Month: September 2020
It had previously signed up as a founding member of the National Association of Pension Funds (NAPF)-backed Pensions Infrastructure Platform (PIP), before bowing out over cost and return concerns.Its £2.3bn in equity holdings returned 7.1%, with the largest manager, MFS, providing a 7.6% return on its investments.The fund also used its annual report to announce the moving of equity assets to in-house management.LPFA said the £534m mandate with Newton Investment Management would be terminated, as the manager no longer “fitted with our investment strategy”, adding that it would now develop an internal buy-and-hold strategy for large global stocks.It increased its investment flexibility by merging two investment funds used to separate active members and those deferred or retired. This led to a change in asset allocation and an increase in illiquid assets.The fund holds £806m in illiquid assets, accounting for 16.5% of the portfolio. However, its statement of investment principles said this should increase to 35% to benefit from the premium associated with these holdings.The LPFA told IPE there was no formal timescale for this, or for bringing further assets in-house.A shift to in-house would save on fees, the LPFA previously stated, with savings used to develop an asset-liability management system and invest in single private equity vehicles, avoiding funds of funds.It said it made significant progress on developing the ALM project.The LPFA added it would also look at opportunities as they came up and review the illiquid benchmark holding annually.A spokesman said: “On illiquids, we have made material progress, but it is on an opportunistic basis.”This came as IPE sister title, IPRE, reported that the LPFA would be funding the development of new private-rented housing in the east of London.On its plans to shift in-house, the LPFA added: “We are building in-house capacity and capability, we look to get the best returns, and that may mean direct or co-investment or investing via an outsourced model.”The fund said it was 93% funded, according to its triennial valuation.However, the fund’s preferred, more conservative measurement of discounting on a risk-free basis valued funding at 61%, an increase of 11 percentage points. The London Pension Fund Authority (LPFA) has seen investment returns of 6.1% over the year to April, backed by rising markets and infrastructure, according to its annual report.The £4.9bn (€5.9bn) fund, local authority scheme and third-party pensions administrator has long been an advocate for infrastructure investment, much through the influence of chairman Eddie Truell.One the fund’s infrastructure investment managers aided a 20% return on its £135m allocation to the asset class in March 2013, as it sold down one its portfolio of assets, making a healthy return on its investments.The fund now holds more than £170m in infrastructure, accounting for 3.5% of total assets.
However, Jürg Brechbühl, director at the Swiss Federal Insurance Office (BSV), told participants at a recent conference in Zurich that the government had set the conversion rate level with “the referendum in mind”.He said the Swiss government could “not afford to lose another vote” on the reform of this key rate in the second-pillar pension system.In March 2010, the majority of the Swiss electorate rejected a proposal for a cut in the conversion rate from 6.8% to 6.4%. This time, the cut is more severe, but the reform package includes measures to guarantee the level of mandatory pension schemes and allows people with lower income, as well as more part-time employees, to join the second pillar.At the conference organised by the Zurich regional supervisory body BVS, Brechbühl argued that “the true costs” of the conversion rate would soon “become visible”, as new pension plans will be allowed to raise additional contributions from their members if the conversion rate proves too high.The BSV director stressed that the Altersvorsorge 2020 reform package “should not be dissected” but passed through Parliament and presented in the referendum as a whole.He pointed out that past attempts at offering reforms in a “piecemeal fashion” had failed.With a single package, any “cherry picking” can be avoided, he said – and “it generates greater trust than several small packages”.He admitted there was “still some risk of failure involved” with large reform packages, but said it was “important what they looked like”.As for the introduction of individual risk choices in Swiss pension plans, the BSV’s director announced that a draft bill would be published “soon”.The issue of the so-called 1e plans, named after a paragraph in the BVV2 investment regulations for Swiss pension plans, has been brought forward by an MP.The initial problem was that members with a riskier strategy in their pension plan would have left possible losses with the pension fund when transferring to a new Pensionskasse.Now, the losses will have to be transferred as well, but, in turn, each Pensionskasse offering more than one investment strategy must introduce at least one with very low risk. Read what Swiss market participants have to say about applying correct parameters and calculations in Mark-to-market obligation a ‘disease’, says Switzerland’s AHV A Swiss government official has expressed hope that the Altersvorsorge 2020 pension reform package will survive an “unavoidable” referendum and acknowledged that the government conceded on a major point to achieve this.In its proposed draft – to be debated by Parliament – the government recommended lowering the conversion rate used to calculate pension payouts from accrued assets from 6.8% to 6%, even though it believes the 6% figure to be too high. Both industry representatives and government experts agree on the need for the sizeable cut to avoid further transfers of active members’ assets to pensioners.Swiss actuaries, in their comments on the draft law, strongly recommended lowering the conversion rate even further.
