November 2022

Getting In On The Act: A New Generation Of Investors Is Here

Gen-Z and millennials are digital natives, caring about climate change, advocating for fair practices, and seeking impact investments that align with their values, and offer more than a short-term financial return. The investment world has undergone rapid change since the onset of the COVID-19 crisis. Data shows that global venture funding reached a record US$621 billion in 2021- more than double the 2020 mark of $294 billion. It is also swinging away from the historically dominant US, with Asia now...

Canadian teachers could have a $95 million hole in their pensions due to the FTX crypto implosion

The crisis at cryptocurrency exchange FTX is having ramifications far and wide. Now Canada’s third largest pension plan is revealing details about its exposure to the troubled company led by 30-year-old crypto billionaire Sam Bankman-Fried. On Thursday, the Ontario Teachers Pension Plan (OTPP) released a statement saying that in October 2021 it invested $75 million in both FTX International and its U.S. entity FTX.US. Additionally, it said, it made a follow-on investment of $20 million in FTX.US in January this...

Regulators researching all-to-all trading in U.S. Treasury market

In an effort to boost resiliency in the U.S. Treasury market, federal regulators are studying the pros and cons of widespread all-to-all trading, which would allow any market participant to trade directly with any other market participant, according to a report released Thursday. The report from the Inter-Agency Working Group on Treasury Market Surveillance, or IWAG, which is composed of staff from the Department of the Treasury, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank...

UK. Insurers face claims threat from pension fund LDI crisis

The events of the past few weeks are likely to result in claims and/or pressure on commercial relationships, particularly when pension schemes conduct their triennial valuations and agree new deficit reduction plans with employers. UK pension scheme managers and their insurers could face claims over their use of liability-driven investment strategies following the turbulence caused by Liz Truss's mini-budget There may be a surge in professional negligence claims against liability-driven investing (LDI) pension funds in the wake of the UK’s mini-budget. Claims...

UK. How Pensions Threatened Financial Stability

Speech By Sarah Breeden, Bank Of England Executive Director, Financial Stability Strategy And Risk, Given At ISDA & AIMA On the afternoon of 28 September, I found myself in a rather unusual position: having to explain to journalists why a part of the pensions industry, unheard of to most of their readers, had posed such a large threat to financial stability that it warranted intervention in the gilt market from the Bank of England. Financial markets globally had been volatile for...

US. Climate investors eye midterms with caution

After an active year of federal policy in favor of climate technology, investors are preparing to go it alone should the midterm results change the tone in Washington. Why it matters: Private investors may have to step up and fund potentially risky, capital-intensive projects like battery-manufacturing plants or grid-resilience projects should federal funds and incentives be pulled back or stopped altogether. Context: Several Republican candidates in state and federal races have indicated that ESG initiatives, particularly from large asset managers running...

Japan’s GPIF reports 0.88% decline for latest quarter

Japan's Government Pension Investment Fund, Tokyo, said its portfolio ended the latest quarter with ¥192.1 trillion ($1.33 trillion) in assets, down 0.88%, or $11.6 billion, from the prior quarter. In a statement posted on GPIF's website Friday, Masataka Miyazono, the pension fund's president, said rate hikes in the U.S. and Europe to contain inflationary pressures stoked concerns of recession, depressing stock prices at home and abroad. But the dollar's continued gains vs. the yen during the quarter ended Sept. 30, to...

UK bond turmoil leaves smaller pension schemes with longer-term costs

The recent crisis in Britain's government bond market means smaller UK pension schemes may fork out more money for a bespoke liability-driven investment (LDI) strategy in future to ensure better protection, industry sources say. LDI products, sold by asset managers such as BlackRock, Legal & General and Schroders to pension funds, use derivatives to help them "match" assets and liabilities so there is no risk of shortfall in money to pay pensioners. Pension funds, who must post cash as collateral against...

The future of defined contribution asset allocation

Strategy discussions around defined contribution workplace saving tend to focus on plan design and engagement but questions of asset allocation are also critical, according to a discussion summary of the most recent Jasper Forum. The Forum was led by Australian Retirement Trust head of asset liability management Brnic van Wyk, Putnam Investments' Mike Dullaghan, DCALTA's Jonathan Epstein, Aon's Rick Jones, Morningstar's Aron Szapiro, and Utrecht University PhD candidate Jorik van Zanden. In the discussion wrap-up, JM3 Projects principal John Mitchem said...

Kenya. Pension assets fall Sh33bn on bonds, equities hit

Pension industry assets under management shrank by Sh33.4 billion in the six months to June on the back of paper losses on equities and government bond holdings, representing the first half-year decline in retiree assets in 19 years. The Retirement Benefits Authority (RBA) said the contraction in the assets by 2.16 percent to Sh1.514 trillion was due to volatility in the financial markets and the political campaigns ahead of August’s general elections. The value of government bond holdings by the industry...