Norway’s NOK5.5trn (€556bn) Government Pension Fund Global has seen investment growth of 3.3% over the last quarter, with emerging market equity outperforming developed markets.While second-quarter figures for the fund noted that returns had been “particularly strong” in countries including Russia, Turkey and Brazil, the returns must be contrasted with prior equity losses in the markets over the last year.However, emerging market equity nevertheless returned 7.4%, 3 percentage points above developed market equity.Norges Bank Investment Management (NBIM) also noted the financial sector was its worst performing industry, with its equity holdings only returning 2.1% – compared with 11.8% from oil and gas companies. The report said increasing numbers of lawsuits against the financials sector, the rising cost of settlements and regulatory pressure negatively affected the sector’s return.Underlining the performance problems, the fund said BNP Paribas, UBS and Credit Suisse Group had been the worst performing stocks over the last quarter.Signalling further problems for the financial sector, NBIM also said it would support changes to the board structure at a number of those regarded as systemically important by the world’s regulators.“One of the core principles of good corporate governance is the separation of board of directors from the day-to-day management of the company,” it said.“One of the clearest ways of achieving this is to separate the roles of chairman and CEO. In the second quarter, this principle formed the basis for our voting at systemically important financial institutions, where we see particular benefits in keeping the roles of chairman and CEO separate.”The Financial Stability Board in 2011 listed 29 banks as systemically important.Among those, US bank Wells Fargo and JP Morgan Chase and others currently have joint chief executives and chairmen, a matter of shareholder pressure in recent years.The fund’s fixed income portfolio returned 2% over the course of the quarter, with inflation-linked bonds offering the strongest return at 3.3%.It also shifted further into emerging markets, increasing holdings in fixed income and equity from over the previous quarter by 0.1 percentage points and 0.3 percentage points, respectively.Real estate outperformed fixed income, offering a 3% quarterly return, with the portfolio’s growth over the last year apparent from rental revenue.Rental income almost doubled over the past year, to NOK1.5bn for the first six months, with returns from its property portfolio to date at 5.1%.However, its property portfolio, when measured in local currency, returned 7% over the first six months of the year.Despite property only so far accounting for 1.2% of the fund’s value, NBIM highlighted its plan to aggressively invest in the area.“With real estate eventually accounting for as much as 5% of the value of the fund, our goal is to build a global but concentrated real estate portfolio,” it said.“We expect to invest 1% of the fund each of the next three years in the private real estate markets.”
He cited the reporting requirements in the AIFM Directive as one result of that tendency in asset management.“We have seen the peak in that, and that there will be a new focus on the internal market,” he said.“We can see that with the way the European Commission’s structure has been reformed, and the capital markets union was added to Lord Hill’s portfolio for that very reason.”Jonathan Hill was recently named as commissioner for Financial Services Stability, Financials Services and Capital Markets Union, a move broadly welcomed in all sections of the industry, including asset management.Lueder’s main focus was on creating new business outside the EU, and particularly in China.“I don’t think there is any agenda for creating new passporting schemes,” he said.“It’s more credible to start to work on third-country schemes that exploit the structures we have already established in the form of UCITS, ELTIF, AIFM and European venture capital schemes.“UCITS has been a great success that gives us a headstart in places like China, Singapore, Hong Kong and Chile.“We have one of the few pieces of European legislation that has become the global standard, the default model for businesses selling funds in third countries.“UCITS is the model we could build on for capital markets union, for raising capital in multiple jurisdictions – not just throughout the EU, but worldwide.”Lueder offered an insight into his detailed discussions with the China Securities Regulatory Commission, the People’s Bank of China and the Chinese asset management community, following on from initial contact made by commissioner Michel Barnier.The favoured structure would see Chinese investors obtain a domestic investor quota to convert part of their renminbi holdings into the investment currency of a UCITS – the opposite of the QFII arrangements, which involve foreign investors getting a quota for investment in China.In terms of the types of products Chinese investors will look for, Lueder reported a lot of interest in the use of UCITS to liberalise and increase convertibility of the renminbi.He cited the example of foreign-currency denominated investments in import or export businesses with exposure to the renminbi, cases where the conversion back to renminbi on redemption provide potential extra return or a hedge for the investor.He added that the liquidity afforded by UCITS was an advantage for these kinds of investment.