Joseph Mariathasan considers the impossible challenge of predicting the price of oilIt always amuses me when I read analyses of where the oil price is likely to be over the next few years. As a young analyst at Shell International, I can remember working on economic modelling of North Sea oil wells using three oil price scenarios. The then-current price was around $30 a barrel, and the lowest price, worst-case scenario we used was one of $19 a barrel. Six months after I left Shell to join an investment bank, the oil price had dropped to $10 a barrel. If mighty Shell, with all its decades of experience, did not have a clue where prices were likely to be in six months’ time, I find it hard to take anyone else seriously when they come out with forecasts based on supply and demand projections and all the other paraphernalia of financial economics.The problem with forecasts is that it is politics, not economics, that can have the bigger impact on oil prices. Saudi Arabia’s cost of production is still probably not much more than $6 a barrel, although I am no expert on this. US shale oil production costs, even though they have fallen dramatically, would still be hovering probably close to 10 times that price at $60-$70 a barrel. When oil was trading at well above $100 – which was the case recently until mid-2014 – the US was well on its way to self-sufficiency in oil thanks to the game-changing introduction of fracking.Yet, if you looked at any other easily tradeable commodity item – T-shirts, for example – no US manufacturer would survive if their cost base were 10 times that of an overseas competitor for an identical product with negligible transport and storage costs, and an indefinite life and pretty much unlimited capacity. But oil, of course, is a strategic commodity, and the US recognised this by launching its own Strategic Petroleum Reserve, which holds enough oil to supply the US for nearly 40 days. It was started in 1975 after the disruption in supplies caused by the 1973 OPEC embargo, itself induced following US support for Israel in the 1973 Yom Kippur war. Fracking has clearly been a game changer for both the economics and politics of oil. The US attaining self-sufficiency in oil over a long time period would have immense ramifications on US foreign policy towards the Middle East. A big loser would be Saudi Arabia, whose leadership has used the support of the Wahhabi clergy for legitimacy and the wealth it accrued to export this brand of Islam globally.Whilst US support is clearly still strong, the underlying tensions are obvious. The Saudi Arabian leadership needs US support, but they face a delicate balancing act as they struggle with the tensions inherent in their society. Ensuring US interest and support for their regime becomes a more critical issue when they can see the fall of Egypt’s Muhammad Hosni El Sayed Mubarak despite decades of US support. Guaranteeing support means ultimately ensuring US reliance on Saudi oil, and, to bring such support about, it needs to drive the fracking community out of business.There are additional benefits to such a close relationship in light of Russia’s recent activity. Russia is heavily dependent on energy exports, which may account for as much as 70% of goods sold overseas. It was the low oil prices in 1990 that contributed to president Mikhail Gorbachev’s struggle to keep the USSR solvent and helped to cause its eventual collapse in December 1991. A low oil price will lead to serious repercussions for an increasingly belligerent Russia under Vladimir Putin, who is also a supporter of Syria’s president and leader of the Shia-related Alawite community, Bashar al-Assad, whom the strictly Sunni Saudis are keen to see replaced. Indeed, some would argue that ‘weaponising’ the oil price in order to try and cause political change in Russia has been a key factor in the oil price collapse. It would certainly be a less destructive route to achieving the US and EU’s foreign policy aims than weaponising the Ukraine through arms sales.I guess, if I were a betting man, I would say the oil price would be likely to stay below the marginal costs of fracking production for a few years.Joseph Mariathasan is a contributing editor at IPE
The commissioner also backed the main elements of the revised IORP Directive, noting the need to ensure pension funds had “sound” risk management processes in place and were run by “capable” people – the latter likely a recognition by the Commission that its initial draft, with its focus on professionals, risked alienating member states that made use of lay trustees.Thyssen also challenged pension funds to live up to the spirit of the revised Directive, arguing that funds needed to “invest more long term” and build cross-border activities.“In short, the proposed directive aims to establish a modern regulatory framework,” she said. She also praised the work undertaken to develop a Europe-wide pension tracking service.TTYPE, which published an initial report in early 2015, is currently examining how to proceed with the development of a viable business plan for the project.Thyssen hinted that there could be further Commission involvement in launching TTYPE.“We are investigating possibilities to help the pension industry build on this momentum to roll out a fully fledged cross‑border pension tracking service,” she said. The European Commission has called for more to be done to highlight the economic benefits of private retirement savings and argued that the overhaul of the IORP Directive is needed to push the pensions sector toward long-term investments.Social affairs commissioner Marianne Thyssen, speaking at the World Pension Summit in the Hague, called on governments and social partners to do more to promote private pension savings.She admitted the current low-interest-rate environment was proving difficult for investors and noted that governments only had a limited ability to offer tax incentives in a time of fiscal constraint.“Nevertheless, we must promote supplementary savings,” Thyssen said. “Even with the limited savings capacity of households, efforts must be stepped up to clearly demonstrate the economic benefits of complementary retirement savings.”
