Danish pensions administrator PKA reports 9% return for 2013

first_imgInvestments at PKA, the DKK195bn (€26.1bn) administrator for five Danish pension funds, generated a 9% return last year, supported by strong returns for quoted equities, the company said.It said the investment return for 2013 was 9%, or DKK13bn, in absolute terms, but added that, including results from the interest-rate hedging portfolio, the return was 4.2%.It said buoyant equity markets in 2013 meant the pension fund’s portfolio of quoted shares contributed positively to the overall return, producing a near-22% profit.Since most of the fund’s equity exposure was passive, it made a return in line with the market return, with very little in costs, PKA said. The fixed income portfolio produced an “extraordinarily good” return of 9% in 2013, according to PKA, which added that this was particularly satisfying in a market environment marked by big price falls as a result of rising yields.Peter Damgaard Jensen, managing director of PKA, said: “PKA has consciously maintained and expanded its exposure to Southern European and Irish bonds, as well as Danish mortgage bonds, and avoided investment in Danish government bonds.”In addition, PKA reduced its sensitivity to interest-rate increases.It had been able to do this because the pension fund was financially sound, Damgaard Jensen said.“We have been able to afford to act long term and be cold as ice,” he said.Absolute return strategies, which had been introduced in the last few years to increase diversification, provided a 13% return last year.Damgaard Jensen said PKA would increase its focus on investments in green investments.“We have had good experiences with the offshore wind farms we have invested in up to now, and we expect to undertake more green investments in 2014,” he said.last_img read more

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UK regulator flags stability risk of ‘very large’ asset managers

first_imgThe FCA’s comments echoed those made by the Bank of England – of which the FCA is a part – in 2014, when then-executive director for financial stability Andrew Haldane said it was viable to consider the risks to the wider economy of the collapse of an asset management company.The FCA also confirmed its plan to publish the final report into its asset management market study in the second quarter of 2017. As well as reiterating its findings from the market study, the regulator also highlighted other areas of concern, including asset managers overpaying for services and custody banks’ reluctance to invest in IT systems.Amanda Rowland, asset management regulation partner at PwC, said the regulator’s focus on liquidity management supported “broader operational concerns” linked to the UK’s imminent exit from the European Union. It also indicated that “some movement around enhanced stress testing and redemption disclosure is possible”, Rowland added.“While acknowledging that Brexit will require regulatory flexibility, the FCA has focused on asset management initiatives such as cost disclosure and liquidity management that have wider international support and will likely be successfully progressed regardless of where Brexit takes the UK and the FCA,” she said.In the immediate aftermath of the UK’s vote to leave the EU, several open-ended property funds were forced to temporarily close to redemptions due to a high level of withdrawals.Chris Cummings, chief executive of the Investment Association, the asset management trade body, welcomed the regulator’s approach and its willingness for industry dialogue. He added: “As we move into a post-Brexit world, it is vital that the UK regulatory framework continues to foster a globally competitive environment to set up and run an asset management business.” The failure or “disorderly wind-down” of one or several large asset managers could pose a financial stability risk to the UK’s system, the Financial Conduct Authority (FCA) has warned.Outlining its views of various sectors of the UK financial system as part of its annual mission statement and business plan, the FCA said: “Market stability could be affected by the failure or disorderly wind-down of a very large asset manager or several asset management firms as end-investors attempt to redeem their holdings on demand, creating a downward selling spiral.”In its business plan for 2017/18, the FCA said: “Following stakeholder feedback, we will review our policy options and the available tools that asset managers have to manage liquidity when facing redemptions and valuation issues, and assess how adequate they are in managing conduct risks and addressing financial stability concerns. This work should ensure that liquidity management in funds allows for a fair treatment of all customers, including those who remain invested, and does not amplify disruptions to the financial system in stressed market conditions.”International regulators such as the International Organisation of Securities Commissions and the Financial Stability Board have previously suggested treating large asset managers as systemically important, putting them at a similar regulatory priority level as the world’s biggest banks and insurers.last_img read more

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