Showing posts from October, 2010

Irish NPRF Up 1.9% in Q3

A follow-up to my recent post on the luck of the Irish running out. Bloomberg reports, Irish National Pension Fund Posted 1.9% Return in Third Quarter:
Ireland’s National Pensions Reserve Fund earned a return of 1.9 percent to 24.5 billion euros ($34 billion) in the third quarter. The fund’s so-called directed investments in the country’s two biggest banks, Allied Irish Banks Plc and Bank of Ireland Plc, delivered a return of minus 2.5 percent, the NPRF in Dublin said in an e-mailed statement today. The return on the fund’s discretionary portfolio was 3.6 percent. That fund amounted to 17.9 billion euros at the end of September, it said. Donal O'Donavan of the Irish Independent reports, National pension fund loses €400m in AIB and BoI deals:The National Pensions Reserve Fund (NPRF) has suffered a loss of €400m on the investments it was forced to make in Bank of Ireland and AIB, according to figures released last night. In 2009 the NPRF invested €3.5bn in preference shares in AIB …

Squeezed and Opting Out of Pensions?

Ellen Kelleher of the FT reports, Squeezed Britons opt out of pensions:
Hundreds of thousands of Britons have taken a holiday from their personal pension contributions, in further proof of the severity with which household budgets have been squeezed by the economic downturn.The latest data from HM Revenue & Customs show that contributions to personal and stakeholder pensions fell by more than £1bn in the 2009-10 tax year.
As many as 430,000 fewer UK residents put money away for retirement through these vehicles in the last tax period, a fall of 4.5 per cent, according to the Revenue’s estimates.The decline in pension savings in the UK appears to be turning into a long-term trend. Since the 2007-08 tax year, as many as 730,000 fewer UK residents are putting money into personal and stakeholder pensions, while total pension contributions have dropped by more than £2bn, according to the Revenue’s data.Itshowedthat£18.2bnwas contributed to private pensions, including person…

Retirement Disaster Ahead?

Brett Arends of the WSJ reports, Warning: Retirement Disaster Ahead:
Don't let the rally in the stock and bond markets fool you. Many Americans are still hurtling towards a retirement disaster. Few realize it. Even many of those running the big pension funds don't know.That's the conclusion of John West and Rob Arnott at Research Affiliates, an investment management firm, in Newport Beach, Calif. In their latest report, "Hope Is Not A Strategy," they have some numbers to back it up."I worry a lot about people reaching their golden years and discovering, 'Oh, I should've saved more,' and 'Oh, I don't qualify for Social Security any more because it's means tested'," says Mr. Arnott, a widely respected market strategist. "We're headed for a retirement train wreck," he adds, "and it's going to get really ugly over the next 15 years."Alarmist? Perhaps. But follow the math.The returns you will g…

Luck of the Irish Running Out?

John O'Donnell of Reuters reports, Ireland urged to use pension fund to buy bonds:
Ireland's finance minister has been urged by some senior advisers to allow the country's 24 billion euro ($33 billion) state pension fund to buy Irish government bonds to support demand, an Irish official said on Wednesday.The senior official, who declined to be named but is familiar with financial policy discussions in the Irish government, said no decision to take such action had been made.A spokesman for Ireland's department of finance, contacted by Reuters, said: "There are no proposals to do this."Tapping the fund, set aside to pay the state old-age pensions as well as pensions for Irish civil servants, could meet stiff political opposition. Roughly 10 billion euros of it are already earmarked to buy stakes in struggling Irish banks.But some officials now believe a change in the law covering the fund, which currently prevents it from buying Irish bonds, could help the count…

Are SWFs The New Endowment Model?

Greg bright of reports, New endowment model: follow the SWFs:
Some sort of shape is starting to take place, post-global crisis, as to how the biggest, longest-term investors are spending their money. If the endowment model was the one to follow for the past 20 years, the sovereign wealth fund model may be the one to follow for the next.Endowment-envy swept the world in the early part of this decade, which was probably a decade too late to reap the benefits from following the very clever investment strategies of the likes of Yale and Harvard. By the time of the global financial crisis, the envy had faded.But investors should think about why the endowment model of investing worked so well for as long as it did. If we can isolate the good things and then transport them to the post-crisis world, a new and better model may emerge. And, as always with investing, if the strategy is right, those in first will be rewarded.What the big endowments did was invest directly, with th…

Don't Believe The Rally?

