Transparency is discussed so much that the word almost seems to suffer semantic satiation in policy and politics, but transparency is not for transparency’s sake.

Public pensions and other private capital investors know that the real goal of transparency is measurement for the sake of good governance, benchmarking, forecasting, and more.

A few pensions have demonstrated extraordinary results as a result of equal effort, no doubt.  However, improved data standards for incoming reporting and a benchmark for pension disclosure is the two-part solution that will usher in constructive transparency.

Until then, pensions must contend with significant variation with incoming reporting and differences in statutory reporting requirements for their disclosures – differences that potentially create additional burdens on pensions.  A two-part solution that is like two sides of the same coin is needed to bring comparability and consistency to the incoming and outgoing reports.  Fortunately, there are a few pioneering efforts to accomplish just that.

Incoming data

As a former pension fund employee, the struggle for consistent and comparable data is something I came to understand well.  The operations and reporting teams at countless asset allocators, pensions included, spend significant time and resources to collect and “scrub” investment data.

The level of time and resources required to make incoming data consistent and comparative is not equivalent to the expected task difficulty, but the devil is in the details – or more specifically, the lack thereof.

Automation is elusive because investor statement formats differ and the individual data points tend to be “apples to oranges” when it comes to comparability which hinders a simple data collection and aggregation.  (See below for a comparison of two actual statement formats).

Banks, technology, and service providers have invested millions for PDF-scraping, AI, machine learning, and more to speed up the data collection and aggregation.  However, incoming data needs an accepted global data standard (data tags) so that electronic reporting files can be automated easily and far more efficiently than PDFs or spreadsheets. The inefficiencies of the inputs, translate to uncertainty in the outputs.

Examples A and B are taken, line by line, from two private equity general partners’ (GPs’) quarterly capital account statements or “NAV statements” to their investors.  Example A is very granular, while Example B is more summarised.  Both statements communicate the same high-level information to the limited partner (LP).  However, for example are they both net of allocated incentive (aka carried interest)?  It is not clear in this example, and combining data from hundreds of different statements can make the same differences add up if the data is “apples-to-oranges”.

Outgoing data

All pensions investing in private capital contend with the inefficiencies described above and then depending on their jurisdiction, their requirements for disclosure can vary just as much.

Working for a US public pension, I found that nearly every other public pension in the US had a slightly different approach to their disclosures.

US public pensions prepare comprehensive annual financial reports (CAFRs) following the Governmental Accounting Standards Board guidelines, of course; however the disclosures for detailed investment costs were not specifically prescribed, and practices varied greatly.

A significant portion of my time each year was devoted to performing analysis and preparing responses to inaccurate comparisons of investment fees, incentive (such as carried interest), and expenses made in the press, reports, and research.  Our operations team did an exceptional job of identifying management fees, allocated incentive and performance fees, as well as fund expenses but in the media, our fund was often portrayed as having substantially higher costs only because our disclosure was more transparent.  The extra efforts were unavoidable but terribly inefficient.

The reality of inconsistency from incoming investment data and the different expectations for pension disclosures mixed with various disclosure practices among their peers creates a not-so-perfect storm for pensions.  However, the Global Pension Transparency Benchmark’s launch[1] may be our industry lighthouse for disclosure practices, and the Adopting Data Standards Initiative seeks to solve for the incoming data hurdles.  I am committed to both.

 

The Adopting Data Standards Initiative

ADS seeks to develop industry standards that will facilitate digital reporting in the free market for efficiency and transparency in the GP-LP relationship with an informed and realistic expected adoption timeline.  The proposed ADS data standards (coming 2021-2022) in financial reporting will provide a solid foundation for the free market to solve for all market participants’ higher technology and analytical needs.  ADS is a global non-profit, to develop #notanothertemplate, but electronic data reporting standards.  Data standards can best be described as a common reporting language of data tags, or labels, and accepted definitions that the industry can utilise to exchange reports electronically in a consumable format that works with any commercial technology or platform:  data interoperability.

Lorelei Graye, is president of the Adopting Data Standards Initiative and an advisory board member of the  Global Pension Transparency Benchmark.

The Global Pension Transparency Benchmark revealed the need for much improved transparency among pension fund public disclosures across the globe. But there were some notable best practice examples among pension funds globally. So who were they?

The Global Pension Transparency Benchmark provides a clear picture of the transparency of pension fund disclosures across cost, governance, performance and responsible investment. But as well as demonstrating the current state of disclosure, it also highlights the global best practices through examples of specific funds’ practices revealing detailed analysis of the funds that stood out.

