Investors should divest fossil fuel-intensive assets, says Generation IM

first_imgInvestors should divest fossil fuel-intensive assets to mitigate or eliminate risks related to carbon, Generation Investment Management has suggested.Al Gore, chairman at Generation IM and former US vice-president, said: “We recognise that can be complex and difficult for some asset owners, and we recommend that, for such owners, they can consider phasing in a transition over a period of time and focusing first of all on the most carbon-intensive forms of energy like tar sands and coal.”This is one of the four actions the firm recommends investors implement, arguing that carbon-related risks significantly threaten valuations in fossil fuel-based industries, and that ”stranded” carbon assets are therefore a risk to investors. The four steps are to: Identify the extent to which carbon risks are embedded in current and future investments across all asset classesEngage corporate boards and executives on plans to mitigate and disclose carbon risksDiversify investments into opportunities positioned to succeed in a low-carbon economyDivest fossil fuel-intensive assets to mitigate or eliminate risks related to carbonThe paper entitled ‘Stranded Carbon Assets – Why and How Carbon Risks Should Be Incorporated in Investment Analysis’ says that, as the case for curbing carbon emissions continues to gain support on economic and scientific grounds, the commercial viability of carbon-intensive assets – particularly fossil fuels – will be increasingly threatened, creating stranded carbon assets.The paper says regulation, market forces such as lower renewable prices and socio-political pressures such as divestment campaigns could drive stranding.Gore added: “Investors have an independent responsibility, and, as they assess the risk involved in carbon-intensive investments, they should look at what they believe is likely in the way of government action. [The removal of government subsidies] is yet another risk. Today, the estimates are that there is about $500bn (€363.5bn) annual subsidy by governments around the world […]. But there are increasing pressures in many countries, including in the US, for the removal of those subsidies. But, regardless of what governments do or don’t do, investors have an independent responsibility to be prudent in analysing the risk in their portfolios, and the risk of a sub-prime carbon asset bubble is very, very high, and it is being missed by many investors today who should recognise a responsibility to take the steps we recommend in this paper.”The paper states: “Maintaining the status quo, whereby investors fail to properly account for the risks inherent in owning carbon-intensive assets, will cause the ‘carbon asset bubble’ to grow until the artificially high valuations for these assets can no longer be sustained. The presence of a bubble is often not recognised by the market due to classic behavioural finance decision-making biases, such as endowment bias and system justification theory.””However,” it adds, ”the carbon asset bubble presents not only risks but also opportunities. In particular, investors have the chance to strategically reallocate their capital in advance of these risks materialising sooner than anticipated and irreversibly impairing the value of carbon assets.”Stranded carbon assets are defined as assets, which would likely absorb the majority of losses associated with carbon risks given the intensity of their CO2 emissions.This term includes fossil fuels, as well as those assets which, given their dependence on fossil fuels and subsequent carbon-emissions intensity, would be stranded in the event fossil fuel valuations plummeted.Given this definition, the paper’s focus is on the impact carbon stranding would have on those industries primarily driven by fossil fuels, such as non-renewable energy, mining, utilities, industrials, materials and transportation.But it admits that, within this group, there are differing levels of vulnerability to stranding.last_img read more

NEST to add emerging market equities to investments for first time

first_imgThe aim with the alternative index global EM fund search is to find a fund with a value style bias or tilt, NEST said.These are the first EM mandates the trust has put out, a spokeswoman for NEST said, but added that NEST does already have some exposure to the asset class through one of its pooled funds – a Blackrock Aquila Life fund.The EM investment funds will be used as building blocks in the default NEST retirement date funds and in other fund choices as appropriate, the trust said. The UK’s National Employment Savings Trust (NEST) is adding emerging market (EM) equities to its investments as dedicated funds for the first time, and has put out a tender in search of managers to run two different strategies within the asset class.The workplace pension scheme, established as part of the country’s auto-enrolment reforms, said it was looking to procure a global EM equity index-tracking fund and an alternative index global EM fund.Mark Fawcett, CIO at NEST, said: “These emerging markets mandates will allow us to further access an asset class with the potential to deliver good growth for our members, as well as greater scope for diversification.”For the global EM equity index-tracking fund, NEST said it would consider any established, well-constructed EM equity index, including funds that applied an environmental, social and governance screen.last_img read more

