Insto roundup: China’s pension fund need; Temasek’s impact investing plan

AUSTRALIA

Scott Hartley, chief executive of Sunsuper, is departing the Australian superannuation fund after leading it for five-and-a-half years, during which time its assets under management more than doubled from A$25 billion ($17.4 billion) to A$66 billion. Hartley will remain with Sunsuper until a new CEO is identified.

The superannuation fund now serves 1.4 million members. Its sharp increase in size comes in part from it having gone through recent mergers with AustSafe Super and Kinetic Super, while its consolidation with CBH Super was the latest example. 

Source: Financial Standard

Despite wary advisers’ concerns over alternative assets’ lack of transparency, Sunsuper argued they should be viewed as defensive investments and that they don’t pose a liquidity threat in diversified portfolios.

The Australian superannuation said at its adviser roadshow on Wednesday (May 29) that its holdings of alternatives include property, infrastructure, private capital and alternative strategies. Brian Parker, chief economist of Sunsuper, said the diversification benefits provided by alternative assets, particularly the unlisted ones, remain “very attractive” in an environment presenting signs of the later stages of economic growth.

Source: Financial Standard

Future Super said Australia could fully support the funding needs for renewable energy by 2030 with less that 8% of the country’s superannuation savings.

The fossil-free superannuation fund has been offering its members options to invest directly in renewable energy projects, in which the fund has partnered with Infradebt Ethical Fund and the Impact Investment Group Solar Asset Fund.

Future Super has been spearheading the industry trend to provide more options in ethical and sustainable investments, while staying away from tobacco, gambling, nuclear or military-related investments.

Source: Renew Economy

Telstra Super has named Sabine Taylor as chief risk officer after she was initially hired as interim chief risk officer in February for the A$21 billion ($14.6 billion) fund.

With more than 25 years of experience in various areas of risks, compliance and operations, Taylor joined the superannuation fund from Colonial First State as head of wrap operations. She has previously held senior roles at UniSuper and AMP.

Source: Investment Magazine

Swiss insurer Zurich on June 1 completed the acquisition of Australian group ANZ’s life and consumer credit insurance business, OnePath Life.

The deal – which was announced in December 2017 – creates one of Australia’s largest life insurers, serving some 2 million customers and paying more than $1 billion per annum in claims.

Source: Zurich

CHINA

The Chinese government should use at least Rmb500 billion ($72.3 billion) of its foreign reserves to establish a state-backed pension fund to address its rapidly dwindling pension system, according to Zheng Bingwen, director and professor at the Centre for International Social Security Studies of the Chinese Academy of Social Sciences.

Speaking at a conference organised by Asia Asset Management on May 24, Zheng said China had $3.07 trillion of foreign reserves last year and that Beijing should use some of these assets to help meet increasing demand for retirement savings.

“The fast-growing ageing population is weighing on the financial stability of the country’s pension system. If the current conditions remain unchanged, overall pension withdrawals are expected to exceed total contributions in 2028, and the entire pension pool is expected to dry up as early as 2035,” he added.

Source: Asia Asset Management

KOREA

South Korea's flagsip state pension scheme will gradually increase its overseas investment to some 50% of its assets under management by 2024 as part of its effort to boost returns and diversify its portfolio, its management committee said Friday.

Under its five-year investment plan, the National Pension Service aims to log a return rate of 5.3% for the 2020-2024 period.

As of late 2018, some 30.1% of the fund's assets were invested in overseas assets.

Source: Yonhap News Agency

South Korea's National Pension Service (NPS) posted a return rate of 4.83% in the first quarter of 2019 on the back of solid performances in domestic and foreign stock markets.

The fund logged a 7.12% investment return from the local stock market in the three-month periodand  a 14.08% yield from overseas stocks.

The return rates from investments in domestic and foreign bonds were 1.27% and 4.76%, respectively, and 1.94% for alternative asset investments. Last year, NPS posted a -0.9% loss on investment. The poor performance marked the first time in a decade that the fund's annual return was negative.

Source: Yonhap News Agency

South Korea's NPS cut the number of listed firms in which it has a stake of 5% or more in the first quarter of the year in an apparent bid to boost its investment returns, corporate tracker CEO Score said.

NPS owned 5% or more of 281 listed companies as of May 21, down 10 firms from three months earlier. The combined market value of its stakes in those firms stood at W103.2 trillion ($87 billion), up 2% from end-December.

Market watchers attributed the slight drop to the pension fund's efforts to diversify investments amid criticism over its negative return in 2018.