Cost

Research based on CEM’s benchmarking database clearly shows that funds with cost-effective investment operations generate better net returns and value added than funds that don’t.

CEM says that clear and complete public disclosure of costs leads to better cost management, and that cost transparency is also important for building trust with stakeholders. It is also true that investments that have the lowest level of cost transparency – where fees are netted from the investments directly – are often the most expensive ones. So transparent cost disclosure is important for pension funds.

The Dutch funds stood out in the disclosure of cost, with the top four scores held by Dutch funds.

An example of best practice from both PFZW and ABP, was in the reconciling of financial statement cost numbers, where they showed why financial statement costs differ from what is used elsewhere in their annual reports.

(For stories on PFZW/PGGM and ABP/APG visit the Asset Owner Directory here).

The GPTB also demonstrates that following accounting practices for audited financial statements as well as also using other parts of the annual report to provide the complete cost picture is an example of best practice.  This means including costs and fees that are netted directly from investments, at least in other report sections (eg management discussion and analysis, key performance indicators).

The Royal Bank of Scotland Group annual report is an example of how to supplement financial statement costs and provide stakeholders with an analysis of total investment management fees.

With regard to investment fees Royal Bank of Scotland monitors investment management fees closely, including fees deducted at source, to determine whether it is getting value for money from its investment managers. It monitors fees in absolute terms as well as comparing fees to the value added over the benchmark.

Governance

Governance and Organisation scores were more closely correlated with overall scores than any of the other factors.

Best practice is for the skills and competencies possessed by the board to be disclosed and contrasted against desired skills and competencies.

The five largest Canadian funds, assessed in the research, had the highest average score for this factor. But the GPTB also highlighted three best practice examples from other parts of the world when it comes to governance disclosure.

Danish fund ATP’s 2019 annual report, outlines competencies in plain language in a way that is easily relatable to their current board position. This information is supplemented with the board members’ educational qualifications and other directorships providing a full picture of the skills possessed by each board member.

The UK’s Universities Superannuation Scheme publishes a corporate governance framework policy on its website which includes full job descriptions for prospective board members which provides full clarity as to the type of skills and competencies desired.

Australian superannuation fund QSuper reports annually on its compliance with the Australian Institute of Superannuation Trustees’ Governance code.

The desired board competencies can be viewed as well as whether their board members have these competencies, and their relative skills in each.

(For stories on ATP, USS and QSuper visit the Asset Owner Directory here).

Performance

Most pension fund returns come from asset mix decisions but there is also has an opportunity to add value through active funds management decisions. Stakeholders are keenly interested in knowing and understanding returns and value added. The GPTB highlighted several best practice disclosure examples for reporting of returns and value added.

In addition to an extensive annual report, CalPERS produces a three-pager that provides a high-level summary of key results for the time-pressed reader. The total fund return includes current year, intermediate and long-term returns.

The COVID 19 downturn is a recent and vivid example of how markets can move abruptly and dramatically and pension fund stakeholders can become anxious and concerned about the security of pensions. CDPQ provided an excellent interim performance update on its website that put the downturn in context and outlined an action plan for mitigating its impact.

In its 2019 comprehensive annual financial report, CalSTRS includes a table with asset class and related benchmark returns for 1, 3, 5 and 10-year time periods. The returns are clearly stated as net of investment fees and time weighted, including a more detailed description of the time-weighted rate of return calculation.

In the investment performance area of its website, OTPP includes information on benchmarks. The discussion includes important context on why OTPP uses benchmarks and how performance relative to them should be interpreted. Total fund net return, benchmark return, and value added are shown for a range of time periods and a list of asset class benchmarks is also provided.

(For stories on CalPERS, CDPQ, CalSTRS and OTPP visit the Asset Owner Directory here).

Responsible investment

Funds with a supplementary responsible investing report or a separate section in their annual report typically have much better RI disclosures than those that do not. European countries – Sweden, the Netherlands, Denmark, and Finland – earned the four highest scores on our RI factor. They stood out for two reasons: funds in these countries generally have more highly developed responsible investing efforts; and they had excellent disclosures communicated via these supplemental RI reports or dedicated annual report sections.

Providing separate sections or standalone RI reporting allows funds to clearly communicate their RI strategy and progress as well as to highlight the specific RI themes they are focused on. It also helps stakeholders to quickly and easily assess whether a fund takes RI seriously and what is being done.

