All Letter from the US articles – Page 7
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Opinion Pieces
Letter from the US: Colleges count losses
US college and university endowments had the worst returns of any insitutional investor in the year ended 30 June 2012
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Opinion Pieces
LIBOR litigation looms
US pension funds are still trying to understand the impact of the LIBOR scandal on their assets to assess whether they should launch a class action against the banks involved in the case. The matter is highly complex and could lead to tens of billions of dollars in claims, not just from pension funds but also from cities, states, lenders, insurers and other investors who say they were hurt by the allegedly manipulated rates.
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Opinion Pieces
Letter from the US: MAP-21 skirts IASB
Under the seemingly innocuous Moving Ahead for Progress in the 21st Century Act (or MAP-21 for short), new accounting rules have been approved in the US that will affect their private pension funds. But will it be for better or for worse?
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Opinion Pieces
Letter from the US: Taft-Hartley blues
Labour unions are not having the best time. Last month they suffered a major setback in Wisconsin, where Governor Walker won a recall election against union members and Democrats, who were protesting against his law removing most collective-bargaining rights from public employees. One reason why the unions lost is that those rights had assured very generous pension benefits to unionised public employees.
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Opinion Pieces
Wisdom of independence
In the aftermath of the 2008 financial crisis, independent US asset managers have increased their revenues and profitability more than the asset-management subsidiaries of the larger US financial institutions. Publicly traded asset managers posted median profitability of 35% last year, compared with 25% for subsidiaries, and grew revenues 15% during 2011, compared with 6% for subsidiaries, according to recent analysis from Casey, Quirk & Associate, a consultant to the global asset management industry.
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Opinion Pieces
Politics of change
The nomination of Mitt Romney as the Republican candidate to the White House may bring a lot of attention to the US pension fund industry. If he wins the election on 6 November, he could introduce a partial privatisation of Social Security, the compulsory insurance programme funded through payroll taxes. The first president to talk about privatising it was also a Republican one, George W Bush, but his proposal went nowhere.
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Opinion Pieces
Funds join the fray
This proxy season in the US is likely to be highly politicised, with the public sector’s pension funds playing a big role. In fact, it will be a test for several rules introduced by the Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition, the 2012 presidential campaign is getting hotter, with the Republican candidates promising to repeal the Act, if elected. The Republicans already control the House of Representatives and might conquer the Senate, too. Moreover, if Barack Obama loses, the new Republican president will be able to nominate a new Securities and Exchange Commission chairman and the SEC will change from a Democratic majority to a 3-2 Republican majority.
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Opinion Pieces
Bankruptcy wave threat
A new wave of bankruptcies is set to put more pressure on the Pension Benefit Guaranty Corporation (PBGC), the US pension agency that insures pension benefits of private pension plans covering some 44m of America’s workers and retirees. For fiscal year 2011, the PBGC has already reported a record $26bn (€19.8bn) deficit – the largest in its 37-year history and $3bn more than the $23bn deficit reported the previous year.
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Opinion Pieces
In the line of fire
The $225bn (€177bn) California Public Employees’ Retirement System (CalPERS) used to be considered a leader in setting new trends, such as investing to improve companies’ corporate governance or to achieve environmental and social goals. But today it is in the line of fire, with critics pointing to its disappointing results and pushing for big changes.
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Opinion Pieces
Hedge funds face clip
Hedge funds enjoyed record inflows in 2011 as new assets from US pension funds poured into their coffers. But it was also a horrible year for their performance and investors put a lot of pressure on them for better terms.
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Opinion Pieces
Investing for impact
“When traditional investors look at impact investing they sometimes think they have to sacrifice returns. Fortunately, there are many examples of impact investing that lead to both competitive returns and positive social impact. In fact, it can be a very competitive field of investing activities versus mainstream assets,” says Scott Budde, head of the global social and community investing department at TIAA-CREF. This is why TIAA-CREF, with $440bn (€319bn) assets, has been involved in impact investing since 2006, and socially responsible investing since the 1980s.
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Opinion Pieces
Saving, the Texas way
Galveston County, Texas, is no longer famous solely for the hurricane that devastated the area killing an estimated 8,000 people in September 1908, the deadliest natural disaster ever to strike the US. Now the county is cited as an alternative ‘Texas’ model for fixing Social Security.
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Opinion Pieces
Consensus elusive
The US retirement system might change dramatically by year’s end; or pension reform could be postponed again until after the 2012 presidential election. Either way, the debate about how to prevent the bankruptcy of social security is hotter than ever.
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Opinion Pieces
Bonds defy downgrade
US pension funds are reassessing their fixed income investment policies after Standard & Poor’s downgraded the US rating from AAA, despite the fact that the new AA+ rating did not force them immediately to sell Treasury bonds.
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Opinion Pieces
A labour of love
This is a busy time for pension fund professionals in the US as they try to figure out the impact of new rules issued by the department of labor (DoL) on fee disclosure and fiduciary responsibility. Changes are likely to occur soon for plan sponsors, providers, investment managers, brokers, and advisers of 401(k)s and other defined contribution plans, which reached a record $4trn (€2.8trn) in total assets and 82m participants at the end of 2010, according to Plan Sponsor.
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Opinion Pieces
Making DC kings
Fidelity is still the king of the US retirement market, at number one among the defined contribution (DC) plans with over $940bn (€651bn) of assets in custody as record keeper at the end of 2010, 12% more than the year before. And there is not a traditional bank among the ...
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Opinion Pieces
Battle to stave off crisis
Andrew Cuomo is one of the most admired recently-elected state governors – primarily for his efforts to get the budget under control and bring taxes down.
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Opinion Pieces
State debate hots up
The debate about US public employees’ pension benefits is hotting up, and the results will have a great impact on the pension fund industry. For the first time there is a discussion about the real costs of promises made by politicians to public sector employees and the bill to tax payers. In fact, the whole matter is extremely political, as one can see from the very different approaches of two neighbouring states, Wisconsin and Illinois.
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Opinion Pieces
Muni transparency
US lawmakers, investors and the Securities and Exchange Commission (SEC) are asking state and local administrations for more transparency about their pension liabilities. All are concerned that these liabilities are increasing the risk level of the $2.9trn (€2.1trn) of municipal bonds issued to balance local public budgets.
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Opinion Pieces
Hard target
Are target-date funds (TDFs) serving the needs of their participants? To answer this question, JP Morgan Asset Management carried out research comparing participants’ behaviour with the common industry assumptions that inform TDF design. The conclusion is that the latter should be more conservative than experts might think.