“Investors in China want UCITS that are complementary to what they already have access to,” Lueder added.“They don’t want European money market funds. They want smaller, specialised, niche investments in their UCITS – this could be a big opportunity for Europe’s smaller asset managers.”Both messages played well with the NCI members in London.Dominic Johnson, chief executive at emerging market boutique Somerset Capital, and NCI’s co-founder and chairman, said: “It’s terrifically heartening to hear from Tilman Lueder that his part of the European Commission is focused on fostering true European capital markets integration, assisting our members – and firms like them – to compete better globally.” Tilman Lueder, head of the European Commission’s asset management division that oversees EU rules applicable to collective investment schemes (UCITS) and alternative investment fund managers (AIFMs), has set out an industry-friendly strategy that focuses on taking European investment vehicles to Chinese institutional investors.Speaking in London at an event hosted by the insurance brokers JLT after a day spent in dialogue with the New City Initiative, a trade body representing owner-managed financial services firms, Lueder was keen to emphasise a shift in focus for the incoming Commission.“There is a new team of commissioners coming in, and the portfolio set-up has been organised in line with the focus on jobs and growth,” he said.While he emphasised that the asset management division had always been much less focused on crisis-response, macroprudential regulation, such as Solvency II and the banking union project, he conceded that after 2008 there was a tendency to see the internal market as problematic because of the systemic interconnections it creates.
Ros Altmann’s decision to halt any further work on collective defined contribution (CDC) was a “strategic and tactical decision” and one fully endorsed by the UK pensions minister’s predecessor.Altmann, named pensions minister in May, said she had inherited “a rather large number of initiatives” but argued that her first priority was to communicate the reform of the state pension, which will transition to a single-tier, flat-rate system in 2016.The Conservative party peer told the National Association of Pension Funds annual conference in Manchester that CDC or defined ambition would be future reforms, but that the changes were either coming too early “or quite a lot too late”.“I don’t think it’s a priority for now,” she said, instead emphasising the need to look at state pension changes and auto-enrolment and communicating the changes allowing early access to pension savings. “This isn’t abolished, this isn’t abandoned,” she said. “This is on hold for the moment because of all the other changes going on. I actually mean what I say, so please don’t read anything else into it.”Altmann noted that, even if the Department for Work and Pensions went “full-pelt”, the regulatory underpinning needed for defined ambition and CDC – not drafted prior to the legislation passed in March – would not be in place until late 2018.In a later speech Steve Webb, who until May was UK pensions minister and oversaw the work on defined ambition, backed Altmann’s priorities and said CDC was “always something for the long term”.But he urged the industry not to let the Pensions Scheme Act 2015 simply “gather dust on the shelf” and argued a system should be ready to help when the appetite for risk-sharing returned.“We have to be helping them, we ought to be planning ahead now, so that when the appetite comes back – not least from employers that find their workers can’t afford to retire because of the DC schemes they’ve been in – we’ve got a regulatory framework that isn’t cobbled together on the back of a [cigarette] packet, but has been thought through carefully over a period of years.”Webb noted the National Employment Savings Trust (NEST) was considering greater risk-sharing for retired members, a proposal it outlined when discussing how its default strategy would change in the wake of the so-called pensions freedoms allowing members to draw down savings from age 55. Altmann seemed to champion the quality standards for DC funds developed during Webb’s tenure, saying she wished to ensure the pension funds used for auto-enrolment were “good schemes”.“I do also recognise,” she said, “that there are concerns about new master trusts setting up, and I want to make sure schemes that are promoting themselves for auto-enrolment are well run, looking after their members properly and sustainable.“I don’t think doing nothing is an option.”Her remarks follow on from those of Lesley Titcomb, chief executive of the Pensions Regulator, who raised the prospect of the master trust assurance framework’s being mandatory for any fund accepting members through auto-enrolment.