The Finnish fund, Elo’s responsible investing initiatives were incorporated into its annual report and Elo provided RI details by focusing on: investing, climate, customers, personnel, and operating methods. The use of visuals and graphics highlighted areas of focus, their investment themes across different asset classes and disclosed details on carbon emission reporting.

The responsible investing report from the Norwegian Government Pension Fund Global highlights the fund’s engagement activities with its largest investees.

Many funds across the globe had a separate responsible investing report, but ATP was one of the few that published individual annual reports across the different responsible investing themes the fund is focused on. The reports provided the processes and activities across each focus area in one easy to access place.

(For stories on Elo, the Norwegian Government Pension Fund Global and ATP visit the Asset Owner Directory here).

 

Effective benchmarking separates the wheat from the chaff in pension management, according to Keith Ambachtsheer who argues the Top1000funds.com /CEM Benchmarking Global Pension Transparency Benchmark will help reduce the material ‘saying-doing’ gap in the global pension industry.

Possibly the most famous aphorism attributed to management philosopher Peter Drucker is “what gets measured gets managed”. Taking Drucker at his word in a pension management context, what outcomes should be measured? And does measurement really lead to better outcomes?

The CEM Benchmarking Inc. story suggests the answer is ‘yes’. The firm has been offering ‘value for money’ benchmarking services to pension organisations around the world since 1992. Today, it has over 400 clients in 25 countries that in turn serve 80 million members and collectively manage some $15 trillion in retirement savings.

Responding to increasing client demand over time, CEM’s suite of databases and benchmarking services has grown to cover public and private markets investment performance and costs, benefit administration performance and costs, organisational structure, asset/liability management, stakeholder communications, and more. Evidence suggests that this benchmarking is indeed leading to better outcomes. For example, a recent study using the CEM‘s benchmarking databases documented that key success drivers of the admired ‘Canadian Pension Model’ were scale, insourcing (especially private markets investing), and investing in internal R&D capabilities (link).

In this context, I commend the Top1000funds.com / CEM Benchmarking Inc. initiative to launch the Global Pension Transparency Benchmark (GPTB). This initiative will further catalyse pension organisations to clearly report how they are creating value for their stakeholders, and thus drive the sustainable delivery of adequate pensions to a country’s retirees at a reasonable cost.

The Mercer CFA Institute Global Pension Index (MCGPI) is a companion benchmarking tool to that same end. Its 12th version published late last year ranked the quality of the retirement income systems of 39 countries on this basis, handing out 2 ‘A’s, 12 ‘B’s, 17 ‘C’s, and 8 ‘D’s. Are these measurements triggering public policy actions? While it would take an in-depth study to answer this question in detail, we do know that the annual MCGPI findings receive significant media attention around the world and are triggering important national pension improvement discussions. The new GPTB will add further insights to guide these discussions.       

The CEM, MCGPI, and GPTB benchmarking stories are harbingers of more to come in the world of pensions and investments. For example, recent studies by UK-based ShareAction and NL-based VBDO have thrown important new light on the asset owner/asset manager ‘saying-doing’ gap in integrating responsible investing/ESG principles and practices into their investment programs.

ShareAction benchmarked the RI/ESG implementation effectiveness of the globe’s top 75 asset managers, while VBDO did the same for the top 50 Dutch pension funds.

Table 1 presents the findings from the two studies. Note that in both studies, in contrast to the strong RI/ESG implementation claims of many asset owners and asset managers, only very few achieved ‘A’ ratings, while in both samples, about half received failing ‘D’ and ‘E’ grades. Conclusion: there continues to be materially more saying than doing in implementing RI/ESG principles and practices around the world, and much more action is required to change this reality.

 

Table 1  Comparing the ShareAction and VBDO RI/ESG Implementation Rankings

Percentage of Funds in each Ranking Category

A          B           C          D          E

ShareAction                             7%       26%      16%     31%     20%

VBDO                                         6%       20%      33%     23%     18%

Sources: ShareAction, VBDO, KPA Advisory Services

 

Effective benchmarking does indeed separate the wheat from the chaff in pension management. The Top1000funds.com /CEM Benchmarking Global Pension Transparency Benchmark will help reduce the still-material ‘saying-doing’ gap in the global pension industry. What gets measured does indeed get managed.

 

Keith Ambachtsheer is Director Emeritus of the International Centre for Pension Management and President of KPA Advisory Services. He is a co-founder and co-owner of CEM Benchmarking Inc., and an Advisory Council member of both the Mercer CFA Institute Global Pension Index and of the Top1000funds / CEM Benchmarking Global Pension Transparency Benchmark. 

