Germany’s Bayerische Versorgungskammer (BVK) has opted not to reduce holdings in “riskier” asset classes in the wake of the ECB’s recently announced quantitative easing (QE) programme and instead increased exposure to “certain segments” of the market. André Heimrich, head of investments at the BVK, told IPE part of the pension fund’s strategy was to react to changes in the market “as early as possible” by “continuously looking into possible capital market scenarios”.He said the BVK had “already” removed foreign currency hedges on volatile assets classes last year, allowing the pension fund to profit now from the appreciation of the US dollar and Swiss franc.Similarly, Claudio Gligo, head of asset management at Austrian pension fund Victoria Volksbanken Pensionskasse, said the QE programme would most likely favour risky assets such as equities and corporate bonds, including high yield, due to the “enormous liquidity” coming to the markets. He said he expected the euro to weaken further, allowing foreign currency assets to have a “positive effect” on the portfolio.He conceded, however, that the long-term effects of the ECB’s policy – particularly with respect to the ultimate withdrawal of QE – remained a big question mark.For the German Association of Corporate Pension Funds (VFPK), the ECB’s decision to buy €60bn worth of European bonds a month is a disaster.The VFPK said the move would hinder pensions provision, “as savers cannot get any return on their investments”, adding that the low-interest-rate environment was being held in place “for monetary policy reasons”.It also argued that quantitative easing had “thwarted the German government’s project to strengthen retirement provision in general via more funded solutions”.Click here for more IPE news coverage of the ECB’s controversial quantitative easing programme
However, the commitment to auction amount ratio (bid to cover) of 3.65 was significantly higher than any seen in the index space, long-dated or otherwise, within the last year.A 2050 index-linked Gilt auction last November fetched a nominal yield of negative 0.39% and a bid to cover ratio of 2.11.Head of solutions research at AXA Investment Managers, Shajahan Alam, said the lion’s share of the auction would have gone to “real money” investors, with pension funds accounting for a large chunk of that.“The big picture is the liquidity in the market and the demand from investors,” he said.“It has dropped below negative 1% for some long-dated linkers, but the markets have been difficult to read over the last quarter and understand what is going on.”He said the surge in demand for the last significant long-dated auction for some months was somewhat tempered by the negative yield, but, going further forward, the issuance would be below the circa £30bn seen in this financial year.AXA IM said there were pension funds waiting to invest in index-linked Gilts but that many operated trigger-based hedging and would enter the market when real yields reached a certain level.“These triggers are unlikely to be reached, so they need to be revised down, or investors need to capitulate and hedge as opportunities arise,” Alam said.“There is a wall of demand from these funds deciding to hedge, and this auction is a turning point, where we are seeing investors who did not previously believe yields would get this negative throwing in the towel.“It shows a willingness [from investors] to do this, and we see this playing out over the next year, and, given the lack of supply, we cannot see how yields will rise significantly.”He also warned of the upcoming Gilt benchmark restructuring expected to occur by 16 April, which could see liquidity adjustments in Gilt markets.From April, 2020 index-linked Gilts will fall out of the FTSE A five-year index, an index widely used among investment funds.The index carries around £24bn in issuance, and the dropping of the 2020 Gilt will see fund managers readjusting their funds to account for duration loss.“At the very least, we expect around £2bn will need to be automatically switched into the revised index, and it is likely further substantial demand will be generated from funds actively managed [against the index],” Alam said.“This will provide further support to yields – unless the DMO acts to absorb through issuance activity very early in the Q2 this year.”To read more on UK index-linked Gilt issuance, click here A long-dated index-linked Gilt auction from the UK government was significantly oversubscribed as pension funds come to terms with negative yields and hedge inflation risk.This is expected to be the last significant auction before May’s general election, with demand afterwards expected to drop in line with government plans to reduce debt issuance.This week’s offering from the UK Debt Management Office (DMO) saw a £4.6bn (€6.1bn) auction of index-linked 2058 maturity bonds fetch £16.8bn in commitments, despite a negative real yield of 0.9%.This is not the first time yields have reached this low, with 10 and 20-year-duration bonds providing a nominal yield on negative 0.7%.