No one at the pension fund was immediately available for further comment.According to its 2014-15 annual report, Hampshire Pension Fund, part of the UK’s Local Government Pension Scheme (LGPS), allocated 37.5% of its total assets to global equities at the end of the reporting year, including a 10.7% allocation to passive global equities.The three managers or funds used for investment within its “high-performance global equities” category are Aberdeen Asset Management, Newton Investment Management and Aberdeen Frontier Markets Equity.These three managed actual allocations of 13.5%, 12.9% and 0.2%, respectively, at year-end, according to the report.In absolute terms, Aberdeen runs £687m of Hampshire Pension Fund active global equity assets, Newton £659m and the Aberdeen Frontier Markets Fund £12m.The pension fund’s total investments stood at £5.1bn at the end of the 2014-15 financial year. The UK’s £5.1bn (€6.5bn) Hampshire Pension Fund is looking for investment managers to take on mandates to invest £1.2bn of its assets in global equities, using an active approach, according to a tender notice.The notice said Hampshire County Council, on behalf of the fund, anticipated awarding mandates to between two and five managers for its total global equities portfolio of £1.2bn.Managers applying have until 2pm on Friday 22 April to submit pre-qualification questionnaires, according to the notice.The council said it envisaged inviting 5-10 firms to tender.
An undisclosed pension fund based in Eastern Europe has tendered a multi-asset mandate using IPE Quest.According to search QN-2180, the size of the mandate is to range between €20m and €40m. According to the client, the multi-asset fund can include any combination of equities, debt instruments and cash/money markets as core assets in the portfolio.The scope is global, although OECD countries are preferred. The client said it was seeking absolute return, risk-targeted or risk-managed funds.The mandate calls for a minimum track record of three years, with at least €300m in assets under management within the asset class itself.Funds should be long-only, and derivatives are allowed for hedging purposes only.Interested parties should state performance, gross of fees, to the end of April.Applicants are encouraged to respond promptly, as IPE Quest will need to send further documentation.The RFP will consist of completing three Word documents that need to be submitted by 30 May.The IPE news team is unable to answer any further questions about IPE Quest tender notices to protect the interests of clients conducting the search. To obtain information directly from IPE Quest, please contact Jayna Vishram on +44 (0) 20 3465 9330 or email [email protected]
Referring to the company’s relationship with insurer Delta Lloyd, the group’s low-cost defined contribution PPI vehicle and its pending general pension fund (APF), he said the asset manager would be able to “turn its hand to anything”.Maters said Delta Lloyd AM’s new policy would seek to further integrate responsible investment, with a dedicated team of SRI specialists, as well as at least one expert per investment team.“By having subjects assessed by various specialists, we expect to achieve better results,” he said.Delta Lloyd AM manages €54bn in institutional and private assets, including €5bn for approximately 30 pension funds.Maters said he expected “sturdy growth” in pension assets under management but declined to provide further details.He did reveal, however, that Delta Lloyd’s general pension fund, awaiting supervisory approval, aimed to manage €6bn in pension assets by 2020.Over the last two years, the asset manager has lost a number of important fund managers, including Maters’s predecessor, Alex Otto; head of equity Jack Jonk; and head of interest Sandor Steverink.Last spring, ratings agency Morningstar lowered the asset manager’s rating from ‘neutral’ to ‘negative’, and the downgrading, according to Maters, was largely due to its new strategy.“Morningstar has faith in our new people, but it wants to see how the new strategy turns out first,” he said.Among Delta Lloyd AM’s newly appointed specialists is Emile Ferjane, who has started as portfolio manager on the fixed income credit team.He joined from Bank of America Merrill Lynch, where he has been an analyst and portfolio manager. Delta Lloyd AM named Maurice Meertens as portfolio manager on the illiquid fixed income team as of 1 November.Meertens comes from Rabobank, where he was a credit analyst.The company further appointed Dmitry Zamkovoy as portfolio manager on the fixed income rates team as of 15 November.Over the last four years, he has served as a fixed income trader at Rabobank.Angus Steel, senior portfolio manager on the equity team, is to leave as of 1 November.Meanwhile, Berber Harkema has started on the equity team as management trainee.Maters said his investment teams were nearly complete following the newest appointments, with the only vacancies being in equities (two) and fixed income (three). Delta Lloyd AM employs a full-time staff of 160. Delta Lloyd Asset Management has appointed a number of fund managers as part of a new strategy aimed at “pro-actively offering integrated and sustainable solutions” for Dutch pension funds and medium-sized insurers.With the appointment of managers for credit, illiquid fixed income and rates, Delta Lloyd AM said it had nearly completed a reshuffle of its expertise after the implementation of its new strategy.Jacco Maters, chief executive and CIO, said the asset manager’s new strategy aimed to achieve maximum returns for clients while taking into account the restrictions imposed by the new financial assessment framework (nFTK).He said Delta Lloyd AM was expecting “significant” interest for integrated solutions and considered itself well positioned to meet demand.