Fundamentals of Dutch pensions system up for discussion, says Klijnsma

first_imgThe fundamentals of the Dutch pensions system, such as a collective approach and solidarity between all participants, will be up for discussion during a broad dialogue about the long-term future of the system, Jetta Klijnsma, state secretary for Social Affairs, has said.In a letter to Parliament, she said she intended to speak with all stakeholders, such as supervisors, umbrella organisations, pensions experts, pension providers as well as ordinary people.The dialogue would initially focus on what is desirable and achievable to be the key elements of the pension system, and would also include tailor-made choices, according to Klijnsma.As a next step, the public discussion would focus on the design of a new system, including ownership rights, whether or not to continue with mandatory participation and the principle of the average contribution. The dialogue is also meant to find solutions for the 800,000 self-employed – many of whom are not saving for an additional pension – and developing pension arrangements linked with care and housing, the state secretary said.Klijnsma annouced that the Cabinet would soon come up with proposals for a pensions scheme for self-employed within the current framework, and that it had requested the Social and Economic Council (SER) for an extensive advice, including the views of the social partners.She added that the Cabinet was already looking into the options of adjusting the current principle of average premiums, which is leading to increased friction between younger and olders workers.The outcome of the different processes would be outlined in a note, to be presented to Parliament in the spring of 2015.Meanwhile, Jan Nagel, senator for the political party for the elderly (50PLUS), has called for a national referendum on the future or the pensions system.The party, which has two representatives in the lower house of parliament, said the proposals for an update of the financial assessment framework (FTK) were damaging and objectionable, in part because contributions would be decreased to also benefit employers.It further argued that an expected increase of the required financial buffers would also come at the expense of pensioners, as this would limit the chances of indexation.A referendum would certainly delay the introduction of a new FTK, which is scheduled to come into force on 1 January 2015.last_img read more

Austrian pension funds return nearly 5% over first half of 2014

first_imgAs per end-March, just over 57% of Pensionskassen’s assets were invested in bonds, and 35.5% on average in equities.Austrian schemes were 3.4% invested in real estate, with the rest invested in “other asset classes”.The FVPK warned that Southern Europe had not fully overcome the financial crisis, as “necessary reforms have not fully been implemented”.According to the most recent statistics, 840,000 Austrians are members of a Pensionskasse, or 22% of all Austrian employees (in 2008, the share had been 13%).In total, the 15 Pensionskassen are managing €17.7bn in assets.The FVPK also confirmed that both Pensionskassen and severance pay funds (Vorsorgekassen) were now exempt from tax-reporting requirements under the FATCA agreement with the US.Only after pressure from the retirement funds, both vehicles were classified as Exempt Beneficial Owners under the agreement, the association said. Austria’s 15 Pensionskassen have reported a 4.8% average return over the first half of 2014 after producing a 1.6% average return over the first quarter.The first-half performance is nearly equal to the full-year performance for 2013, which stood at 5.14%, as that year had started in a difficult market environment, leading to a 0.82% half-year performance.In 2014, the further lowering of the interest rate by the European Central Bank sustained the “challenge” for institutions for future investments, according to the Austrian pension fund association FVPK.“At the same time,” it said, “bond prices rose as well, and, additionally, the equities markets developed positively.”last_img read more

Wednesday people roundup

first_imgAP3, Pension Protection Fund, Aviva Staff Pension Scheme, Arabesque Partners, UN Global Compact, M&G Investments, Impax Asset Management, AXA IM, Independent Trustee Services, Mercer, Aon, AMP CapitalAP3 – Mårten Lindeborg has been named the Swedish buffer fund’s deputy managing director and CIO, replacing outgoing CIO Kerim Kaskal. Lindeborg has been with AP3 since 2009, first as head of strategic asset allocation and more recently as head of asset allocation. Pension Protection Fund – Trevor Welsh has been named the UK lifeboat fund’s inaugural head of liability driven investments (LDI). He joins from the Aviva Staff Pension Scheme, where he was head of UK sovereign and LDI, and has also worked at Aviva Investors and UBS. Arabesque Partners – Georg Kell has been appointed Arabesque’s vice-chairman. Kell has spent the last 15 years as executive director of the UN Global Compact and oversaw the launch of the Principles for Responsible Investment and UN initiatives on responsible management education and sustainable stock exchanges. M&G Investments – Ominder Dhillon has been named global head of institutional distribution. Reporting to chief executive of fixed income Simon Pilcher, Ominder will oversee distribution for all asset classes. He joins from Impax Asset Management, where he was managing director of global business development, and has worked at Fidelity International and Scottish Widows Investment Partnership.AXA Investment Managers – Laurent Clavel has joined the manager as senior international economist. Working within AXA IM’s research and investment strategy team, Clavel will be based in Paris. He began his career at INSEE, France’s national statistics authority, and was most recently head of its forecasting unit. Clavel has also worked at the French finance ministry and as economic adviser to the French embassy in Sweden.Independent Trustee Services – Janine Wood has been appointed client director based in Manchester, joining from Mercer. Wood spent 20 years at the consultancy and was most recently principal consultant and scheme actuary.Aon – James Monk and Gisele de Werra have joined the consultancy’s DC investment team. Monk joins from P-Solve Investment as senior DC investment consultant, while de Werra was previously a European government bond broker at BGC Partners.AMP Capital – Antonio Barbera has joined the company’s London offices as portfolio manager within its global listed infrastructure team. Barbera joins from Kalis Capital, where he was portfolio manager and co-founded one of the company’s equity funds.last_img read more

