UK pension funds sue Bank of America; Hungary pension crisis to test European Union; Macquarie eyes emerging market infrastructure; Europe pension funds increase exposure to alternatives
Macquarie eyes emerging markets infrastructure
Macquarie is set to launch an infrastructure fund that will focus on equity investment in Mexican infrastructure.
According to Latin Finance, the size of Macquarie Capital Mexico had not been made public but was expected to be "substantial".
Macquarie has already partnered with State Bank of India (SBI) to launch an infrastructure fund investing in Indian projects. International investors have raised US$887 million ($1.26 billion) so far for the Macquarie-SBI Infrastructure Fund, while Macquarie, SBI and the International Finance Corp (IFC) have committed an additional US$150 million ($212.3 million) each to the fund.
Further investment from local Indian institutions during 2009 is expected deliver a total fund size between US$2 billion ($2.83 billion) and US$3 billion ($4.24 billion).
SBI and Macquarie will hold 45 per cent each in the joint venture with the balance held by the IFC. Investments will be made in traditional infrastructure assets that generate long-term cash flows.
Industry guidelines to ease funds transfer
The Financial Services Authority (FSA) in the United Kingdom has confirmed industry guidelines as set out by the Investment Management Association (IMA).
The guidelines are expected to facilitate the electronic transfer of funds while at the same time reassure fund managers that instructions given electronically are genuine. Until now, investors who sold or transferred units electronically were required to follow up instructions in writing. Now fund managers can accept authorisation by electronic means and administrative savings for UK fund managers could be as much as £290 million ($598.79 million).
The IMA guidance would help fund managers to transfer from the "cumbersome paper-based trading system" without weakening protection, FSA director of retail policy and conduct risk Dan Waters said.
US pension funds sue Bank of America
Five public pension funds have filed a class action suit against Bank of America, alleging the bank did not disclose material information to shareholders prior to its merger with Merrill Lynch.
The two largest United States state public pension funds, California Public Employees Retirement System (CalPERS) and California State Teachers Retirement System (CalSTRS), will lead the action that also includes the public employees' retirement fund in Ohio and pension funds in Sweden and the Netherlands.
They are claiming losses of up to US$274 million ($387.75 million) on their Bank of America investments between 21 July 2008 and 20 January 2009. CalPERS board president Rob Feckner said failure to provide complete or accurate information to shareholders drove the stock price down dramatically.
Hungary pension crisis to test European Union
In eastern Europe, Hungary poses one of the bigger risks in a challenging landscape for pension reform.
Hungarian national news agency, MTI, recently reported a planned 90 billion Hungarian forint ($555 million) cut in pension plans for 2009 and a further 165 billion forint ($1.02 billion) in 2010.
The pension reduction plan is part of the commitment Hungary made last year to the International Monetary Fund, which stepped in with an emergency US$25.1 billion ($35.52 billion) bailout.
Hungary's pension costs currently surpass 10 per cent of its gross domestic product, according to the Wall Street Journal.
Europe pension funds increase exposure to alternatives
European pension funds are increasing their allocation to non-traditional asset classes, according to Mercer's annual European Asset Allocation Survey, which looks at 1000 pension funds across Europe with assets of €400 billion ($733.4 billion) or more.
"The banking crisis and collapse of Lehman Brothers highlighted the operational risks associated with the investment of institutional assets and brought counter-party risks more into focus," Tom Geraghty, European head of Mercer's investment consultant business, said.
The survey found 35 per cent of United Kingdom schemes and 60 per cent of European schemes outside the UK were looking at diversifying their assets to manage risk. In the UK, schemes favoured hedge funds, global tactical asset allocation and active currency, while the report found that in Europe, schemes favoured hedge funds, commodities and high-yield bonds.
Norway invests in clean energy
Norway has announced plans to invest 20 billion Norweigan krone ($4.2 billion) of its government pension fund in clean energy over a five-year period.
Norwegian Finance Minister Kristin Halvorsen said the fund would focus on clean energy, carbon capture, waste and pollution management and energy efficiency improvement. Norway's US$300 billion ($424.54 billion) pension fund has previously withdrawn backing for tobacco companies and has incorporated corporate governance principles in reviewing potential investments.
Global pension assets fall
The current economic and financial crisis has reduced the value of private pension assets by around 20 per cent to 25 per cent on average, according to the latest figures published by the Organisation for Economic Co-operation and Development in April.
Global pension assets fell by US$5.4 trillion ($7.64 trillion) in 2008. Some countries fared worse, however, with falls of more than 30 per cent in Ireland and close to 25 per cent in the United States.
In light of Australia's current political climate - or lack thereof - it seems only logical for the industry to move towards self-regulation.... read more »