OMGI, Schroders, Jupiter, LOIM, Mediolanum, TPR, Aberdeen Standard Investments, Pensioenfederatie, Code Pensioenfondsen, Pensioenfonds Robeco, JP Morgan AM, BMO GAM, TTF, ISS-oekomOld Mutual Global Investors – OMGI has appointed Martin Visairas as managing director, institutional, with responsibility to service and expand the company’s institutional client base. He will join the business on 22 August. Visairas was most recently at Citi , where he worked after leaving Old Mutual Asset Managers, an OMGI predecessor company, in 2010. At Citi he was responsible for linking hedge fund clients with leading institutional investors across the US, Europe and Asia Pacific. Schroders – Schroder Real Estate has hired Robin Hubbard to lead its global real estate capital raising and joint venture strategy. As reported earlier this week by IPE Real Assets , the €17bn manager recruited Hubbard from InfraRed Capital Partners where he was director of investor relations and business development. He has been tasked with growing the firm’s direct real estate relationships with institutional investors in North America, Australasia and Europe.Jupiter Asset Management – Alejandro Di Bernardo and Joel Ojdana have been appointed as analysts in the manager’s fixed income team. Di Bernardo will join as an emerging market debt analyst focusiing on Latin America. He was previously a high yield and leveraged loans analyst at Deutsche Asset Management in New York. Before that he worked at Citigroup and Accenture in South America. Ojdana will focus on generating US-focused ideas for Jupiter’s unconstrained bond strategy. From 2015 he worked as a credit analyst at Balyasny Asset Management and Seaport . Lombard Odier Investment Managers – LOIM has appointed François Meunier as an equity portfolio manager, based in London. The Swiss asset manager said the newly created role would see Meunier focus on companies demonstrating strength in “disruption and innovation broadly across sectors, up and down the value chain”. He joins from Morgan Stanley where he was head of technology equity research since 2010. During this period he also acted as an adviser to the office of the UK prime minister – which was David Cameron until June 2016 – and France’s economy ministry. He previously lead technology equity research at JP Morgan Cazenove for six years.Mediolanum Asset Management – The Irish asset management company of the Mediolanum Banking Group has hired Astrid Schilo as multi asset strategist and Inma Conde as head of manager research. A German native, Schilo was most recently research senior principal at Accenture Research, where Mediolanum said she was involved in a major artificial intelligence project. Conde joins from Minnesota Philanthropy Partner, one of the largest community foundations in the US, where she was director of investments. The Pension Regulator (TPR) – The UK regulator for pension schemes has added three new members to its determinations panel ahead of new regulatory oversight powers for defined contribution master trusts. TPR’s authorisation regime for the multi-employer vehicles begins on 1 October.Sarah Chambers , Antony Townsend , and Mike Urmston will take up their posts next month, the regulator said, bringing the total membership of the determinations panel to 12 – albeit temporarily. Three existing members are to step down in July 2019, once the new regulatory regime is up and running.Tony Foster and David Latham have been re-appointed to the panel for a second term.Chambers is involved with several influential UK organisations including the Legal Services Consumer Panel, the Electoral Commission, the Judicial Appointments Commission and the Civil Aviation Authority’s consumer panel member. Townsend is the Financial Regulators Complaints Commissioner, a role he has held since 2014. He is on the regulatory boards for the Royal Institution of Chartered Surveyors and the Association of Chartered Certified Accountants. Urmston is chair of insurers Phoenix Life and AIG Life, and is a former chief actuary and finance director for Aviva. Aberdeen Standard Investments –André Haubensack has been appointed head of distribution for Switzerland. The appointment follows the merger of Standard Life Aberdeen PLC