The Netherlands' Central Bank has warned the country's pension funds that their €150 billion ($177 billion) investments in tech companies, representing almost 43 per cent of their listed equities portfolios and 8 per cent of their total balance sheet, is at risk from a potential AI bubble.
The €9.5 billion DanishPædagogernes Pension, PBU, is in the process of consolidating the number of managers in its listed equity portfolio. The decision at the fund - which has around 10 large, focused equity mandates - is linked to an ambition to reduce the number of companies in the portfolio in the belief that fewer companies in the 42 per cent actively-managed equity allocation allows greater ESG oversight.
US companies have some defensible profitability advantages but elevated margin levels may be poised for a reversal of fortune. The tide appears to be turning on some of the secular trends that have supported high US profit margins.
The size factor has recently come under attack from smart beta providers because its performance has lagged behind other factors. A common recommendation is to remove size from the factor menu, to give more weight to factors with better performance. But due to its low correlation with other factors, size offers substantial diversification benefits.
A new fund in Germany combining liquidity, dynamic equity exposure and strong ESG focus is against the mould of the country’s more conservative, insurance-led investment style, and Heribert Karch, managing director of MetallRente which offers the fund, is determined to bring a return-seeking investment culture to Germany.
The returns of long-term investors are driven by economic growth so it is difficult to ignore China as a big part of the future investment opportunities, a panel of experts told delegates at the Fiduciary Investors Symposium.
Senior investment director on Cambridge Associates' global investment research team, Michael Salerno, analyses the impact of Brexit on UK equities, the British pound and tactical asset allocation.
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