Currently, PFZW has invested approximately 7.5% of its total assets in coal, oil and gas.The pension fund said its engagement process focused mainly on coal, and that it aimed to identify the long-term risks for the companies involved, as well as encourage the application of cleaner technologies such carbon capture and storage (CCS).In addition, it said it was urging politicians and decision-makers to develop “uniform and solid long-term policies” to make investing in climate-change solutions more attractive for institutional investors.As of the end of 2013, PFZW had invested 3% in “solutions for social issues”, such as climate change and food and water shortages.It said it wanted to increase this allocation fourfold over the next five years and halve its investments’ carbon footprint.Last week, the €396bn asset manager APG announced that it expected to remain invested in fossil fuels for “the time being”.Responding to a petition against investments in coal, tar sands and shale gas, presented by members of the accountability body of civil service scheme ABP – APG’s largest client – as well as several professors and environmental group Milieudefensie, APG spokesman Harmen Geers said divesting from coal within two years would be “too abrupt”.He said ABP supported a sustainable climate policy but wanted to achieve this goal “gradually”.Currently, the civil service scheme has a €30bn stake in energy and energy-linked infrastructure.David van As, director of the €48bn pension fund for the Dutch building sector (BpfBouw), told IPE investments in fossil fuels had not yet been discussed by the scheme’s board.Meanwhile, PME, the €40bn pension fund for the metal and electro-technical engineering industry, said it would also would remain invested in fossil fuels whilst conducting an engagement process with energy companies for a gradual transition to sustainable energy sources.PME spokeswoman Gerda Smits added that pension funds should work together with politicians to develop climate-change solutions.PME has a 4% exposure to fossil fuels. The €162bn healthcare pension fun PFZW has said it will continue investing in fossil fuels for the foreseeable future “as they are still vital for economic development and transport”. The Dutch scheme, however, acknowledged the need for a transition to sustainable energy sources.It also noted that it had already begun to engage with companies that either extract fossil fuels or use them for energy generation.PFZW’s response was triggered by recent scrutiny in the local media of Dutch schemes’ involvement in fossil fuels and their effect on the climate, as well as the so-called ‘carbon bubble’ – the risk of overvaluing reserves that may never leave the ground due to new climate measures.
The European Securities and Markets Authority (ESMA) has come out in support of a common EU approach to loan origination by investment funds, publishing an opinion on the subject not long after France’s financial markets authority said it would like French funds to be able to move into this business.ESMA, one of three European supervisory authorities, flagged the French initiative when it noted that loan origination by funds was, at least partly, allowed in the majority of EU member states and that several of them, such as Germany, Ireland and Spain, have set up bespoke frameworks.A common approach at EU level, ESMA said, will help create a level playing field and reduce the potential for regulatory arbitrage.“This could, in turn, facilitate the take-up of loan origination by investment funds, in line with the objectives of the Capital Markets Union (CMU),” it added. ESMA noted that the Commission’s CMU action plan cited the possibility of European Long-Term Investment Funds (ELTIFs), for example, to originate loans to a certain extent.The supervisory authority said the elements presented in its opinion “should ideally form part of a harmonised European framework on loan origination”.It said this could be achieved in different ways – through a legislative proposal, for example, or by way of an ESMA instrument supplementing the Alternative Investment Fund Managers Directive (AIFMD).ESMA raised several issues in its opinion it believes the European Commission should take into account for a consultation intended to be launched this quarter, including systemic risk, exemptions for certain fund types, authorisation versus registration requirements, and the scope of fund operations.In France, the financial markets authority AMF recently set out its thinking about some of the issues, having been motivated by the entry into force of the EU ELTIF regulation to consider adapting rules to allow French investment funds to grant loans.At the moment, French funds can lend to companies but not by way of primary loan origination; as pointed out by ESMA, investment funds can also provide credit in the form of “loan participation” or “loan restructuring”. Xavier Parain, managing director in charge of the asset management directorate at the AMF, told IPE: “There is scope for asset management companies to do direct lending, and that can really benefit SMEs to have new actors, with a different approach to lending than banks.”He said there was strong interest among a variety of French asset managers to be able to add loan origination to their activity.Indeed, as emphasised by his colleague Patrick Simion, a financial expert at the AMF, in contrast to the situation in some other countries, in France, investment funds will be allowed to be diversified – i.e. pursue other business activities distinct from granting loans.The AMF envisages that only certain types of professional funds be able to grant loans and that these will be subject to additional constraints – on their leverage and use of derivatives, for example.It also intends for investment management companies to be required to report regularly to the AMF and the central bank on all loans granted, so that lending can be monitored over time.Management companies wishing to originate loans should be licensed by the AMF in accordance with the AIFMD and “have a programme of operations that allows for the possibility of granting loans”.The AMF has also said it would like “the new rules to ensure that equivalent principles are applied among different lenders within a clarified legal framework, taking into account each operator’s economic model” (like insurance firms).The pending introduction of loan origination by investment funds is the latest move in France to grow the non-bank lending market.In late 2013, for example, the French insurance code was amended to make it easier for insurance companies to lend to unlisted companies and invest in unlisted loan funds, as well as unlisted bonds.This paved the way for the creation of a new type of investment vehicle, Fonds de Pret à l’economie (funds of loans to the economy, or SME loan funds).The Novo funds sponsored by Caisse des Dépôts et Consignations were launched in 2013 under this new FPE framework, with a decree in December 2014 removing further barriers and expanding the universe of eligible investors. Taking advantage of these new investment freedoms, in February this year, AG2R La Mondiale and Klesia, two major social protection groups, launched a PME Emplois Durables, a €210m fund designed to channel institutional money to SMEs.It will invest in a mix of debt and equity.
According to the ESAs, however, it proposed the changes without demonstrating that the rule was “disproportionate”.Walsh said he now expected the Commission to re-work the disputed RTS with regards to non-centrally cleared derivatives trades.“But I wouldn’t expect [the Commission] to completely ignore the advice received from the ESAs,” he said.“There’s a challenge here for policymakers, who clearly disagree, and there’s a challenge for people like ourselves and our members, who clearly are affected by this [and need to] ensure we get a workable solution.”Henrik Munck, senior consultant at the Danish Insurance Association (F&P), said it fully supported attempts by the Commission to relax the proposed RTS.“From a Danish perspective,” Munck said, “it wouldn’t really make that much sense to impose this concentration limit.”He said he was fairly sure Danish pension providers would deposit Danish government bonds as collateral for initial margins.“The actual reason why we think the Commission’s proposal is sound is that, in essence, it wouldn’t really make a difference for the [stability of the] financial system as a whole,” he said.Walsh said the rules backed by the ESAs affected a “significant number of larger schemes” but argued that the problem could not be solved solely by changing the RTS.“The real problem, the central problem, is the bank’s increasing determination to accept only cash collateral – whereas, the age-old problem is that pension funds don’t hold large amounts of cash.”Because this stems from bank capital rules, rather than EMIR, he said, addressing the problem involves “a whole set of more complex challenges” in convincing the Basel Committee on Banking Supervision of the need to amend the rules. The pensions industry should expect the European Commission to draft new regulation on derivatives clearing, after the European Supervisory Authorities (ESAs) rejected a relaxation of rules governing trades above €1bn.James Walsh, EU policy lead at the UK’s Pensions and Lifetime Savings Association (PLSA), said it was “quite difficult” to predict the outcome of the struggle between the European executive and the ESAs, which saw the supervisors reject changes to its regulatory technical standards (RTS) on clearing due to a lack of evidence.In a joint statement last week, the three ESAs argued that the disputed sovereign concentration limit – which requires non-euro-zone pension funds posting more than €1bn in collateral with a single counterparty to ensure that no more than half of the employed bonds come from any one issuer – was “crucial” for mitigating risks.The Commission previously called for the rule to be scrapped.