and Aberdeen Asset Management last year. Haubensack joined Standard Life Investments in 2014 as part of the acquisition of Ignis Asset Management. Aberdeen Standard Investments said it expects to announce two new appointments for the distribution team for Switzerland in the coming weeks. Before joining Ignis Asset Management Haubensack was a director at New Star Asset Management and Credit Suisse. Pensioenfederatie – Leon Mooijman has started as policy advisor at the Dutch Pensions Federation. He joined from Nationale Nederlanden , where he has been client director, corporate pensions during the past two years. Prior to this, he was head of the pensions team of employer organisation AWVN since 2002. Mooijman has been a trustee at the pension fund Kartonnage & Flexibele Verpakkingen as well as at the scheme Noblesse on behalf of AkzoNobel. Between 2008 and 2016, he was a member of the advisory board of pensions magazine Pensioen Bestuur & Management.Code Pensioenfondsen – Loes Ypma and Frans Prins have been appointed as member and adviser, respectively, of the monitoring committee for the Dutch pension fund code as of 1 October. Ypma is on the town council of Almere and was a member of parliament for labour party PvdA between 2012 and 2017. Prins is chairman of the supervisory board (RvT) of APG ’s €1.2bn staff pension fund as well as chair of the pension fund of carbon firm Norit . He has been director of the Pensions Federation as well as PWRI, the €8.7bn pension fund for disabled workers. Ypma and Prins succeed Cateautje Hijmans van den Bergh and Loek Sibbing, respectively. The monitoring committee is chaired by Margot Scheltema.Pensioenfonds Robeco – Tom Steenkamp has been named chairman of the €641m Pensioenfonds Robeco. He is to succeed Harry Horlings, who left Robeco for NN IP last spring. Steenkamp, a senior investment consultant at Robeco as well as professor of investment and finance at Amsterdam’s Free University (VU), is already deputy chair of the company scheme. Fieke van der Lecq will leave as a member of the pension fund’s supervisory board. She will be replaced with Peter Priester.JP Morgan AM – Matthijs Claessen has been appointed executive director at JP Morgan Asset Management, tasked with generating new instutional business in the Netherlands and Belgium. He joins from NN Investment Partners, where he left as director for institutional business development. He has also worked at NN IP’s predecessor ING IM.BMO Global Asset Management – The investment manager has hired three new staff for its Amsterdam-based operations as of 1 July. Alexander van Aken has started as director and portfolio manager as well as delegated chief executive for fiduciary management, responsible for expanding the company’s fiduciary services in the Netherlands. Van Aken reports to Bart Kuijpers. He joined from SEI Investments, where he has been director, client services during the past nine years, focusing on fiduciary services.Pieter van Stijn has become director, governance and sustainable investments. Prior to this, he was senior responsible investment advisor at the €215bn asset manager PGGM. Martijn Moens has also joined BMO AM, with responsibility for leading the marketing activities on mainland Europe. Moens joined from Fidelity, where he was head of marketing and corporate communications for the Benelux.Transparency Task Force – John Howard is to become the founding chair of the UK campaign group’s advisory board. A former BBC TV and radio presenter, Howard chaired the UK regulator’s Financial Services Consumer Panel for three years until 2008. Other previous roles include being a member of the board of the Financial Ombudsman Service and also a non-executive director of Ofgem, the energy regulator. He is currently vice chair of the Family Building Society and a member of Scottish Widows’ independent governance committee and with profits committee. ISS-oekom – Stefan Löbbert will join the ESG rating and research provider’s sales team in Munich next month. The company described him as “one of the most prominent experts on sustainability in the financial sector in Germany”. He joins from HypoVereinsbank/UniCredit Bank, where he was the long-standing head of corporate sustainability.