 

 

The Global Pension Transparency Benchmark has revealed the need for serious improvement in pension transparency across the globe.

The Global Pension Transparency Benchmark, a collaboration between conexust1f.flywheelstaging.com and Toronto-based CEM Benchmarking, brings a focus to transparency of pension fund disclosures.

The GPTB ranks 15 countries on public disclosures of key value generation elements for the five largest pension fund organisations within each country. The overall country benchmark scores look at four factors: governance and organisation; performance; costs; and responsible investing; which are measured by assessing hundreds of underlying components.

Overall the transparency of disclosure varies greatly, both between countries and between funds, across all the factors that were measured. In some instances there are wild variances between the best and worst performers.

Pension funds around the world scored best on performance disclosure, followed by governance, cost and responsible investment. But only performance could be considered a decent score (average country score of 68).

While some countries and funds scored well on certain factors, on average transparency of disclosure needs improvement.

Principal at CEM Benchmarking, Mike Heale, who led the project says the benchmark has highlighted the areas where improvement is needed.

“We found quite a remarkable range for both what was disclosed and the communication quality. Individual fund total transparency scores ranged from 18 to 82. The highest scoring funds generally covered all factors well and provided many best practice examples that we have highlighted,” he says. “However, we were disappointed with the overall global results. All too often disclosures for responsible investing, costs, and governance were non-existent or minimal. Transparency builds trust. It is the right thing to do and the smart thing to do. There is much room for improvement.”

Analysis of the results showed that certain countries, and pension funds, dominated each of these four factors.

Within costs, the Netherlands was a clear leader. Within governance, the Canadians shone. When it came to performance transparency, the United States was the leader. And within sustainability, Sweden was the outlier, although all the Nordic countries performed well.

The wildest variance was in the disclosure of governance (0-97) and responsible investment (0-88).

The cost factor

The average country cost factor score was 51, with individual fund scores ranging from 18 to 88.

As indicated by the score range, cost factor disclosures varied considerably.  Disclosures were better when the pension fund was a single purpose entity rather than one component of a larger organisation such as a wealth management company or a governmental department.

The Netherlands stood out way ahead of the pack with the highest country score of 83, and a tight range of 71 to 88 within the funds from that country. In fact, the top four cost factor scores were held by Dutch funds. The next closest country was Canada with an average of 69.

While the Netherlands dominated, best practice in cost disclosure could be seen across other funds as well. The Royal Bank of Scotland Group was one example, as it supplements financial statement costs in its annual report and provides stakeholders with an analysis of their total investment management fees.

The governance factor

The average country score for governance was 53 out of a possible 100.  The biggest Canadian public funds collectively have a global reputation for superior performance, and governance excellence is often cited as a key driver.  The fact that the five largest Canadian funds had the highest average score for governance and organisation also supports their collective reputation for governance excellence.

This factor had the largest range within countries from a low of 0 (Mexico, which did not disclose any governance materials) to 97 (Canada).

While the Canadians were clear leaders in governance transparency, there were some other very good examples of best practice including Danish fund ATP’s clear disclosure of its board competencies and skills.

The performance factor

The average country score was 68 and the average country scores ranged from 51 to 87.

Disclosures were generally comprehensive for the current year and at the total fund or investment option level.  But there was minimal or missing data for longer time periods and asset class results.  Components with the highest scores included asset mix and portfolio composition and risk policy and measures.  Components with the lowest scores were asset class returns and value added and benchmark disclosures.

Best practice examples can be seen in the US funds CalPERS and CalSTRS but also the Canadian fund, Caisse de depot et placement du Quebec.

The responsible investment factor

The average country score was 41 out of 100, the lowest average score compared to the other three GPTB factors.  Responsible investing also had the greatest dispersion among average country scores as different countries are at different stages of implementing responsible investing and providing disclosures.  The average country scores ranged from 2 to 73.  Best practice among the funds can be seen in the Finnish fund Elo’s annual report and the Norwegian Government Pension Fund Global responsible investing report.

 

For all the results and analysis click here.

 

 

Transparency is an important link in improving pension delivery, and the Global Pension Transparency Benchmark will help lift transparency standards and ultimately trust in pension institutions, according to its advisory board.

“It is hoped the benchmarking process will encourage a greater level of debate about lifting transparency standards within the pension community,” says David Atkin, deputy chief executive of AMP Capital. “By highlighting best practice, this should encourage everyone to improve their level of transparency and communication effectiveness. If key stakeholders have better levels of knowledge about the institutions that serve them, this will surely improve levels of trust and confidence in them as institutions.”

