Diary of an Investor: Rear-view mirror
A couple of weeks ago I made my way to Amsterdam’s Beurs van Beurlage for a festive evening, the annual dinner of the Dutch Committee of Institutional Investors. It’s always a good occasion to catch up with old friends, even if you’d rather give some of the guests a wide berth.
Nowadays, of course, champagne is frowned upon, so we have to do with wine or beer. Someone mutters about doing better for the increase in our membership rates. At least they send us a nice monogrammed leather credit card holder, I think. For me it’s all about the quality of the networking.
Soon after I arrive, I spot my old friend Bram. Bram works for BIG Asset Management, where he has just been promoted to key account director for the Netherlands and the Nordic region. He’s travelling a lot to Copenhagen and Stockholm these days, he tells me.
‘Don’t you love Anglo-Saxon companies,’ Bram says. ‘They put all us sensible northern Europeans in one box. At least it isn’t far to fly and I’m not away from my family for too long.’
After some convivial conversation over dinner, we are introduced to our guest speaker, a former investment management CEO who has ended up in a prominent international role. His words seem very wise. He tells us that he isn’t going to lecture us on corporate governance, executive pay or socially responsible investment, which earns him an appreciative laugh. His main point is that pension funds should be more active in shaping regulation in financial services generally, not just in pensions.
Pension funds depend on macro prudential stability, he argues, and they should lobby for a shaping of the rules to better suit the common interest. One of those is bank capital requirements. Why should they be more leveraged than hedge funds, which are only geared around three times? We should raise our voice!
We continue the discussion over after-dinner drinks. Bram says BIG Asset Management has increased the number of staff in its regulatory department. ‘Our CEO told us that as a key player in the financial world, with nearly a trillion dollars in AUM, we had to play a role in shaping the next generation of financial legislation.’ One of the main things BIG Asset Management wants to avoid, Bram adds, is being regulated by the back door as a shadow banking entity.
Fieke is the CIO of one of the smaller Dutch pension funds. ‘It’s all very well for you,’ she chips in. ‘It just isn’t feasible for pension funds to get into the lobbying business. It’s hard enough for our pension fund association to get its message across.’
‘I wonder if there is any point sometimes,’ I venture, ‘since the politicians always seem keen to regulate using the rear-view mirror. Haven’t you noticed that they are always preventing yesterday’s crisis?’
Pieter Mullen is investment director at Wasserdicht Pension Funds