Lobby groups have clashed over the structure of the EU’s proposed pan-European personal pension product (PEPP).Two groups of European parliamentarians have weighed in to the discussions about the PEPP’s rulebook, arguing in favour of inflation protection on top of capital guarantees.The committee for Internal Market and Consumer Protection has supported a guarantee “at least to equal the contributions paid, including all costs and charges and after inflation”. The parliament’s employment committee, meanwhile, has also called for inflation protection in the PEPP, which it said could be capped at 4% annually. The European Parliament building in BrusselsInsurance Europe also called for politicians to be more specific with their proposals for capital protection. The European Commission’s current wording states that the default investment option for the PEPP should be protected through “risk mitigation techniques”. However, definitions have been left to ‘delegated acts’, meaning that a final decision would be made after PEPP negotiations have concluded.The insurance sector group argued that, if left unresolved, this could mean levels of consumer protection varied “depending on the PEPP provider”.In addition, the European Fund and Asset Management Association (EFAMA), which represents the interests of potential asset manager providers, argued that nominal capital protection was “highly misleading” because it did not take into account the erosion impact of inflation. However, instead of inflation protection, EFAMA has argued in favour of life-cycle investment strategies, which it has claimed would give vastly better returns to almost all PEPP savers and address Better Finance’s concerns about inflation.An obligation to provide a financial guarantee would also limit insurers’ access to the PEPP market, EFAMA said. This outcome would be highly unattractive to consumers, the association said, because a key goal of the PEPP initiative was to increase competition and enhance choice in Europe’s personal pensions market.Fees and costsSeparately, Better Finance also demanded “an overall fee cap of 1% for the default life-cycle option” for the PEPP.However, Bernard Delbecque, EFAMA’s senior director for economics and research, told IPE that “a better approach would be to unbundle costs”.“This would allow for transparency between the different types of fees, such as investment management, distribution, and advice costs,” he said. The PEPP’s intended single market would also achieve scale economies and reduce costs, Delbecque added. Despite PEPP’s “mixed complexity”, the Commission has declared itself confident that PEPP rules would clear through the Brussels machinery on time and claimed that discussions on the proposal were “progressing well”.It has also stated that there was no risk of the PEPP discussions delaying the progress of its flagship Capital Markets Union programme.ECON is due to finish its work on the PEPP rulebook next month. Discussions between the parliament, the European Commission and member states will follow with the aim of an set of rules by the end of this year.This article was updated on 20 August to clarify Insurance Europe’s comments. The committees’ comments follow calls from consumer campaign group Better Finance for politicians writing the PEPP rulebook to include protection against inflation in real terms, if possible.Failing this, PEPP documents “should at the very least include a prominent warning about the devastating impact of inflation”, Better Finance said.The PEPP rules are currently being debated and drafted by the European Parliament’s Economic and Monetary Affairs committee (ECON).Pensions industry trady body PensionsEurope in its feedback to ECON said that the wording regarding guarantees was “not clear enough”, but stopped short of calling for inflation protection.Instead it suggested that the PEPP rules include “a guarantee on the capital invested, as provided in the applicable legislation of the PEPP provider”, and that “when a capital guarantee is provided, it should be a long-term guarantee provided at the end of the accumulation period”. LimitationsHowever, insurance industry trade body Insurance Europe countered that “covering inflation on top of the capital invested would be extremely challenging – if not impossible”.Consideration had to be given to “inflation’s fluctuant nature and the fact that it is not known at the time when [any] guarantee is issued”, it added.
Chris HoggGregg McClymontLaura MyersEmma Douglas, head of DC at Legal & General Investment Management (chair)Zoe Alexander, director of strategy at NESTAdrian Boulding, director of policy at NOW: PensionsRachel Brothwood, director of pensions at West Midlands Pension FundMel Duffield, pensions strategy executive at Universities Superannuation SchemeTeresa Fritz, member representative at Croydon Pension FundBrian Henderson, director of consulting at MercerChris Hogg, chief executive at National Grid UK Pension SchemeJamie Jenkins, head of pensions strategy at Standard Life AberdeenNicola Mark, head of the Norfolk Pension FundNeil Mason, head of pensions at Surrey County CouncilGregg McClymont, director of policy and external affairs at The People’s PensionLaura Myers, head of DC at Lane Clark & PeacockJackie Peel, UK and international benefits director at Mars UKAnna Rogers, senior partner at ARC Pensions LawMichael Watkins, head of proposition development at Smart PensionCarol Young, head of group pensions at Royal Bank of ScotlandJulian Mund spoke to IPE editor Liam Kennedy earlier this year about how the PLSA was changing and broadening its approach to representing the UK’s pensions industry. The UK’s pension scheme trade body has reduced the size of its main board and named 17 people to a new policy