Source: IcelandAn Iceland store in Fulham, LondonIt was certainly successful as an ad campaign, as by early December 2018 figures from industry newswire PRWeek showed that the advert had been viewed 65m times across social media and Iceland’s own channels, making it “one of the most viewed Christmas campaigns of all time”, according to PRWeek’s report. Moreover, it appears its success helped to shift the dial in how consumers perceive the brand, as well as providing an uplift to sales.Banning palm oil completely, however, is actually quite bizarre. Making supply chains sustainable is the key to ending large-scale tropical deforestation, declares lobby group Global Canopy, and even Greenpeace declares that palm oil can be grown without destroying rainforests.Palm oil itself is the most efficient source of vegetable oil, providing – according to some estimates – a third of the world’s vegetable oils from just 10% of the land used for all oil crops. Replacing palm oil with other edible oil sources may require five times the land currently being used for palm oil, according to this column from the Oxford Student newspaper. It is five times more efficient than both rapeseed sunflower oils and up to nine times more efficient than corn and soya.Banning widely used commodities altogether is a nuclear option that should only be undertaken when strictly necessary. What matters is that commodities are sourced from ethically aware companies that produce them in a sustainable and responsible manner. One investment theme that will only grow stronger in 2019 is that of incorporating environmental, social and governance (ESG) criteria.Few fund managers are willing to stand up and declare that they do not take ESG criteria into account, but how many actually move beyond ‘virtue signalling’?ESG advocates often argue that such investment policies and approaches make sense because ESG-focused funds outperform – but proving those results may be a red herring. Companies themselves are under increasing pressure – and rightly so – to take ESG issues seriously, but to do so may require a more detailed approach to analysing supply chains than headline-grabbing actions with questionable motivations. Frozen food company Iceland made headlines in April 2018 when it announced a ban on the use of all palm oil in its products by the end of 2018. It also produced an advertisement based on a shortened film from campaign group Greenpeace highlighting the detrimental impact of palm oil plantations on the environment, closing with the emotive phrase: “Dedicated to the 25 orang-utans we lose every day.”Was this the actions of an enlightened firm driven by the desire to ensure impeccable ESG credentials? Or was this just a cynical marketing strategy of virtue signalling guaranteed to hit the headlines and encourage the ethically minded to switch their weekly shopping to Iceland? Credit: Bishnu SarangiA palm oil plantation in Karnataka, IndiaNot only does that provide valuable income to, in many cases, poor communities across the globe, it also encourages the growth of sustainable and ethical practices in agriculture and mining through the pressure that global consumer companies can apply to the companies in their supply chains.Ensuring that commodities are obtained from acceptable sources, not banning them, must be the key. Determining the nature of the sourcing of products may have been a problem in the past but is certainly not the case now.There are many organisations that have focused on looking at supply chains in detail and the required information is available online. Trase, for example, uses publicly available data to map the links between consumer countries via trading companies to the places of production in unprecedented detail. The results can be quite surprising.For ESG investing to succeed as a strategy, what is required is less of the virtue signalling and public posturing, and more real analysis of supply chains and decision-making based on encouraging behaviour by companies that is ethical, sustainable and fair to all their stakeholders.Rather than banning the use of palm oil – or, indeed, any other agricultural produce – the world would be better off if more attention was paid to global supply chains with entities involved in every step sharing the responsibility for placing commodity production on a more sustainable footing.