Credit Suisse pension fund tweaks parameters, beats market return

first_imgAdditionally, the fund switched from periodic to generation tables to calculate longevity risk.The Credit Suisse Pensionskasse also announced plans to introduce individual investment choices for pension fund members with contributions above a certain threshold.Under these so-called 1e-plans, named after the relevant paragraph in the BVV2 investment regulations, pension funds can introduce up to three different risk profiles for people with higher income.However, Martin Wagner, managing director at the Credit Suisse Pensionskasse, said at a recent conference in Zurich that it was a “shame we are only allowed to offer three different choices”.He added: “People want to individualise themselves and their financial matters”.Also speaking at the conference, organised by supervisor BVS, Willi Thurnherr, chief executive at Aon Hewitt in Switzerland, said 1e legislation was still under review and in need of a number of amendments. The government, he said, has yet to define the “risk-free investments” to be used in at least one of the choices.Thurnherr said these individual choices for members could “help ease the burden on companies’ balance sheets”, but he warned they might also be “the beginning of the end of guarantees for members”.He said this was “certainly not where we want to get to” in Switzerland. The CHF14bn (€11.4bn) pension fund for Swiss bank Credit Suisse has reported a return of more than 1.6% for 2015, well above the market average of just under 1%.As per December 2015, the Credit Suisse Pensionskasse’s funding level stood at 110%.To ensure the sustainability of its funding, the scheme adjusted its technical parameters from 2016, as many other funds have done over the past year.The discount rate, or technischer Zins, applied to active members’ liabilities was reduced from 3% to 2%.last_img read more

NEST sees returns dampened by ‘challenging’ market conditions

first_imgThe UK’s National Employment Savings Trust (NEST) has seen all its default funds achieve positive returns over the last year, despite what it said were challenging times facing investors.The master trust, which at the end of March had £825m (€1bn) in assets under management, ended the financial year with nearly 3m members – the majority of whom were saving into its 50 default retirement date funds.NEST released its annual report as the UK government asked whether the scheme should be allowed to offer its members drawdown products, an area from which it is currently barred, as pension scheme members were required to annuitise when NEST’s founding statute was drafted.Despite nearly doubling scheme assets over the course of the year, NEST attributed a net increase of £406m to member contributions, and only £16.9m to investment return. This compared to a £38m gain from investments during the 2014-15 financial year, and a net increase in assets of £296m from contributions.While all of NEST’s default retirement date funds achieved a positive return, volatile investment markets meant the consumer price index (CPI) plus 3% target for members in growth phase was missed.Of the sample of funds listed in its annual report, NEST said members in the 2040 fund achieved an annual return of 0.66%, while a member targeting retirement in 2059 achieved a return of 1.4%.Only funds targeting outperformance relative to CPI or the London Interbank Bid Rate (LIBID) were able to outperform their benchmarks, and both the ethical fund and sharia fund fell short, returning 1.21% and 1.32%, respectively.“The year under review was a challenging time for markets, with considerable investment volatility, particularly in the summer of 2015 and at the start of 2016,” NEST said.It added that stocks with “heavy” commodity exposure suffered over the course of the financial year, and said credit markets were “challenging”.“Against that backdrop,” it said, “NEST Retirement Date fund returns were understandably lower than in previous years.”However, it emphasised that the annualised performance for its funds since inception in 2011 remained “comfortably ahead of target”, as was the case with the ethical fund’s 9.9% annualised return compared with its target of 4.6%.Default funds in the lower-risk foundation phase have also fared well since inception, with members targeting retirement in 2059 seeing an annualised return since inception of 7.9%, compared with its annualised investment target of 1.56%.The scheme’s annual report was released as the Department for Work and Pensions launched a consultation on the future of NEST, asking whether the scheme should be allowed to offer drawdown products after the introduction of pension freedoms and the end of compulsory annuitisation.The consultation suggested allowing NEST to offer decumulation products to its existing members, and noted the scheme’s previous research, which saw it propose the introduction of blended products combining deferred annuities and income drawdown.In emphasising that NEST would only offer decumulation to existing members, the DWP is likely seeking to stave off criticism from an industry fearful that the scheme will dominate the nascent drawdown market.It therefore also asked those responding to the consultation, which closes at the end of September, to detail the impact of the decision on individuals, and other pension providers.Commenting on the consultation, pensions minister Ros Altmann said: “NEST has played a vital role in the success of automatic enrolment, and its importance is likely to increase in coming years.“It is right, therefore, that we now consider how it continues to deliver its services in future.”NEST has 3.3m members and has seen its assets increase to £970m.last_img read more

