Germany’s €70 billion pension provider VBL is increasing its diversification, notably investing in overseas real estate outside Germany for the first time. It's also increasing its tilt to international equities over European stocks, enabled by an organisational and investment process overhaul.
Sampension, the DKK325.6 billion labour-market Danish pension fund has found a rich seam investing in AAA-rated CLOs where it earns a pick-up from traditional fixed income in loans with low default rates. The head of credit Anders Tauber Lassen says the fund feels "quite comfortable taking this type of risk".
A full-blown trade war, and changes in monetary policy triggered by a loss of credibility in the Federal Reserve and other global policy institutions, could result in a return of the positive correlation between bonds and stocks, and investors need to be aware of the risk, warned Luis Viceira, George E. Bates Professor in the Finance Unit and Senior Associate Dean for Executive Education at Harvard Business School, at the Fiduciary Investors’ Symposium at Harvard University.
Rebecca Henderson, the John and Natty McArthur University Professor at Harvard University who co-teaches Reimagining Capitalism at HBS, says inequality is equal to climate risk in its potential impact. She told delegates at the Fiduciary Investors Symposium at Harvard University when a system no longer generates freedom and prosperity it must be changed. Change is possible because we have the resources and technology to do it. A first move is decent jobs for people at the “bottom”.
PRI has developed an Inevitable Policy Response (IPR) that lays out a realistic forecast of how governments will respond with policy to try and navigate climate risk by 2025.
Modern portfolio theory has created the impression that diversification is always a good thing, but asset owners could benefit from a more sceptical attitude. This article suggests over-diversification favours managers at the expense of returns to investors.
Chief risk officer at the World Bank Group, Lakshmi Shyam-Sunder, says the extreme uncertainty of the global economy requires a new risk management framework, and investors should not take anything for granted in scenario planning. The World Bank has revised down its estimates for global growth to below 3 per cent.
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