DaimlerChrysler plans equities shift
GERMANY - The €8.9bn DaimlerChrysler pension scheme is planning to invest €680m in German large cap equities this summer and has hired a consultant to select the appropriate manager.
Industry sources have told IPE the passive investment will be placed in August but DaimlerChrysler's consultant will choose a manager to handle the mandate before then.
The automaker itself is one of the 30 firms traded on the Dax but sources said "it appears to be a strong sign that DaimlerChrysler's pension scheme thinks the Dax (Germany's blue-chip equity index) will continue to rise".
DaimlerChrysler spokesman Thomas Fröhlich has flatly declined to comment. "Our policy is not to comment on the activities of our pension scheme," he told IPE.
The automaker's €8.9bn scheme finances its German pension liabilities through a contractual trust arrangement (CTA), an investment vehicle adopted by two-thirds of the 30 firms traded on the Dax.
While virtually all asset managers in Germany provide passive approaches - with a focus on beta or market return - to equity investing, specialists in the sector are Barclays Global Investors and State Street Global Advisors, SSgA being one of the biggest players in the German institutional market, with €12bn under management in Germany and Austria.
It is not immediately clear which consultant DaimlerChrysler would use for the €680m investment, but there is intense speculation Mercer could be advising on its asset allocation.
The consultant declined to comment. However, to help set up CTAs and invest their billions of euros in assets, Dax firms have relied heavily on investment consultants active in Germany, like Mercer, as well as consultancies such as WatsonWyatt, BodeHewitt, Rauser Towers Perrin, Heissmann and Aon Jauch & Hübener.
Prior to today's news, DaimlerChrysler's latest business report reflected CTA plans to reduce its exposure to equities to 53% this year 2007 from 56% last year but this move does suggest it is now increasing its exposure.
The previous business report also stated the CTA's fixed income allocation would remain unchanged at 35% in 2007, while investments in alternatives - including hedge funds, private equity and commodities - would double to 8% from 4%. The CTA's real estate exposure was to rise to 3% from 2%.