Falling costs and strong returns prompt KLP price cut

first_imgNorway’s municipal pensions provider KLP is to cut prices for its customers amid looming changes to its competitive environment.The premium reductions follow a strong investment return recorded in the first quarter of the year. KLP’s investments added NOK2.2bn (€226m) to its portfolio in the first three months of 2019.Sverre Thornes, KLP’s chief executive, said: “The return on our customers’ pension funds is well above the return we have guaranteed, and our costs are low.”He added: “We are finding that low costs and a strong financial position allow us, as a mutual-owned company, to pursue our ambition to reduce prices and hence costs to our customers within public sector occupational pensions.” In the first quarter, the pension fund generated a value-adjusted return of 3.1% and a book return of 1%, which it attributed to strong equity market performance.As a result, KLP’s total group assets rose to NOK699bn at the end of March from NOK676bn at the end of 2018.Reforms take shape Sverre Thornes, chief executive, KLPThe provider has held a near-monopoly in the local authority pensions market in Norway since 2012 but is set to have more competitors as the country reduces its tally of municipalities.The reform means that some of the new, larger local authorities will be able to expand independent pension schemes and therefore have less need for KLP’s services.In addition, the advent of a new hybrid pension scheme for public sector workers in Norway, to replace existing defined benefit models, could also increase competition from other providers.Storebrand and DNB announced in February that they intended to re-enter the municipal sector following the implementation of the reforms in January 2020.The funds previously managed a third of the market’s pensions, before quitting back in 2012, leaving KLP largely unchallenged.However, KLP said today that the ongoing reform efforts had not affected its growth.The firm also emphasised the importance of equalising pension premiums regardless of age or gender. Trade unions and employers have agreed that KLP should continue to build on this principle, ahead of a debate on the subject in the Norwegian parliament.“This is an important point to make clear before the changes in public sector occupational pensions take effect from 1 January 2020,” KLP’s Thornes said.last_img read more

Spring starts with several homes sold under auction conditions

first_imgSOLD: 30 Lever St, Albion sold for $950,000 at auction on September 1, 2018.“Bidding kicked off at $800,000, and it (quickly) moved up to about $890,000,” Mr Lea said.“Then from $890,000 to $950,000 it was painfully slow, in one thousands and $500 (bids).“All three bidders got quite involved and the one at the very end, basically launched in last minute.“It had already been declared on the market at $925,000 and they jumped in.“They made one bid in the $800,000s, and they jumped straight on the end and were very successful.” Buyers though the refurbished Albion home had a great location.Mr Lea said throughout the campaign buyers had been attracted to the street and location.“On the street there are a lot of beautifully renovated homes, so it’s really encouraging when you’ve got a slew of other renovated homes on the street that you’re not buying into a terrible area,” he said.“I think the block was quite moderate in size at 422sq m, so it was a lot of house on a smaller block and also, it’s quite inner city, it’s very central to pretty much everything and is in the Ascot State School catchment.” GOING GONE: This Hollond Park home sold for more than 800 per cent the owners purchased it for 31 years ago.HOW does an 814 per cent return on your investment sound? Well that’s roughly the percentage increase the sellers of 32 Percival Tce, Holland Park gained in the 31 years they owned the home. >>AUCTIONS SET TO START SPRING WITH A BANG >>CONTAINER HOME ATTRACTS PRE-AUCTION INTEREST >>MILLIONS CHANGE HANDS IN PROPERTY TRANSACTIONS The vendors purchased the property for just $145,000 in 1987, and sold it under the hammer yesterday for $1,326,000 to a local family. The view from the Percival Tce, Home.Ray White Sherwood/Graceville sales executive Lachlan Humble said more than 70 people had inspected the home in the lead up and about 50 of them turned up to the auction.Mr Humble said a whopping 11 bidders registered to buy the home, and bidding started at $900,000. “We probably had between 20 and 30 bids to get $1,326,000,” he said.Mr Humble said the vendors were happy with the results, but had mixed emotions about leaving after 30 years. >>FOLLOW EMILY BLACK ON TWITTER<< A refurbished Albion home also sold at auction yesterday — catching a $950,000 price tag.McGrath Estate Agents Wilston sales agent Craig Lea said about 40 people gathered on the back lawn and deck to see three registered bidders vie for 30 Lever St.More from newsParks and wildlife the new lust-haves post coronavirus17 hours agoNoosa’s best beachfront penthouse is about to hit the market17 hours ago No. 24 Canowie Rd, Jindalee sold under the hammer on the first day of spring for $665,000.@realty Centenary Suburbs sales associate Adam Wishart sold 24 Canowie Rd, Jindalee under the hammer for $665,000.Mr Wishart said bidding started at $545,000 and two of the four registered bidders put their hand up at auction in front of about 20 onlookers.last_img read more