Denmark’s MP Pension is to lift an investment ‘quarantine’ it attached to Australian investment bank Macquarie in October last year, amid the furore over its historical role in the international dividend tax affair dubbed the Cum-Ex scandal.The DKK115bn (€15.4bn) pension fund for academics said it was satisfied that the bank thoroughly disapproved of its own behaviour during the scandal in 2011, and has been involved in no similar cases since then. Macquarie also revised its tax policy, which now prohibits speculation on dividend tax payments.Anders Schelde, CIO at MP Pension, said: “MP Pension has had a close and constructive dialogue with Macquarie since October 2018 and we have been reassured that Macquarie is somewhere else today regarding their tax practices. Therefore, we have decided to cancel the quarantine.”The fund said it held shares in Macquarie worth DKK29m and more than DKK800m in infrastructure investments managed by the bank. MP Pension explained that its quarantine tool differed from outright exclusion of a company in that it only lasts for six months, during which time the bank would assess the situation and engage with the company. Investments can be reduced but not increased during the period.It added that its decision to remove Macquarie from quarantine was based on interviews with the bank’s chief executive and other management staff and investigations it conducted to assess whether its new tax policy would be strong enough to prevent any further misconduct.MP Pension also assessed Macquarie’s continued level of co-operation with the German authorities investigating the scandal and the behaviour of its current management in relation to tax practices.Other major Danish pension funds threatened to stop doing business with Macquarie last year in the wake of the Cum-Ex scandal, which involved traders buying and selling shares rapidly to allow multiple claims to claw back dividend taxes – even though the tax had not been paid.
The Church Commissioners for England and New York State Common Retirement Fund (NYSCRF) have written an open letter to ExxonMobil shareholders asking them to call for change in the company’s governance and strategy, by their votes on three specific issues at the company’s annual general meeting on 27 May.Investors are being asked to:Vote for a shareholder resolution calling for an independent chair of the ExxonMobil board. Tthe current chair is also the company’s CEO;Take a “strong voting stance” on director election in line with their own voting policies. The Commissioners and NYSCRF will vote against the re-election of the entire board);Vote for a shareholder resolution requesting an annual report on the company’s lobbying activities, including the amounts paid and recipients.The two institutions have taken the action as part of the Climate Action 100+ initiative. At last year’s ExxonMobil AGM, investors staged a significant rebellion when 40.8% of the votes were used to back a proposal to separate the positions of chair and CEO.The open letter underlines the importance of governance, in the context not only of climate change, but also the collapse in demand for oil and gas, especially as a result of the COVID-19 crisis.It said that a growing number of companies – including BP, Repsol and Royal Dutch Shell – have responded “in outstanding fashion” and committed to become net zero emissions businesses by 2050.The letter continued: “They have also enhanced their oversight of lobbying by industry associations to clamp down on indirect lobbying against the achievement of the Paris goals. ExxonMobil, by contrast, has been uniquely resistant to accepting responsibility for the emissions associated with its business.”Edward Mason, head of responsible investment for the Church Commissioners, quoting from the open letter, said: “Our voting intentions are, again, a measure of our profound dissatisfaction with ExxonMobil’s approach to climate change risks and the governance failures that underpin it.“We believe that ExxonMobil can do so much better, and that a change in strategy and governance can bring about a long overdue improvement in shareholder returns,” he added.Thomas P. DiNapoli, trustee of NYSCRF, said: “We believe that an independent board chair and the disclosure of lobbying are important first steps in restoring oversight and good governance practices at ExxonMobil.“In short, we believe that the time has come for ExxonMobil shareholders to insist, unequivocally, on change. We believe that ExxonMobil directors must be held to account for this broken state of affairs.”Last month however, the US Securities and Exchange Commission (SEC) blocked a shareholder proposal co-filed by the Church Commissioners and US-based non-profit organisation As You Sow, requesting ExxonMobil to issue a report describing its plans (if any) to reduce its total contribution to climate change and align its operations and investments with the goal of maintaining global temperature rise well below 2ºC.The SEC had also blocked a similar proposal in 2019.
