December 2020

08Dec

The Consequences of Long-Term State Pension Underperformance

The financial health of state pension plans has worsened and advisors should avoid municipal bonds from certain issuers. Each year Cliffwater LLC prepares an annual report on the financial condition of state pension plans over time. This year’s report covers 66 state pension plans and almost $3 trillion in assets. Following is a summary of some of the key highlights of the report, which covers the 19 fiscal years ending June 2019: Following the great bull market of the...

December 8, 2020
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07Dec

For institutional investors, ETFs can make meeting liquidity needs easier

Liquidity is never far from the minds of institutional asset owners but the importance of having a comprehensive liquidity plan came into sharp relief during the pandemic-induced spike in market volatility earlier this year. When stock prices plummeted in February and March, the asset allocation of many institutional portfolios fell out of synch with policy benchmarks, with asset owners finding themselves significantly underweight equity and overweight fixed income. That would have been the perfect time to rebalance, but an...

December 7, 2020
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07Dec

Exxon Under Pressure From New Activist Fund

Exxon Mobil Corp. is facing the threat of a proxy fight from a newcomer activist investor with a sustainability bent that wants the beleaguered energy giant to act faster to remake itself. Engine No. 1 LLC, an investment firm launched by Chris James last week, is preparing to send a letter to Exxon ’s board urging the Irving, Texas-based company to focus more on investments in clean energy while cutting costs elsewhere to preserve its dividend. The letter, a...

December 7, 2020
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04Dec

Why a Canadian Pension Fund Performs Better Than Yours

Over the period from 2004 through 2018, Canadian pension funds outperformed their international peers in asset performance and liability hedging, according to a research paper that says a key to this success is a three-pronged business model that would have boosted the returns of US and other pensions had they used the same tactics. The three-pillar business model consists of managing assets in-house to reduce costs, redeploying resources to investment teams for each asset class, and funneling capital toward...

December 4, 2020
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02Dec

Latin American private pensions fuel cross-border demand: report

The research puts total AuM for the four administradoras de fondos de pensiones (AFP/Afore) systems at $574bn at the close of 2019. Including Brazil's complementary pension system, which also had a positive year, total regional AuM stands at $1.05trn. Flows into the AFP/Afore pension managers in Chile, Mexico, Colombia, and Peru reflect a gradual upward trend that mimics increasing formality in labor markets and higher salaries. The inflows are also among the most reliable in Latin America. While cross-border...

December 2, 2020
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November 2020

30Nov

Canadian pension funds, insurers seeking private debt face shrinking pool of lower-risk firms

Canadian pension funds and insurers are facing a shrinking universe of higher-quality private debt investments to lift returns in a low-yield world, as the coronavirus pandemic has crushed many businesses, while banks maintain lending to better ones. The tightening supply of this high-yielding credit comes as many Canadian institutional investors have been accelerating their exposure to the private debt. Private credit is issued primarily by closely held companies, offering a premium over corporate bonds due to fewer disclosures and...

November 30, 2020
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26Nov

Swedish pension giant and LGIM launch sustainable EM equity fund

Swedish pension fund AP1 and LGIM have collaborated to launch a new EM equity fund. The L&G Emerging Market Equity Future Core fund will link the allocation of capital to clear sustainability requirements for companies it will invest in. The rationale behind the launch is to meet institutional investors’ need for index-linked funds with an extended sustainability profile. According to AP1, the need for this kind of product has increased as more investors choose passive or index-linked management models....

November 26, 2020
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25Nov

US. Effect of the Biden Administration on Health and Retirement Benefits

What president- elect Joe Biden´s administration will be able to get done regarding health care and retirement policy will depend much on the political tone in Congress. Control of the Senate is hinging on two Georgia runoff elections in January, notes Geoff Manville, partner and government relations leader in Mercer’s Law and Policy Group. He says most observers believe Democrats will lose one of those races, which would give Republicans Senate control. “That would make it all but impossible...

November 25, 2020
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24Nov

Canada. TTC pension plan focusing on liquidity amid coronavirus pandemic

The Toronto Transit Commission Pension Fund Society has been reminded of the importance of liquidity during the coronavirus pandemic, according to Sean Hewitt, the fund’s chief executive officer, during a virtual roundtable hosted by the Canadian Pension and Benefits Institute on Thursday. “COVID-19 was a really interesting test study in liquidity,” he said, noting the TTC plan conducts a liquidity budget test annually to ensure it’s able to pay pensioners under dire circumstances. The previous test case was the...

November 24, 2020
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23Nov

What South Africans Need To Know About Offshore Investing

South Africans looking to make proper provision for their retirement should consider utilising their full annual foreign exchange provisions and should choose the right offshore investment options to protect themselves from a volatile economic and political environment. This is according to Sovereign Trust SA. Many South Africans still feel conflicted about investing offshore, partly because they don’t understand the differences between local and international retirement plans, said Richard Neal, MD of Sovereign Trust SA. “While offshore retirement funds, like...

November 23, 2020
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