“We believe that this contradicts and undermines many initiatives on the EU and national level to strengthen workplace pensions.”Taxes on financial transactions ended up being taxes on savings or pensions, added PensionsEurope, and the FTT would “increase the costs, lower the returns and reduce the efficiency of the investment strategies of pension funds, which will ultimately lead to lower benefits for pensioners”.“The FTT would have a significant impact on the future retirement income of European pensioners”PensionsEuropeIt also argued that the proposed “mutualisation” system, whereby revenues from the tax would be pooled and shared among the countries applying it, would mean that “to some extent” pension income from members in one EU country would be transferred to another country.“This clearly cannot be the purpose of an FTT regime,” said PensionsEurope.It called on the 10 member states to dismiss the proposal or, if the tax were to be introduced, to exempt pension funds and their assets from its application.Insurance Europe, PensionsEurope’s counterpart for the insurance sector, said exempting pension products from the scope of the FTT was “crucial”, and distinguished this from exempting only specific types of pension providers.In its view, it said, it would be best to leave the definition of “pension products” to be exempted to national authorities, whereby the principle of ‘substance over form’ should be observed.“All financial institutions that provide occupational pension products should be regulated not on the basis of the legal vehicle through which the products are sold, but rather according to the benefits those products provide to beneficiaries,” the insurance association wrote.*Belgium, Germany, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia Industry associations have reiterated their concerns about plans for a financial transaction tax (FTT) ahead of a meeting tomorrow of the technical experts from the EU states aiming to implement the tax.PensionsEurope and Insurance Europe have written to ambassadors from the 10* EU countries that have pursued the introduction of an FTT under the so-called enhanced cooperation procedure after an initial proposal from the European Commission was blocked by a majority of member states.Exempting pension funds from the tax has been discussed before within the group of 10 countries, but according to PensionsEurope, pension funds and their asset managers regretfully “remain in the scope” of the legal text being negotiated.“As a result, the FTT would have a significant impact on the future retirement income of European pensioners,” said the association in its letter.
One of the five bedrooms.A wing of the home has three bedrooms, all with built-in desks, and a children’s retreat.The master suite is further towards the rear of the house, with a walk-in wardrobe and resort-style ensuite.The shower has a rainwater showerhead and there is also a spa bath. More from newsLand grab sees 12 Sandstone Lakes homesites sell in a week21 Jun 2020Tropical haven walking distance from the surf9 Oct 2019The kitchen is large.A fifth bedroom is on the opposite side of the home near the garage, and could be used as either a guest bedroom or study.There is an open plan kitchen and living space, as well as a rumpus room with a wet bar made of corrugated iron. The home at 10 Lemon Grove, Caboolture, is for sale.WHEN Matt and Nichole Forrester built their Caboolture home nine years ago they wanted somewhere they could unwind.The couple have four children, so space was a necessity but otherwise wanted the 10 Lemon Grove property to be their own private haven. “We wanted an open living resort basically,” Mr Forrester said.The single-level home has 355sq m of under-roof living, on a 4006sq m block. The bar is a talking point of the home.Mr Forrester said the bar was somewhere they often entertained.“It was something we thought we could talk about, so it usually creates conversation when people come over and then leads to a couple of drinks,” he said. Outside are footy goal posts.Outside is a flat, separately fenced yard with football goalposts at one end, and a netball hoop to the side.“The boys play football and the girls play netball,” Mr Forrester said.“We spend a fair bit of time out there, and if it’s not one sport we’re playing, then it’s the other.” The garage is currently set up as a gym.The garage is also currently set up as a gym.There is space for big boys’ toys with a 69m x 9m shed that includes an office, shower, toilet, kitchenette and airconditioning.Video Player is loading.Play VideoPlayNext playlist itemMuteCurrent Time 0:00/Duration 7:28Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -7:28 Playback Rate1xChaptersChaptersDescriptionsdescriptions off, selectedCaptionscaptions settings, opens captions settings dialogcaptions off, selectedQuality Levels576p576p480p480p256p256p228p228pAutoA, selectedAudio Tracken (Main), selectedFullscreenThis is a modal window.Beginning of dialog window. Escape will cancel and close the window.TextColorWhiteBlackRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentBackgroundColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyOpaqueSemi-TransparentTransparentWindowColorBlackWhiteRedGreenBlueYellowMagentaCyanTransparencyTransparentSemi-TransparentOpaqueFont Size50%75%100%125%150%175%200%300%400%Text Edge StyleNoneRaisedDepressedUniformDropshadowFont FamilyProportional Sans-SerifMonospace Sans-SerifProportional SerifMonospace SerifCasualScriptSmall CapsReset restore all settings to the default valuesDoneClose Modal DialogEnd of dialog window.This is a modal window. This modal can be closed by pressing the Escape key or activating the close button.Close Modal DialogThis is a modal window. This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenPrestige property with Liz Tilley07:29
Inside 681 Jesmond Rd, Fig Tree Pocket.“Sometimes people came back four times,” Ms Harris said.More from newsDigital inspection tool proves a property boon for REA website3 Apr 2020The Camira homestead where kids roamed free28 May 2019“People are more thoughtful than they used to be, particularly in that price range.“They just don’t come through the house and walk up and make an offer.“They want to make sure it’s going to suit their lifestyle.”Ms Harris said six parties showed active interest in the property, and three written offers were received. The home at 681 Jesmond Rd, Fig Tree Pocket, sold for $1,140,950.POTENTIAL buyers are becoming more considered and inspecting properties up to five times before putting in an offer.RE/MAX Profile Real Estate agent Gayle Harris said there were 53 individual inspections of 681 Jesmond Rd at Fig Tree Pocket, but some of those were the same people coming back several times. The kitchen is modern.The home sold for $1,140,950.“It was bought by a couple looking for a family home,” Ms Harris said.The agent said the Jesmond Rd location was highly sought after.“If I had another four or five of those houses in that price bracket, we would sell them,” she said.“In an area like that, which is very family orientated, the market is strong.”