Auctions are a great way to let buyers know that you are serious about selling within a set timeframe. Picture: AAP IMAGE/Troy Snook. IN the latest of our expert series, Stacey Quaid, the managing director of Colliers International Cairns explains why there’s nothing like an aucton to show buyers you mean business: AN auction is one of the most powerful messages you can give the market when you decide to sell your property, as it provides total focus for a set time frame and shows your commitment to the sale. For buyers, it provides opportunity to contest the property fairly and to see clearly the current market values.As values change with market cycles there can be a risk of under-pricing in a rising market or overpricing when markets are in decline.The best test in those circumstances is to market without price and for this, auction remains the number one choice for residential properties. What to do in the garden this Winter Tax changes hit investor numbers More from newsCairns home ticks popular internet search terms3 days agoTen auction results from ‘active’ weekend in Cairns3 days ago Big property changes starting July 1 Colliers International Cairns managing director Stacey Quaid.When properly managed, auctions allow buyers to make their own decisions in respect to value and, as we have often seen, circumstances can dictate a higher worth to some buyers than expected.Over the years, I have sold many properties well over reserve, not because the buyer paid too much, but because that buyer saw value above the seller’s (and in many cases, our) expectations.With a market described as being in a “steady state” and “at the start of recovery”, we will see market change and more balance as we move from a buyer’s to a seller’s market and in turn we will see more and more auctions as sellers look for the best price possible.With the perfect selling season upon us and the potential of a rising market, now is the time to think of selling and auction should be one of your first choices. *Stacey Quaid is managing director of Colliers International Cairns
Just because one bank won’t lend to you doesn’t mean you can’t obtain finance, according to Haesley Cush. Picture: AAP/David ClarkI was in the city this week meeting with the genius’s at Apple after a midnight altercation between my bedside waterglass and my Mac Book Pro.Unfortunately the glass of water won and it would need a complete over haul.So after I was informed to fix it I’d be $1200 lighter I decided to walk back to the office in New Farm and save myself the cab fare.As I walked home from the city I called Paul Hixon from Loan Market. Paul has been my loan broker for years and I wanted his thoughts on self managed super funds and the decision by some banks to stop lending to them. I wanted to discuss the potential affect to the market and it’s affect, effect on those buyers. His feedback was that there were still a number of banks and institutions that would continue to lend to SMSFs.He said Westpac’s announcement through the week, which was what had spurred my curiosity, to pull out of that market was probably only due to their already large lending in that segment of the market.More from newsNew apartments released at idyllic retirement community Samford Grove Presented by Parks and wildlife the new lust-haves post coronavirus17 hours ago Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 6:36Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -6:36 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD432p432p270p270p180p180pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenJuly 20: Liz Tilley talks dream homes06:36 Paul went on to educate me that this is quite common with lenders and it is why buyers should look at more than one lender when they are looking to buy a property. He said banks will pull out of a market segment, including a suburb or style of property, even a particular unit complex if they felt they already had too many loans in that area.After hanging up the phone I thought of all the contracts that crash on finance conditions each week and the heartache from buyers, sellers and agents. Many of those buyers could have had their finance rejected from their lender, thinking it was their financial position or their deposit size or even that they’d just made the wrong choice, when potentially it could just be that institutions decision to just not want that particular loan.Seemingly those buyers could have just gone to another reputable lender with their identical financial profile and received a good loan for that property with no tricks or wizardry.Now each to their own and if you like your lender then that’s part of the decision too. But checking costs you nothing. Questioning my own financial decisions, I had just walked for thirty minutes to save $5 on an Uber, I have always recommended buyers chat to an adviser or broker for the best product for your situation.