How to own 20 homes before you turn 30

first_imgSuburban townhouses have delivered strong rental yields for Mr Dilleen. Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:28Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:28 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD540p540p360p360p270p270pAutoA, 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 Rate1xFullscreenEddie Dilleen – Goals 00:28 You don’t have to fall in the love with the property, Mr Dilleen says, just its returns.Mr Dilleen said he saved for four years — from the age of 14 to 18 — to get $20,000 for his first property.”At the end of the day I just wanted to help my family, I didn’t want to be poor anymore.” He might not have owned a good camera or even a good car but it was as an 18-year-old that Eddie Dilleen celebrated buying his first property.“When people say the Australian housing market is too expensive, they’re only looking at Sydney and Melbourne, they don’t realise the good deals around Brisbane and the Gold Coast. The market’s amazingly affordable.” FOLLOW SOPHIE FOSTER ON FACEBOOK Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 0:40Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:40 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels720p720pHD576p576p432p432p288p288pAutoA, 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 Rate1xFullscreenEddie Dillen – Tips for fledgling property investors00:41 Eddie Dilleen, Property Investor & Buyers Agent, posing in front of a unit he owns on Chambers Flat Rd, Marsden, Brisbane. Picture: AAP Image/Steve Pohlner.A 27-YEAR-OLD man is proving it’s possible to own 20 homes by the time you turn 30 — and he’s picked where Australia’s newest property moguls will be ‘born’. Eddie Dilleen — who now has a portfolio worth over $3 million — believes the country’s newest property moguls will cut their teeth across the Brisbane to Gold Coast working class strip.Born into a “very poor” family living in housing commission, he currently has 14 properties and has plans for six more underway in some of the most affordable parts of Brisbane and the Gold Coast. Secret entrance hidden in plain sight Property investor Eddie Dilleen now sees SEQ as the next hotspot for future property moguls.The key, he said, was to seek out properties that were below median suburb prices where the rent could pay for double the mortgage costs — and, right now, the best place to do that was in SEQ.“Brisbane and the Gold Coast have great potential, there’s more rental yield than Sydney and Melbourne. Right now I wouldn’t be buying in Sydney and Melbourne.”The price range he was targeting was around the $350,000 and below range for houses and about $250,000 or under for townhouses. Mr Dilleen who set up his own business to help others create property portfolios, said the trick was “start small, think outside the box”.“It doesn’t have to be the biggest, fanciest thing you can find. Make sure it’s got a high rental yield.” Staggering profit in nine months The fast & the luxurious: V8 star’s mansion “A house within Brisbane 20 minutes north or south maximum, about $350,000. I’ve bought property at $250,000 northwest of Brisbane in affordable blue-collar areas only half an hour up. After costs it was a $260,000 land and brick house rented out for $320 a week. “A townhouse can be bought for $200,000 or under and they often rent for $320 to $330 a week. I picked up one built in 2011 for $195,000 that someone paid $330,000 for off-the-plan — they paid too much basically. There are a lot like that.” He might not have owned a good camera or even a good car but as an 18-year-old, Eddie Dilleen celebrated buying his first property.More from newsParks and wildlife the new lust-haves post coronavirus16 hours agoNoosa’s best beachfront penthouse is about to hit the market16 hours ago The property bottom line was Mr Dilleen “didn’t want to be poor anymore”.last_img read more