Source: Yonhap News Agency

MACAU

Casino operators Sands China and Galaxy Entertainment Group said they would join the voluntary pension scheme run by the government of Macau in July.  Sands China said it would join the Non-Mandatory Central Provident Fund fund scheme on July 1.

Source: GGR Asia

MALAYSIA

Malaysia’s sovereign wealth fund Khazanah Nasional may be looking to invest in SoftBank’s $100 billion Vision Fund after holding preliminary talks with the Japanese conglomerate.

The talks between representatives of Khazanah and SoftBank were held in April, five months after Malaysian prime minister Mahathir Mohamad formally invited SoftBank chairman Masayoshi Son to join Khazanah as a director and adviser. Son turned down the offer, saying he wanted to focus solely on SoftBank.

SoftBank is reportedly looking to raise an additional $15 billion for the Vision Fund, which is largely backed by the sovereign fund of Saudi Arabia. Since it was launched two years ago, the Vision Fund has invested around $70 billion in tech companies across the globe.

Source: Nikkei Asian Review, DealStreetAsia

The Employees Provident Fund (EPF) reported a total investment income of RM9.66 billion ($2.31 billion) for the first quarter of 2019, 25% lower than the RM12.88 billion recorded in the same period last year.

Equities contributed RM4.16 billion, or 43% of total investment income for the first quarter, while fixed income assets returned RM4.85 billion, or 50% of returns. The asset classes account for 39% and 50% of EPF's total investments, respectively.  

Deputy chief executive officer (investment) Nasir Latif said "equities will continue to play a pivotal role in enhancing returns and ensuring we are able to declare dividends of at least 2% above inflation”.

Source: Daily Express

NEW ZEALAND 

Allianz announced its retreat from the commercial motor, public liability and property insurance markets in New Zealand. Marc Guppy, chief executive of Allianz New Zealand, said the insurer would no longer write new policies starting May 31, in a letter to insurance brokers.

“After much consideration, and following a review of the strategic opportunities available to our business in New Zealand, Allianz has made the difficult decision to exit the three lines of business – commercial motor and fleet, public and products liability and property insurance,” said Guppy.

Source: Stuff

PHILIPPINES

The state-run Social Security System (SSS) said on May 29 it generated PHP4.4 billion ($84.59 million) in additional income over the one-year implementation of its second loan restructuring programme (LRP).

SSS president and chief executive Aurora Ignacio said the LRP, which ended last April, was able to restructure PHP10.9 billion worth of loans. 

Source: PhilStar

SINGAPORE 

The philanthropic arm of Singapore state investor Temasek Holdings on May 31 announced the launch of ABC World Asia, an Asia-focused private equity fund dedicated to impact investing.

ABC World Asia will invest in companies primarily in South and Southeast Asia and China, with the support of Temasek Trust, Temasek and Pavilion Capital. The impact fund will focus on themes including financial and digital inclusion, better health and education, climate and water solutions, sustainable food and agriculture, and smart and liveable cities.

“Temasek Trust seeks to play an active role in impact investments through sustainable philanthropy, beyond our usual approach of grant-making,” said Temasek Trust CEO Cheo Hock Kuan in a statement.

Source: DealStreetAsia

Asset manager Ion Pacific completed a $7.3 million investment in tech-driven insurance company Singapore Life, alongside the firm's original shareholders, according to a statement. Western insurers Aflac and Standard Life Aberdeen also participated. 

The investment gives Ion Pacific exposure to the life insurance market in Southeast Asia, a “key focus region” for the company, said principal Kristaps Ronis.

Source: Live Mint, Cleantechnica.com

INTERNATIONAL

Global investor confidence rose in May, though institutional investors in Asia were more cautious, according to data from State Street. The US firm’s Global Investor Confidence Index rose 6.6 points to 79.5 in May, from 72.9 in April. But the Asia ICI dropped by 4.2 points to 88.4.

The index analyses asset owners’ buying and selling patterns, and greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral – the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.

Source: State Street

Many institutional investors confuse integration of environmental, social, and governance (ESG) factors in portfolios with socially responsible investing, something that has implications for actuarial and other firms that advise pension plans, says new research.

The purpose of ESG factor integration is to improve financial performance or mitigate financial risk, not change the world for the better, according to the white paper by Randy Bauslaugh, a partner at Canadian law firm McCarthy Tétrault, and Hendrik Garz of Sustainalytics, a provider of ESG research.

A major barrier to understanding the legal obligation of plan fiduciaries relating to ESG factor integration is the confusing language that “shades the boundary between taking into account financially relevant ESG factors on the one hand and promoting ethical or social behaviour for its own sake on the other”, says the report.

Source: Chief Investment Officer