according to Wood Mackenzie.With the shift only at the beginning, and the scale is yet uncertain, wind and solar energy will be increasingly important strategic growth themes that cannot afford to be ignored as the majors plan to 2035 and beyond.last_img read more