NETHERLANDS - Guus Boender, and asset liability management professor and partner of ORTEC in Rotterdam, is calling on pension funds to look beyond 'financial titles' and invest in logistical and social infrastructure of countries.
Boender was nominated for an Outstanding Industry Contribution award at last night's IPE European Pension Fund Awards 2008 in Barcelon, for his long-term achievements in ALM matters.
In an interview with IPE, he said ahead of the event: "I propagate what I call 'mission-related investing' by pension funds, meaning they should not only invest in financial titles such as the metal industry in China, but also invest in the logistical and social infrastructure of the countries in which they live."
Boender claimed pension funds still focus too much on investing their assets, which in future might prove to carry insufficient diversification.
On a shorter time scale, Boenders said pension fund financial buffers and supervision needs to be made dependent of the price of risk, as this would allow pension funds to build up buffers in good times, and use them in bad times.
"If that had been the case, pension funds could now, in the current market, have acted as buyers instead of sellers," he said.
Boenders' views echo a number of players on the Dutch pension market, who have pleaded for regulatory changes in recent months, as pension funds note the implied volatility of the equity markets and the spreads on corporate bonds can fluctuate immensely in a relatively short time spam.
He also believes more research needs to be done into the pro-cyclical risk appetite of pension funds, to help pension funds assess the risk attitude of pension fund managers.
"The way people and pension funds see risk depends on timing; we usually become risk-averse at the wrong time, namely when it is too late," said Boenders, arguing the pension fund industry should apply fields of study such as behavioural finance.
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