Hewitt risks raising expectations too high
Most days I can rely on a communication from some investment consultant or other landing in my inbox bemoaning something about pensions.
Today it is Hewitt Associates, which quotes some nice round figures about the danger of 15,000 people in the UK losing at least 20 per cent of their pension benefits if trustees of defined benefit schemes do not “take control of investment strategy”. It says £150m of pension benefits are at risk over the next two years.
The challenge of setting up independent pension trustee boards is an uphill task.
Any hopes of making progress were dashed today, reading the latest findings from Trustee GAAPS. Only one third of pension trustee boards of FTSE 100 companies are independent, according to the trustee search firm.
Is there an equity risk premium? Can investors take advantage of it? Yes, according to Jeremy Siegel. No, according to a delightfully scornful riposte from sometimes FTfm writer John Keefe.
Feel free to join in the fight in comments, but bear in mind that in the long run, we’re all dead.
The prospect of living in poverty or at least in tightened circumstances in old age is not daunting British workers.
One in three people currently at work plan to rely on whatever the state provides when they retire, according to research carried out for Baring Asset Management.
The arrival of really expensive funds in the Ucits space, notably those being launched by hedge fund managers, makes the funds run by traditional long-only managers look quite reasonable.
Pensions bonanza cancelled
Now it’s official – the much trumpeted pension buy-out market has fallen flat. And just to spell it out, a report by Punter Southall called the False Dawn reveals that most (about 84 per cent) pension schemes trying to transfer liabilities to an insurer through a buy-out would find it cheaper to just adopt the same low-risk investment strategy an insurer would use.
Where is financial innovation coming from in these days of (slightly) chastened banks? Look no further than index providers. The profit to be made from joining the index game has tempted Thomson Reuters to throw its hat into the ring, as we reported in FTfm yesterday.
Now S&P has announced an intriguing new securities lending index series, designed to measure the average cost of borrowing US equities. What does it portend when an activity like securities lending gets its own index? S&P says it is bringing transparency to opaque over-the-counter transactions, and providing both lenders and borrowers with a means of hedging (against rate increases that would decrease revenue streams or against costs, respectively). The indices can also be used to speculate on the direction of markets, S&P points out.
The ingenuity of index providers knows no bounds. What next? An index of bank bonuses or CEO pay perhaps? Tracking those might be worthwhile!
As the gold price tops $1000 amid worries over dollar weakness, many investors are piling into bullion as a safe haven.
But for those still not convinced try reading Reasons to Avoid the Gold Rush or Avoiding the gold trap
After last year’s fun and games in the world of money market funds, when it turned out they were not as stable and secure as everyone thought, there is a rush to come up with new classifications, in an attempt to make them less risky and also to make sure everyone agrees on what a money market fund is.
Just about everyone would like to make some amendments to the proposed EU regulations for the alternative investment industry, from hedge funds to governments, industry consultants and pension schemes.
The latest laments come from Mercer, the pension consultants, and their pension fund clients who agree the industry needs improvement and better supervision but call for Brussels to take a broader look outside the EU to see what is happening to the industry on a global regulation front.