95 Dempsey St, Gordonvale.“There are the small things you enjoy too like sitting on the patio watching the sun rise over the Pyramid, it’s just beautiful.“We have a fully self-contained granny flat and on numerous occasions parents have come to stay for extended periods.“I’ve got one garage up top, and a 3.5-bay garage down bottom so there is plenty of room for tools, extra cars, a caravan.”Cairns Property Office agent Robyn Hawley-Whitton said the 1.6 hectare (3.95 acre) property was set on two titles and there was a possibility for boundary realignment.“With some of the best mountain views in the region, this is an opportunity not to be missed,” she said. “Waterfalls can be seen cascading down Walsh’s Pyramid in the wet season and you have a bird’s eye view from your home, making this property truly unique and desirable. 95 Dempsey St, Gordonvale.“The pool house is the most enjoyable spot in the house. We’ve had lots of gathering there from New Year’s Eve parties to State of Origin games. “We’ve got teenage boys too so they can have friends over and have a bit of fun.“We are looking to downsize as the boys are a bit older and we are just not using the property as much.”From kookaburras to Ulysses butterflies, native wildlife is in abundance and there is plenty of space for domestic pets such as dogs, cats and chooks.Security, too, is also a drawcard of the property.“What brought us firstly to the home was the size of the property which gave a degree of privacy – you don’t hear the neighbours at all,” Mr Brain said.More from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days ago“There is a degree of security as well, being away from the road. 95 Dempsey St, Gordonvale.THE best part of Steve Brain’s day is working out in his home gym overlooking Walsh’s Pyramid.Then, there are the days when, hot from a night sleeping in the dense, tropical air, Mr Brain leaves the master bedroom via its own entrance and heads directly to the pool to cool down.The impressive Gordonvale home, set in Pyramid Estate at 95 Dempsey St, caters for those keen for luxury close to nature.The Brain family have lived there for five years after being drawn to its seclusion and privacy.“We’ve done some renovations, we built the pool house which has a bar and TV area and we have redone bathrooms,” Mr Brain said.
95 Dempsey St, Gordonvale.“Gordonvale is only a 30-minute drive the Cairns domestic and international airports and boasts a vibrant local community close to a major regional city.”The clay brick and tile home has a timber kitchen, granite bench tops, dishwasher and gas cooktop.There are also 40 solar panels, insulation, tinted windows and security screens installed throughout.Ms Hawley-Whitton said offers would be considered prior to the August 12 auction.
The outdoor kitchen Frameless nine metre high glass doors mark the transition to the outdoors.New RE/MAX agent Udo Jattke said the view across Cairns to the Coral Sea would transfix all who visited 6 The Peak.“By day or night, the heart of the home is the impressive al fresco area where you can relax on one of the day beds or eat and drink around one of the most amazing outdoor kitchens you will ever see,” he said. “The sparkling infinity pool overlooking Cairns is also a drawcard. “Throughout the home, the use of natural materials, including stone and recycled timber, which happens to be sourced from the old Carlton United Brewery in Brisbane, with a certificate of authenticity, adds to the warmth and wonderful ambience this home.” Look over the city as you swimMore from newsCairns home ticks popular internet search terms2 days agoTen auction results from ‘active’ weekend in Cairns2 days agoThe care and dedication to the build is so obvious RE/MAX principal Tony Williamson remarked it was the best house he’d ever walked through in his entire real estate career. Mr Britton and his wife moved in just over three years ago and after 30 years in business have decided to pursue the free, nomadic life of retirees.“We do entertain a lot with a handful of friends and family. The deck next to the pool is a great spot to be. We could be having cheese and drinks, but it mostly ends up being a barbecue, because it’s just so easy,” he said.“We’d cook and eat outdoors more than we did inside. We have a great Siemens teppanyaki plate, we do like the teppanyaki style of cooking.” A bath with a viewBut it is hard not to notice the immaculately presented collection of stone, wood, steel and glass which makes up one of the winners of the Housing Industry Association’s Best Home in Cairns awards.The airconditioned walk in robe was designed for the lady of the house complete with a mirror, drawers for hair straighteners and plenty of storage. Mr Britton even requested louvres to be built into the north of the house to avoid stormy, wet weather which usually comes from the south.However, if heavy rain does comes from north, a sensor has been programmed to close the windows as soon as it detects moisture. 6 The Peak, Brinsmead goes to auction on December 12.A fully integrated CBUS electronic system controls the entire home and it comes with a 12 kW solar and security system. 6 The Peak, BrinsmeadEVERY inch of this property sitting atop Cairns has been meticulously planned and executed.Take the four rhomboid, backlit floating stairs connecting two of its luxurious levels, for example. The stunning feat of design took eight separate meetings with builders and electricians before owner Ross Britton got his way.“This house is a testament to what can be done,” he said.“In terms of practicality, we wanted five bedrooms and really open, spacious living areas.“We wanted, as you walked through the door, the wow factor not to be the house itself but the view.”