The arrest of a fundraiser for New York city comptroller John Liu and the ongoing federal investigation into his finances confirms the need for the governance reform planned for the city’s five public pension funds, Columbia Business School Professor Andrew Ang says. (more…)
OMERS has will capitalise on its ability to invest for the long-term and use the newly-launched venture capital arm to invest directly in the entire life cycle of a project.
OMERS Ventures, which will be the avenue for the fund to invest directly in venture rather than through funds, is predicated on funding through the entire life cycle, from the angel round to ultimate liquidity.
In a speech to the Toronto Board of Trade, chief executive of OMERS Ventures, John Ruffolo, says venture capital investors in Canada should make more long-term commitments to avoid start-ups heading to the US for funding.
He says that will be the core of OMERS’ strategy, with investments ranging from $500,000 to $30 million, and remaining invested for at least 15 years before seeking an exit.
OMERS Ventures forms part of OMERS Strategic Investments, which has a mission to drive “corporate initiatives that will position OMERS as a global player, incubate investment platforms that do not logically fit under the mandates of OMERS existing investment entities and further differentiate OMERS from conventional pension funds by burnishing its reputation as a pension-based investment enterprise unlike any other in the world”.
Overall, the $53 billion fund has a strategic plan to have about 47 per cent of assets invested in private markets. The figure is currently about 40 per cent.
OMERS Ventures will focus on investments in technology, media, telecommunications, clean technology and life sciences in Canada and the US, and has made its first investment in a company called WaveAccounting.
Ruffolo says WaveAccounting is an example of the type of further investments the fund would like to make. In nine months it has seen rapid growth, taking advantage of social media trends, and it is now used in 190 countries.
The Canadian venture industry has slowed in the past couple of years, and in his speech to the Toronto Board of Trade, Ruffolo presented a plan to get the “money flowing again”, which included abandoning the notion of a quick exit.
Private engagement has more influence on company behaviour and performance a new study of CalPERS’ corporate governance reveals.
Analysis by Wilshire Associates has found that because privately engaged companies are more receptive to reform and move more quickly to better governance standards, the turnaround in their stock performance is quicker.
It found that the turnaround in stock performance for publicly-engaged companies is not apparent until close to two years from engagement.
Wilshire measures the performance results of all companies publically and privately engaged from 1999 to 2009.
The study found that in the past 11 years, privately-engaged companies significantly outperformed the companies named on the public focus list for one, three and five years after CalPERS made the initial contact.
The performance of all companies engaged through the focus list program produced a cumulative return of 11.59 per cent above their benchmark after three years, and 4.77 per cent after five years.
Until 2009, the $223 billion Californian fund employed a combination of public and private engagement that included 59 companies on a public focus list and 110 which were engaged privately.
In 2009 there were 14 new companies privately engaged and none were named to the public focus list. In late 2010 the fund decided to abolish the focus list and exclusively engage companies privately.
The investment committee meeting in November was the first time it had received a corporate governance program report incorporating the focus list program analysis, proxy voting quarterly report results, and updates on principles for responsible investing, financial market reform and policy.
Meanwhile CalPERS has indicated that improving its ranking for Principle 1 of the UNPRI – which states: “We will incorporate ESG issues into investment analysis and decision-making processes” – will be a measureable outcome of the total fund ESG integration initiative of 2012.
The increase in the Australian superannuation guarantee (SG) from 9 to 12 per cent of salary is an example of how the retirement savings burden, a global phenomenon, can be shifted from the public to private sectors, according to senior partner at Mercer, David Knox.
The increase in the SG, which has been approved in the House of Representatives and will be debated in the Senate this week, will be gradual over the next eight years.
While the percentage of salary deducted will be 12 per cent, the 15 per contributions tax in Australia means the amount in the “super pot” will be more like 10 per cent, Knox says.
“10 per cent for retirement benefits is the right number around the globe,” he says. “With government budgets under pressure and an ageing population, shifting the balance more towards private provision is significant.”
Knox also says, while it seems like the increase is one third (from 9 to 12 per cent), for most members the actual increase will be more like 40 per cent.
“Expenses won’t increase, and members also pay an insurance premium and that won’t increase. So what’s left for retirement is a greater net benefit.”
One of the highlights of the Australian system is its mandatory nature, with all employees, except the self-employed, covered.
The Australian superannuation system had assets of $1.3 billion at the end of June, and assets are expected to double again in the next seven years.
New research released this month gives impetus to the evidence that newspaper articles can predict aggregate future stock returns.
Conducted by Professor of Finance at the University of St Gallen in Switzerland, Manuel Ammann, it examines articles in the German finance paper, Handeslblatt, from July 1989 until March 2011, and overall found that “newspaper content is a valuable predictor for future DAX returns”.
While, typically, economic and financial data dominates the research of economists and analysts looking at future stock returns, the predictive power of newspaper articles can now join the fray.
While this research should be reason enough for you to want to read top1000funds.com, we’re also embarking on change in order to make your reading life easier.
This newsletter marks a new phase in our development – which includes not only new design but also new frequency in our delivery – as we endeavour to deliver in-depth industry analysis in a timely fashion. We will now send a newsletter to your inbox twice a week.
The research by the St Gallen academics has also given me cause to think about the influence and power of media, and how top1000funds.com can challenge its readership but also work with it to influence policy, investment practice and thinking for the greater good.
There have been other qualitative measures that look at the influence of newspaper articles including the The Economist’s informal R-word index which looks at the number of times the Wall Street Journal and The New York Times use the word “recession” in a quarter.
It claims that previous incarnations of the index identified the start of US recessions in 1990, 2001 and 2007.
There is also the “MarketPsych Fear Index” which is a 10-day exponential moving average of the percentage of “fear” words in the US financial news. The company that produces it also now publishes the “MarketPsych Fear Gauge” which is a real-time display of the fear expressed in financial social media.
Perhaps we can develop our own research measuring the influence of our work on this industry.
Certainly top1000funds.com aims to challenge “best practice”, industry norms, conventional thinking and methods of investment. We want to bring you information that is otherwise difficult to access, from your peers, industry observers and academics, looking sideways at the issues and the patterns of change.
As always we welcome your ideas, feedback and referrals. Let’s talk.
Mario Batali Is Sorry bit.ly/tNYG1k
Yahoo is searching for a future. It offers a spectacle that involves huge war chests and equally inflated egos econ.st/v49Op6
Speech by Philip Lowe, Assistant Governor, to Australian Farm Institute Agriculture Roundtable Conference, Melbourne –goo.gl/Rjs1U
An unemployment cartoon of the day (with giraffes): nyr.kr/sdG2MV