The $178 billion CalPERS is considering inflation-linked assets, such as the water bonds issued by the World Bank, as part of an over-riding view to allocate capital to climate change initiatives.
The financial crisis struck as many of the state-owned portfolio companies held by Khazanah Nasional Berdad, Malaysia’s $23 billion (RM82 billion) sovereign wealth fund (SWF), were learning to operate with new executive leaders and, crucially, less gearing. Simon Mumme charts the progress of the manager’s attempts to strengthen and diversify the Malaysian economy throughout the crisis and beyond.
As institutional investors have been hit hard by events of the past 18 months, there has been a surge of interest in the adoption of an additional, mid-term, time frame in which to provide investment
targets. Watson Wyatt believes pension funds should allocate between 5 and 15 per cent of their risk budget to dynamic asset allocation.
The US Securities and Exchange Commission (SEC) is currently considering pay-to-play activities and will report back on any proposed action in the next few weeks, according to its chairman Mary Schapiro, speaking via video at the annual International Corporate Governance Network conference this week.
Pension funds should demand an overhaul in the product offerings of funds managers and change the terms of mandates to incorporate environmental, social and governance issues in portfolios, according to Colin Melvin, chief executive of Hermes Equity Ownership Services, who pointed to a number of funds in the UK, including the owner of Hermes, BT Pension Scheme, considering such action.
The financial crisis has challenged pension funds to rethink standard asset allocation models, but as Jonathan Armitage, head of US equities at Schroders observes, a lot of investors are questioning whether they need to react.