Pension Pulse

Gary Lamphier of the Edmonton journal reports, AIMCo boss warns of storm clouds ahead for financial markets : I wouldn’t want Leo de Bever’s job. Oh sure, it pays well. And as CEO of Edmonton-based Alberta Investment Management Corp. (AIMCo) you get to play with real money. We’re talking nearly $70 billion of public sector pension, endowment and government financial assets. Running a pile that big must be quite a rush — on a good day, anyway. On a bad day? Not so much. Alas, the global economy and world equity markets have endured more than a few bad days lately, with many more to come. When your portfolio can rise or fall by as much as $300 million by supper time, it requires someone with ice in his veins to manage it. De Bever certainly qualifies, and that’s a key reason why AIMCo managed to post a healthy 7.4 per cent net return on assets for the fiscal year ended March 31. Thanks to big gains in real estate (22.8 per cent), real return bonds (16.3 per cent) and private equity...

Chris Tobe of Stable Value Consultants sent me a guest comment, Beware of Currency Managers at Public Pensions Plans: Public Pensions nationwide need to think long and hard before they hire a currency manager. As an investment consultant and trustee I had never heard of a public pension plan using an active currency manager. In August 2011 in my role on the investment committee I noticed that the performance of the $12 billion Kentucky Retirement Systems (KRS) for the June 2011 fiscal year looked odd. I noticed that we trailed our overall benchmark 160bps or $250 million, while all the individual money managers all beat their benchmarks for the year. I asked our CIO to explain and told me that over $100 million of this loss was due to a currency manager (Record) I was not aware of (see here ). After this discovery I inquired from our investment consultant their views on currency managers. RV Kuhns did not think Currency Overlay managers were appropriate for Public Pension Plans. T...

Julien Toyer and Thorsten Severin of Reuters report, Europe's leaders at odds before summit : European leaders sound unusually divided before a high-stakes summit, with Germany's Angela Merkel saying total debt liability would not be shared in her lifetime and giving little support to Italian and Spanish pleas for immediate crisis action. Rome and Madrid have seen their borrowing costs spiral to a level which for Spain at least would not be sustainable as it battles to recapitalize banks ravaged by a burst property bubble and cut a towering government deficit. Spanish Prime Minister Mariano Rajoy said on Wednesday he would ask other European Union leaders to allow the bloc's bailout funds or the European Central Bank to stabilize financial markets. Speaking in parliament before a meeting of European heads in Brussels on Thursday and Friday, Rajoy warned that Spain would not be able to finance itself indefinitely with 10-year bond yields near seven percent. ...

Lisa Lambert and Nanette Byrnes of Reuters report, New rules may make public pensions appear weaker : New accounting rules approved on Monday are likely to show public pension funds are in a weaker financial position than previously thought and intensify disputes over how public retirement systems are funded. The Governmental Accounting Standards Board, which sets the accounting standards for the public sector, finalized a single system of accounting to replace the menu of financial reporting options public pension funds currently use. State and local governments will have to post their net pension liability - the difference between the projected benefit payments and the assets set aside to cover those payments - up front on financial statements, under the changes. "The pension liability will appear on the face of the financial statements for the first time. That's going to create the appearance of a weaker financial position," said Robert H. Attmore, GASB ...

Stocks slid in early trading on Wall Street Monday, following global markets lower, after Spain requested help for its struggling banks . Bloomberg reports Treasuries rise as Soros warns Euro is at risk : Treasuries rose, extending a quarterly gain, as investors sought refuge amid speculation European leaders will fail to make progress at a two-day summit on stemming the euro bloc’s debt crisis. Longer-term bonds extended their advance after a report that Moody’s Investors Service plans to downgrade Spanish banks. German Chancellor Angela Merkel rejected joint euro-area bonds or bills, saying that introducing shared debt in the 17-nation currency region now would be “counterproductive.” The U.S. will auction $99 billion of notes this week. “The market is stepping back from any meaningful expectation for anything from the summit,” said Ian Lyngen, a government-bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “We are back in a risk-off mode until there is a reason n...

It's St-Jean Baptiste Day, a national holiday here in Quebec, so decided to run through some interesting stories I've been tracking over the weekend. Remember to follow me on Twitter (@PensionPulse) where I post links to stories on pensions, markets, health, Greece and a lot more. Muslim Brotherhood’s Morsi wins Egyptian presidential vote: The Globe and Mail reports that Egypt’s election commission has declared Mohammed Morsi of the Muslim Brotherhood the winner of Egypt’s first free elections by a narrow margin over Ahmed Shafiq, the last prime minister under deposed leader Hosni Mubarak. Egypt remains deep divided and it remains to be seen how these tensions between Christians, Muslims and the secular army play out under this new government. Schaeuble tells Greece to "stick it" : Reuters reports that German Finance Minister Wolfgang Schaeuble said Greece's new government should stop asking for more help and instead move quickly to enact reform measures agr...