Latest from IPE Magazine – Page 550
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Features
Cautious tack keeps pensions flowing
It is the proud boast of the Sparinstitutens Pensionkassa (SPK), the pension fund for Sweden’s savings banks, that it has never been underfunded since it was created in 1944. The fund, a defined benefit scheme, has ridden out the recent storms in the equity markets, principally because of its conservative ...
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Features
When less can be more
If interest rates rise what should pension funds do? The answer for the majority of pension funds is likely to be the same - nothing. For the minority - those for whom substantial bond portfolios are actively managed by internal pension fund investment staff - the answer is slightly different: ...
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Features
Banking on uncertainties
Recently, trying to forecast interest rates has been a pretty tricky task. And there is no reason to expect that things will become easier soon. In a global financial world, interest rates - and this is particularly true of long-term rates - have become dependent on the interplay of so ...
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Features
Structures for all seasons
The pension fund environment has changed tremendously over the past few years, with long-term objectives tending to be replaced by a shorter-term focus. These changes have been predominantly driven by new accounting standards, evolving regulation and particularly adverse financial markets. The new IAS 19 accounting rules have repositioned corporates’ pension ...
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Features
Correlations: how will they move?
In the 20th century, we have observed three periods of decoupling between bond prices and equity prices; once during the 1930s, once in the early 1960s and lastly a period that started at the end of the 1990s. Computing these correlations using daily, weekly or annual returns and over different ...
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Features
Inflation on the prowel
The financial setbacks of recent years have left many pension funds in a difficult position. With their concentration in equities, portfolios were damaged by the collapse of the technology bubble, while the simultaneous fall in bond yields raised pension liabilities. Additionally, government reviews and legislative changes have all placed pension ...
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Features
Moving into uncharted waters
As the yields on long-term lending shrink, it becomes harder for active managers to justify their fees managing these kinds of investments. Indeed, there is a case for saying that the credit markets in total are not attractive right now for institutions, with even BBB bonds offering just 50-70 basis ...
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Features
Breaking the stranglehold
One of the myths about Germany is that it is becoming less attractive to foreigners wanting to do business. Spreaders of the myth – typically neo-liberal-minded industrialists, economists and politicians – say that unless Germany lowers its labour costs, cuts its taxes and streamlines its bureaucracy, it will attract fewer ...
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Features
ETFs find a ready home
Exchange traded funds (ETFs) are currently enjoying a significant boom in the US. After the initial domination of the area by institutional investors, retail investors have now discovered the advantages of this product. In the US currently, 171 products with $243bn (e201bn) in assets under management are listed by eight ...
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Features
Don't write Germany off
Speaking in Brussels in June, former German junior finance minister and World Bank managing director Caio Koch-Weser, admitted that the dream of bringing the financial centre of Europe to the economic centre was still just that. “Germany as a financial services location ‘Finanzstandort Deutschland’ is…still a long way from having ...
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Features
Uni-directional world of funds
In Germany, institutional investors are increasingly turning away from Spezialfonds in favour of mutual funds. Experts say this is largely because of the onerous reporting requirements they have to adhere to when invested in Spezialfonds, but there are other factors at play too. “Three or four years ago, there were ...
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Features
Hedge funds - too late again?
Germany introduced an innovative hedge fund regulation on 1 January last year. But German investors, including institutions, have yet to invest significantly in hedge funds, while international institutional investors are increasing their exposure to hedge funds and are even being attracted by German-regulated hedge funds. Are Germans missing the boat ...
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Features
Pensions in a state of insecurity
Norbert Blüm, a former Conservative labour minister, once committed one of Germany’s best-known political gaffes by claiming that the state pension was “secure”. While Blüm had good intentions – meaning to say that payment of some pension was guaranteed – he probably should have realised that his remark would be ...
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Features
The evergreen issue of funding
There has been significant progress made during the past 12 months, in legislative, both enacted and planned, in practical and in conceptual terms regarding pension funding. On the legislative front, the European pension fund directive was implemented into local German law in July of this year. The main changes made ...
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Features
Makeover for the tried and true
It has been a bumper year for German investors so far. Global equities up about 16%, European equities a percentage point higher and even doughty European fixed income has returned 5%. But in spite of the markets’ generosity, providers are still banging the drum for innovation. They fear that unless ...
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Features
Alpha transport - exploiting inefficient markets
Institutional investment portfolios have typically been constructed around a strategic policy portfolio and where investors believed that they could identify managers with skill, they adopted an active strategy to add value relative to that benchmark. Where active management is adopted there are two sources of return – the return attributable ...
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Features
Positive times ahead
After the sharp fall in receipts since the record year 1998, from €66bn then to barely one-third of that in 2003, Spezialfonds suffered a real slump in 2004. The last time that receipts were less than the €3.7bn collected was back in 1985. But the sector was still able to ...
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Features
Managers making their mark
To get an idea why the US investment bank Goldman Sachs is widely respected, consider what it has achieved in Germany since arriving there 15 years ago. Goldman Sachs, which runs a smallish operation in a skyscraper next to Frankfurt’s trade fair, has for years consistently been at the top ...
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Features
Private banks making their name in institutional transparency
In Germany, private banks are usually thought of as staid institutions that have served the country’s rich since their beginnings in the 18th century. Serving high net worth individuals - and being every bit as discrete about it as their Swiss peers – explains much of what the likes of ...
