As a recent survey by US management consultant Casey Quirk showed, for investment management, 2009 is all about beta. Director of research, Ben Phillips, spoke to Kristen Paech about mandates that pension funds are investigating, and the role alpha may play.
In this paper by Vanguard Investment Counseling and Research, the performance of active funds in the US and Europe during the seven bear markets since 1970 is evaluated, revealing that the performance of certain market segments relative to the broad market may contribute more to outperformance than manager skill.
Style investing remains a powerful tool in periods of market volatility and, in particular, style analysis reminds investors to be aware of the distinction between overall market risk and stock specific risk. Amanda White spoke with director of Style Research, Robert Schwob.
The giant Dutch pension fund ABP’s plan to reduce investment risk as a means of recovery from an underfunded position is paying dividends, with the coverage ratio increasing from 86 to 91 per cent from March to April.
Institutional asset owners who have signed the UN Principles of Responsible Investing were told they must make the effort to help pioneer a sustainable economy, in an address from David Blood, co-founder with Al Gore of Generation Investment Management.
The New Mexico Governor, Bill Richardson has directed the State Investment Office to ban the use of third-party placement agents on investments of the state’s Permanent Funds, and directed the Education Retirement Board to move forward with a six-month ban on third-party marketers as it evaluates the long-term implications of a permanent ban.
The New Mexico State Investment Office and the state’s Education Retirement Board were also recently directed
by Richardson to terminate contracts with private equity advisor, Aldus Equity.
In addition an independent review of investment practices and policies, including the use of third-party marketers, has been commissioned and the state Board of Finance and the Legislative Council Service will work on the scope of the review, as well as an appropriate budget.
“I feel strongly that a ban on these agents is necessary to restore confidence in our investment practices,”Âthe Governor said. “The practice of fund managers paying huge fees to third-party agents may be legal and legitimate, but the potential for a conflict of interest is troubling. I’d rather remove that potential conflict and be confident that our investments are not tainted in any way.”
The move by New Mexico is the latest in a raft of public pension plans putting bans on placement agents, with the New York City Employees’ Retirement System and the New York City Policy Pension Fund among others already placing bans on the use of placement agents.
The New York Attorney General, Andrew Cuomo, is leading the pension fund investigation and as a result of a meeting with 36 Attorneys General’s offices has created a multi-state task force to share information explore pension fund abuse.
“The task force will allow us to have a unified, efficient method for gathering information as we fight to combat corruption and restore transparency and integrity to public pension funds,” he said. “Pension funds across the country are now taking appropriate steps to clean up abuses – but we should not forget that the real goal must be systemic reform so we can avoid continually closing the barn door after the horse has bolted the stable.”