26 Tosti St, Sorrento More from news02:37International architect Desmond Brooks selling luxury beach villa14 hours ago02:37Gold Coast property: Sovereign Islands mega mansion hits market with $16m price tag2 days agoThis five-bedroom house is described as an “original waterfront classic” that’s ripe for renovation.Marketing agents Scott Euler and Nicole Buchanan of @realty sold the property 18 months ago for the first time in 40 years and are reselling it for the current owners.“It is in complete original condition — down to carpets, light fixtures, bathrooms and different wallpapers in every room — even the wardrobe doors are wallpapered,” they said.It’s on the market for offers over $1.115 million. Leon Williamson, 92, is preparing to farewell her family beach house.Mrs Williamson and her late husband John paid $14,500 in 1968 for the five-bedroom Mermaid Beach property in Chairlift Ave East.The residence has three bedrooms on the second floor as well as a kitchen, bathroom and living areas.A self-contained living area and two more bedrooms are on the ground floor.Ron London is marketing the property and said it offered a range of possibilities for investment, renovation or redevelopment. 14 Alfred St, Mermaid Beach. 14 Alfred St, Mermaid Beach 18 Ernest St, Labrador. 14 Alfred St, Mermaid Beach. 7 Chairlift Ave East, Mermaid Beach 26 Tosti St, Sorrento. 2 Beau Court, Highland Park. 7 Chairlift Ave East, Mermaid Beach. This “renovator opportunity” in Highland Park is on the market at $420,000.“We have just listed this very affordable home in a sought after location, on an approx. 703sq m huge corner block of land, with side access for the boat, caravan, trailer or the additional car,” the listing states.“The home has an open living floor plan kitchen, and offers the family a perfect and easy lifestyle.“This property may suit the first homebuyer, tradie, and the investor.” Positioned on a double block in Chirn Park is an “old Queensland cottage”.“(A) great opportunity to renovate (the) existing for bedroom home or start again by building two new homes,” the listing states.“Tremendous potential only limited by the imagination.”On the market at $795,000, the house features four bedrooms, two bathrooms, an open plan living area, three garage spaces and a 6m x 8m shed. 26 Tosti St, Sorrento. 26 Tosti St, Sorrento is ripe for renovation!SHAGGY carpet, 70s wallpaper and oldschool chandeliers — are these the best renovators on the Gold Coast?Everyone loves a good home renovation and there are plenty of potential “projects” on the Coast.With renovation shows taking over our television screens and big profits to be made it’s not hard to see why they are so popular.We’ve rounded up five of the best new renovators to hit the market: 18 Ernest St, Labrador 26 Tosti St, Sorrento. 2 Beau Court, Highland Park. 18 Ernest St, Labrador. Located only six houses from the Gold Coast’s Millionaire’s Row, this deceased estate is on the market for the first time in 50 years.It offers ocean views from the second level with two bedrooms, one bathroom and a kitchen on each level.Joanna Bell-Booth of Ray White Mermaid Beach is marketing the property. 2 Beau Court, Highland Park 7 Chairlift Ave East, Mermaid Beach.