Pension Pulse

Greg Roumeliotis of the Globe and Mail reports, OMERS, Japanese partners launch infrastructure fund : One of Canada’s largest pension plans teamed up on Thursday with Japan’s pension funds and some of its major conglomerates to help raise $20-billion (U.S.) for the world’s largest infrastructure fund to invest in assets such as roads and airports. While a handful of the world’s biggest pension funds have the capacity to lead their own investments in infrastructure assets, the initiative represents an unprecedented effort to cut out asset managers as middle men in infrastructure investment. Ontario Municipal Employees Retirement System (OMERS) said on Thursday it, along with Japan’s Pension Fund Association and a consortium led by Mitsubishi Corp., Japan’s largest trading house, had committed a total of $7.5-billion toward the new fund. Infrastructure funds have traditionally been sponsored by investment banks, private equity firms and independent asset managers. If successf...

Joe Weisenthal of Business Insider reports on Hugh Hendry's latest letter, It Looks Like America Is 'Creating Yet Another Historic Turning Point' : We wrote yesterday about how how Hugh Hendry is back with his first big shareholder letter since 2010. The gist is that Hendry is more bearish than ever on China, and that his favorite way to play it remains credit default swaps on China-exposed Japanese corporate names, which are still up to their necks in debt. He doesn't write much about the US, but we wanted to highlight his bullish commentary... This might be the year everyone else notices this; the year panic over Chinese economic growth comes to replace the market's morbid fascination with the travails of the European continent and the year in which we see that the US is not giving way to China in terms of global economic leadership. There is a near consensus that China will supplant America this decade. We do not believe this. We are more bullish on U...

Since 2008, Wall Street and Washington have fought against the tide of the fiercest financial crisis since the Great Depression. What have they wrought? In a special four-hour investigation, PBS FRONTLINE tells the inside story of the struggles to rescue and repair a shattered economy, exploring key decisions, missed opportunities, and the unprecedented and uneasy partnership between government leaders and titans of finance that affects the fortunes of millions of people around the world. Below, watch Parts 1 & 2 (or on your tablet ). Have a great weekend!

You knew it was only a matter of time before some credit agency downgraded Spain right before the weekend. On Thursday, Standard & Poors cut Spain's sovereign credit rating to BBB+ from A on concern the nation will have to provide further fiscal support to the banking sector as the economy contracts. The assertion that Spain will need a major banking bailout due to a surge in defaults was derided yesterday as nonsense by Banco Santander Chief Executive Officer Alfredo Saenz: “Mortgages get paid in good times and in bad,” he said in a news conference at the bank’s headquarters outside Madrid. “Anyone raising this problem as one of the issues for the Spanish financial system is saying something stupid.” There’s more at stake than the credibility of the CEO of the country’s largest lender . If he’s right, investors betting against his bank and the country will lose. If he’s wrong and delinquencies rise, that will weaken the nation’s banks as Spain’s Prime Minister Mariano Raj...

On Monday, Social Security Board of Trustees released its annual report on the financial health of the Social Security Trust Funds : The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be exhausted in 2033, three years sooner than projected last year. The DI Trust Fund will be exhausted in 2016, two years earlier than last year’s estimate. The Trustees also project that OASDI program costs will exceed non-interest income in 2012 and will remain higher throughout the remainder of the 75-year period. In the 2012 Annual Report to Congress , the Trustees announced: The projected point at which the combined Trust Funds will be exhausted comes in 2033 – three years sooner than projected last year. At that time, there will be sufficient non-interest income coming in to pay about 75 percent of scheduled benefits. The projected actuarial deficit over the 75-year ...

Svea Herbst-Bayliss of Reuters reports, Hedge fund managers a gloomier lot in 2012-survey : Faced with new regulatory oversight, fierce competition for investment dollars, and uncertain markets, nearly half of the hedge fund industry is bracing for a difficult year, a survey shows. Accounting, consulting and audit firm Rothstein Kass found that 47.5 percent of managers said 2012 will be "difficult" or "somewhat difficult", making for a noticeably gloomier outlook from a year ago when only 32.3 percent of respondents said they expected 2011 to be a tough year. One surveyed manager warned that bigger funds may fail to meet their investors' expectations. Another manager said that the pressure to perform is on in 2012. "We are in a new world," said Howard Altman, Rothstein Kass' co-chief executive officer, adding "I t is a time of inflection for the industry with registration and how difficult it is to raise to capital." As of March 30, all ...

Lawrence Fletcher of Reuters reports, Managers pocket 28 percent of hedge fund profits : Hedge fund managers pocketed 28.1 percent of profits generated by their funds over the past 18 years, new research from London's Imperial College found. The research, commissioned by KPMG and hedge fund industry body the Alternative Investment Management Association, found investors' share of annual profits delivered by hedge funds from 1994-2011 was 71.9 percent. It also found funds delivered an average annual return of 9.07 percent from 1994-2011, compared with 7.27 percent from global commodities, 7.18 percent from stocks, and 6.25 percent from global bonds. "This research ... disproves common public misconceptions that hedge funds are expensive and do not deliver," said Rob Mirsky, head of hedge funds at KPMG in Britain. The study, which assumed average hedge fund fees of 1.75 percent and performance fees of 17.5 percent, followed the publication in January...

Bill Tufts, Founder and Executive Director of Fair Pensions For All , sent me a media release, Teachers' Pension Plan CEO offers dose of reality to taxpayers: Ontario taxpayers received a painful dose of honesty from the Ontario Teachers’ Pension Plan President and CEO Jim Leech last week as he admitted the funding formula is broken beyond repair and that “revolutionary” changes to pensions are needed. Leech spoke at a fundraiser in Hamilton on Thursday, after a decidedly brutal assessment of the Teachers’ Plan in the Hamilton Spectator the day before. Leech pointed out that the plan’s current formulas were based on a 1970 actuarial report that assumed teachers would work for 27 years and retire for 20. As of 2012 teachers are indeed working for 27 years, but they are retiring for 30. “There is no defined benefits plan ever conceived that you would draw from much longer than you paid in,” he said. “It mathematically doesn’t work.” Documents released this month by the OTPP reveal th...