group as part of a major overhaul of its governance structure.The changes were announced last year at the Pensions and Lifetime Savings Association’s (PLSA) annual conference. In May the association named Legal & General Investment Management’s head of defined contribution (DC) Emma Douglas as chair of the new policy board .The three new members of the PLSA’s main board are: Alison Hatcher, global head of corporate sector at HSBC Global Asset Management; Patrick Heath-Lay, chief executive officer of B&CE, the provider for DC master trust The People’s Pension; and Catherine May, a corporate affairs specialist who has worked at several FTSE 100 companies.Seven people have stepped down from the board, including former chair of the PLSA Lesley Williams, National Grid pension chief Chris Hogg, and Royal Bank of Scotland’s pension scheme manager Carol Young. The main board now has eight members, down from 12. Emma Douglas, chair of the PLSA’s new policy boardHogg and Young have joined the newly established policy board alongside other former PLSA board members Nicola Mark, head of the Norfolk Pension Fund, and Jamie Jenkins, head of pensions strategy at Standard Life Aberdeen.The policy board includes representatives of pension providers, lawyers, asset managers, consultants and pension fund executives from both the public and private sectors.Emma Douglas highlighted the diversity of the appointments: “The make-up of the policy board not only reflects the breadth of the PLSA’s membership, but we also have a range of ages and backgrounds represented and over 50% are female, which unfortunately can still be rare within our industry.”The proposed membership – which will be confirmed following a vote at the PLSA’s annual general meeting next month – is as follows: Julian Mund, chief executive of the PLSA, said: “The changes to our board are part of wider reforms we have been making to ensure we have the right governance for our association and are able to fulfil our mission of helping everyone achieve a better income in retirement.“Alison, Patrick and Catherine will bring a fantastic mix of skills to the table and I am excited to work with them to deliver our strategic goals in the years to come.”
The chief executive of the UK’s Financial Conduct Authority (FCA) has rejected claims that the implementation of MiFID II regulations has hit research coverage of certain sectors, and instead welcomed the cut in spending by fund managers.In a speech at an event hosted by the European Association of Independent Research Providers (Euro IRP) in London on Monday, Andrew Bailey said the FCA had been aware that the MiFID II could lead to a drop in the number of research houses covering less popular small and middle-sized companies.He said the regulator had taken steps to ease any potential impact, including allowing “free distribution of research that supports capital raising events, allowing issuer-sponsored research – an important source of coverage for smaller companies – to be freely circulated and clarifying that research made publicly available cannot be an inducement”.Bailey said that, since implementation, the FCA had watched for evidence of change in this sector: “The evidence is, so far, inconclusive, and does not suggest the dramatically negative impact that some predicted.” Andrew Bailey, chief executive, FCA“Similarly, LSE order book data for 2018 point to a material increase in trading volumes between 2018 and 2019, especially for small caps, suggesting liquidity has been maintained in the market,” he added.However, earlier this month, two surveys showed professionals working in the asset management sector thought there had been a drop off in the scale and quality of provision.CFA Institute, which spoke to 500 professionals, found almost half of those providing the research thought the quality had decreased overall. Just 44% of respondents working for banks or brokerages said the quality of research had remained constant in the 12 months since the introduction of the regime. The same number said research quality of small and mid-cap stocks had decreased.Another survey, from broker Peel Hunt and the Quoted Companies Alliance, said nearly two thirds of investors – 62% – believed less research was being produced on mid and small-cap companies. A third said they expected further reductions in both the volume and quality of research in the future.At the event in London yesterday, Bailey said the FCA estimated that the asset management industry – and by extension asset owners – had saved around £180m (€209m) in fees since the implementation of the updated directive.He said that this would amount to a saving of around £1bn over the next five years.“Importantly, buy-side firms have indicated they can still access the research they need,” said Bailey. “This may reflect the low ‘entry level’ prices for written research, alongside more thoughtful consumption across the board.”Chris Deavin, chair of Euro IRP said in a statement following the event: “We are very appreciative of the continuing focus from the FCA on the competitiveness of the investment research industry, and welcome Andrew Bailey’s confirmation of the zero inducement risk that asset managers have in taking research services from independent research providers.“As all independent research providers by definition rely on the inherent quality of their services in order to be successful, we also fully support the FCA’s stated view that quality, rather than quantity of research, is the key metric that the buyside should apply in evaluating their research services consumption.” Data for the 2015-18 period showed analyst coverage levels on the London Stock Exchange (LSE) Main Market and Alternative Investment Market remained broadly consistent, Bailey said.