Transparency within the investment industry is not where it should be and it is hoped that the benchmark will focus attention on transparency as a lever for better outcomes.

Member of the GPTB advisory board Keith Ambachtsheer, who has been an advocate for better pension design for decades, says there is room for significant improvement when it comes to transparency.

“Real transparency is still a rare commodity in the pension industry. The GPTB initiative will help lift the veil on whether pension organisations are really creating value for their stakeholders… or not,” he says.

Lorelei Graye, has had vast experience in improving transparency in private asset disclosures during her time at South Carolina Retirement System Investment Commission and as the founder of the Adopting Data Standards Initiative aimed at building collaborative global data standards for private capital.

She says the the GPTB plays an important role for improved pension outcomes.

“Recognising the best examples in practice within our industry gives us all something to measure against and a standard for which to strive. I hope our work for the GPTB brings the need for consistency into sharp focus and elevates best practices,” she says. “Borrowing slightly from Mahatma Gandhi, I believe that a just cause is never damaged by truth and so transparency will ultimately only serve to strengthen the pensions and investments world because we thrive when markets, operations (including costs) are efficient, accurately measured, and effectively managed.”

Board member Angelique Laskewitz says that while the asset owner community has made great progress over recent years recognising the value of assessing governance in the investment decision making process and demanding greater levels of transparency from the companies they invest in to assess governance maturity and value creation, the same level of transparency has been slower within pension organisations.

“We have however, been slower in recognising that this level of good governance should also apply to the way we hold ourselves to account to the end beneficiaries we serve,” agrees fellow board member David Atkin. “To do this means being transparent about our strategies, how we make decisions, how we create long term value in all of its dimensions, how we hold ourselves accountable and how our stakeholders can assess our success in meeting their needs. Unfortunately much of the corporate reporting from the asset owner community currently  is focused on meeting minimum compliance requirements, rather than providing reportage that is engaging and meaningful.”

Atkin says that the GPTB is an important step in creating a public data set that enables benchmarking of the transparency quality of key asset owner institutions in leading economies around the world.

Similarly vice president of communications at Canadian fund IMCO, Neil Murphy, says pension funds need to look at the broader stakeholder community.

“As many pension organisations are active and significant investors in capital markets, there is an ever-increasing pressure to align with global financial disclosure standards. This form of transparency is directly linked to the trust they must foster among a wide range of stakeholders (beyond plan members), including investment partners, global media and government entities,” Murphy says.

“While public stakeholders may form opinions based on formal disclosures, which they may encounter through pension funds’ reporting, they increasingly draw conclusions on what they don’t see, or what is omitted. This underscores the critical nature of transparent, comprehensive and consistent reporting.”

Each member of the GPTB advisory board brings a unique perspective on the importance of transparency and reporting through their work experiences, and have been invaluable in advising the development of the benchmark.

For all the analysis and results click here.

David Villa, executive director and chief investment officer of the State of Wisconsin Investment Board, passed away on the weekend.

David Villa was a unique thinker and generous with his ideas. It was hard not to be swept away by his passion for change.

We had a close working relationship which was predicated on his deep thoughtfulness and desire to improve outcomes for his members and the many other pension fund members around the world for whom his peers managed money.

I first interviewed David in 2009 and more recently he has been a member of our international advisory board. As with many relationships, the recent customary use of zoom meetings allowed me to see the more private side of David and we discussed his love of music and his vast guitar collection.

He’d flick me emails telling me our website was slow, or that he wanted to put forward a colleague for a speaking spot at one of our events or to share one of his many ideas on how to improve pension fund processes and behaviours. He was engaged and thoughtful.

David has been with SWIB since 2006 when he joined as chief investment officer and was named executive director in 2018.

In my first interview with him in 2009 we discussed manager selection and monitoring,  in-house investments, costs and risks; themes that resonated in every conversation as we ruminated over a path to pension efficiency.

At that time David was campaigning to emphasise the importance of allocating capital according to risk instead of dollars, and to question each investment’s contribution to risk.

“Risk is the same as loss. Many think of risk as volatility, the swing, but it’s the risk of really bad stuff happening,” he said at the time. “In Wisconsin we hunt deer from the age of 9, and from then until the age of 85 you could keep track of your hunting results, measure the distance of where you shot from and the hit rate. But the real risk is a bear coming into your tent in the middle of the night and waking you up.”