I wanted to follow-up on my previous post where Leo de Bever articulated his fears on what will happen when the music stops. Joe Saluzzi, co-founder of Themis Trading, was interviewed on Yahoo Tech Ticker on Monday (see video below):
Major averages are hovering near their highest levels since September 2008, but retail investors continue to flee the market. Domestic equity funds have suffered outflows for 24 consecutive weeks through Friday, and over $81 billion has come out of domestic equity mutual funds year to date, according to Morningstar.At the risk of stating the obvious, several factors explain why investors simply don't trust the rally. Twice bitten, thrice shy: Having been burned by the bursting of the tech stock bubble in 2000, the housing bubble and the financial crisis of 2008, investors are understandably wary of getting sucked in again. A "lost decade" for index investors hasn't helped either. It's the Economy Stupid: With the "real"…

Leo de Bever on When The Music Stops

Late Friday afternoon, I had a chance to speak with Leo de Bever, CEO & CIO of the Alberta Investment Management Corporation (AIMCo). As always, the conversation was fascinating as we delved deep into issues affecting pension funds.

A few weeks ago, AIMCo released its Annual Report 2009/2010. AIMCo's fiscal year ends March 31st, just like that of CPPIB and PSPIB. AIMCo’s total fund return was 12.0% for the year ended March 31, 2010, outperforming the AIMCo Composite Benchmark by 1.2% and the AIMCo Client Composite Benchmark by 1.5% (click on image below to enlarge):

AIMCo’s Balanced Fund Composite return was 17.8% for the year ended March 31, 2010, outperforming the Balanced Fund Client Composite Benchmark of 16.9% by 0.9%.

What I found particularly interesting was the section covering changes to performance benchmarks:
Prior to July 1, 2009, AIMCo measured performance against the asset-weighted composite of client investment policy benchmarks (i.e., the Total AIMCo Client Composi…

Ego Makes Entrepreneurs?

I spent all morning at the Palais des Congrès here in Montreal attending a conference on entrepreneuship which was sponsored by the Board of Trade of Metropolitan Montreal and financial institutions like the Business Development Bank of Canada as part ofSmall Business Week 2010:
The Board of Trade of Metropolitan Montreal and its team of experts in entrepreneurship – Info entrepreneurs – today announced the programming for Small Business Week 2010 in Montréal. The program will feature a series of activities that will bring together hundreds of entrepreneurs from the Montréal area. “This prestigious event is a special one for Montréal small businesses,” said Michel Leblanc, President and CEO of the Board of Trade. “It combines helpful training, presentations by experts and the perfect opportunity to establish or develop a professional network.”The week offers a variety of activities that meet the needs and reflect the interests of all small businesses. On October 19, particip…

Canadian Plan Solvency Ratio Slips in Q3

Benefits Canada reports, OFSI pension estimates down, global pensions up:
The global funded status of pension plans increased in Q3, but results from OFSI show different results.
The Office of the Superintendent of Financial Institutions (OSFI) has released the results of its semi-annual solvency testing for 400 federally regulated, defined benefit (DB), private pension plans. The average solvency ratio at the end of June 2010 is estimated at 87%, three points lower than the December 2009 estimate of 90%. Judy Cameron, managing director of OSFI's private pension plans division, attributes this decrease to market volatility in the earlier part of the early. "Since June 30th, market conditions have remained volatile. Although pension fund returns have improved, there has been a substantial decline in long-term interest rates," said Cameron. "The modest decline in the average estimated solvency ratio in June suggests that plans will continue to face elevated funding dema…

Canada Ranks Fifth in Global Pension Study

Derek Abma of Postmedia News reports in the Montreal Gazette, Canada's pension ranked among best, but could be better:
Canada's pension system is one of the best in the world, though there is room for improvement and the recent global financial crisis has affected its sustainability, a report said Wednesday. The second annual Melbourne Mercer global pension index ranked Canada fifth out of 14 countries for its pension system's adequacy, sustainability and integrity. Canada was fourth last year, but more countries were included in this year's rankings, including Switzerland, which finished second behind the Netherlands. Canada's overall score was lower at 69.9 compared to 73.2 last year. "Not surprisingly, the (global financial crisis) has threatened the sustainability of public and private pension systems in several countries through the decline in asset values and an increase in government debt," said David Knox, a senior partner with consulta…