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.”
CalPERS has officially adopted a placement agent policy, in light of recent pay-to-play allegations at other public funds, and introduced an investment policy for leverage, as its total fund value increased to $177.5 billion as at April 23, up from $169.4 billion at the end of March.
The majority of US corporate plan sponsors want to terminate their frozen pension plans quickly but don’t have the sufficient assets to do so, according to Cecil Hemingway, US Retirement Practice Leader with Aon Consulting. A new survey by Aon, of more than 70 US organisations with a cumulative total of frozen pension plan asset of more than $50 billion, found that 81 per cent are planning to change their investment strategy in the near future, with many looking to hedge significant risks (35 per cent), change investment to reflect the shorter investment horizon to termination (27 per cent) or move to a more liability-driven investment strategy (19 per cent).
The World Bank has set up a new asset management division, IFC Asset Management Company, and a new private equity fund, specifically designed to facilitate co-investment by sovereign wealth funds in developing countries.
UK pension funds are being encouraged to support the residential property market via an initiative which would see them invest in the private rented housing sector for the first time.
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