In 2010 SWIB announced a new asset allocation strategy that included the use of leverage and risk parity, something that was broadly criticised in the local media which accused the fund of gambling with taxpayers’ money. But it was innovative in the pension world and something that David and his team had been contemplating for about three years.

At the time SWIB’s allocation to equities comprised about half of the core fund’s assets but 90 per cent of the total fund volatility, so the rationale was to trade a reduction in the allocation to stocks for the lower risk of fixed income. The new allocation shifted its allocation out of equities into fixed income and added leverage.

This approach also led to some meaningful relationships with managers and the ability for the fund to call on its managers’ knowledge and expertise. This ultimately resulted in its in-house team running levered strategies itself.

This innovative and brave approach, under David’s guidance at Wisconsin, has also spilled out to other funds, with the Public Employees Retirement Association of New Mexico a notable example in building a risk parity approach using leverage. The approach has been a big contributor to SWIB’s fully funded status.

David was a lifelong learner, with degrees from Princeton, Stanford and Northwestern universities. He was academically minded and thorough.

In 2013 David presented the results of a study he had worked on for two years with Sorina Zahan, partner and chief investment officer of Chicago-based Core Capital Management, at the Top1000funds.com Fiduciary Investors Symposium.

Drawn from two years of research their study into benefit design developed a mathematical framework to compare the different vulnerabilities and returns within defined benefit, defined contribution and hybrid pension schemes.

David showed how hybrid pension schemes, combining both defined contribution and defined benefit characteristics, are best for governance because they align interest of both employees and sponsors. Importantly he highlighted that the funding crisis in the US was a result of bad governance. It’s another example of his commitment to the fact he was managing other people’s money but also a commitment to investigating efficiency and challenging the status quo.

Back in 2016 the fund’s strategy was built on a two-pronged attack; building a portfolio of hedge funds that aimed to provide a higher quality source of alpha on top of existing market beta exposures, and continuing to building an internally managed, multi-asset division to provide a diversified source of return generation.

Under David’s leadership, the $120 billion fund has grown its internal management from 21 per cent to over 50 per cent of assets, generated strong returns at a lower cost than its peers, and during the last five years added $1.9 billion above its performance benchmarks.

Managing liquidity was always front and centre of his tenure as CIO which was not only a risk management tool but an opportunity, with Wisconsin able to provide liquidity in times of crisis. More recently he emphasised the discipline of rebalancing.

SWIB is unusual as it does not have an automatic rebalancing process, rather the senior investment team votes every month on the portfolio positions. While it does have limits imposed by the board, they are pretty wide and it’s rare to bump up against them.

“At this moment we are fearless rebalancers,” Villa said as the COVID crisis hit in April last year. “A lot of return will come from being willing to rebalance without worrying about what might happen. We are also very liquid. Our asset allocation is built around publicly traded securities so we are extremely liquid, and there are deep derivative markets that allow us to rebalance synthetically. Fourteen years ago it would take us eight weeks to rebalance, today it takes us less than 24 hours.”

Under David’s leadership, the State of Wisconsin Investment Board has become renowned for its diverse investment strategy, internal management, benchmark-beating results and fully funded status. More recently the Madison-based fund also leads peers in investment management technology.

David was always looking to the future, and more recently that included some monumental transformation of the internal systems and the use of technology to manage and monitor the portfolio. He was a bright light in bringing public pension fund processes in from the dark ages. More recently David was working on the internal technology systems and building Wisconsin into a first class funds management firm by building a data warehouse, improving data governance, upgrading the performance analytics engine, centralising the portfolio engineering function and upgrading technology platform for private equity.

The last time we spoke, in December last year, he was contemplating the impact of the COVID-19 crisis and the continued ignorance and inability of the finance industry to look beyond traditional models in assessing global risks.

“Global health networks faced pandemics and potential pandemics in the past with Legionnaires disease, AIDS, bird flu, SARS, and MERS but going into 2020 the market, press, and others acted as though nobody anticipated a COVID-type event. What bothers me is what other risks may exist in plain sight that the marketplace underestimates?” he says.

“Climate change and ocean acidification is disregarded. War ships on alert and in close proximity in disputed regions of the oceans add uncertainty. In the background of these risks, the financial promises made to workers to partially replace income in retirement may need to be broken by governments that have failed to properly fund public pensions. The consequences of this myopia will not be felt next quarter or even next year but can easily become a crisis within the next two decades.”

David Villa is well remembered and will be missed.