The European Court of Justice (ECJ) has ruled that foreign investment funds that invest in French companies should not be liable to pay a discriminatory withholding tax on dividends.
Prior to today’s judgment, under French corporate tax law, France levied a withholding tax of 15%, or in some...
Tim Hodgson, Towers Watson, explains the thinking behind thematic investing
We believe thematic investing or even just thinking about investment themes has merits in shaping both the asset allocation and the risk management processes. The essential idea is to start positioning portfolios to benefit from tomorrow’s trends today; and the idea seems to have resonance...
Will Oulton, Mercer, on how the finance industry’s focus needs to be on long term sustainable growth rather than simply the next quarter’s earnings
The financial crisis and global recession have left champions of free market capitalism facing an increasingly sceptical global audience. The current debate regarding “fair” or “responsible” capitalism often highlights the finance industry as having a transaction based,...
The average UK pension fund achieved a weighted average return of 4.3% for the year ending 31 December 2011, reveals BNY Mellon’s annual UK pension fund performance research. This is the third consecutive year UK pension funds have posted a positive annual return since the financial crisis in...
Where is the growth in diversified growth?, Mike Turner, Aberdeen Asset Management, suggests looking East and elsewhere in emerging countries
The launch of many diversified growth funds over the last several years has been a response to the perceived failings of what are known as traditional balanced funds.
Traditional balanced funds typically focused on short term performance and peer group comparison rather than meeting the long term...
Hugh Gittins, Eversheds, outlines the potential risks of infrastructure investments and the implications for trustees
Currently a very low proportion of the UK’s pension investments is in infrastructure. However, if the UK government’s plan to increase pension scheme investments in infrastructure projects becomes reality, these projects may interest trustees.
National Infrastructure Plan
The...
Jo Maguire, PricewaterhouseCoopers, on the proposals to change UK GAAP and the impact on pension scheme accounts
In January 2012 the Accounting Standards Board (ASB) issued its revised proposals for the changes to UK Generally Accepted Accounting Practice (UK GAAP) and conversion with International Financial Reporting Standards (IFRS). The new standards will be adopted for periods beginning on or after 1...
Research suggests hedging exchange rate risk is expensive and possibly counterproductive reports Anthony Hilton, Evening Standard
In the years when I was a pension scheme trustee, decisions which led to the allocation of assets overseas were always followed by a discussion on whether or not the fund should hedge the currency exposure. Liabilities were almost all in sterling so any overseas holding caused a mismatch in that...
Mark Humphreys, Schroders, explains how investment managers are helping smaller schemes to benefit from a larger pool of resources
A number of studies have shown the investment outcomes of smaller pension schemes to be inferior to those of their larger counterparts.
This has a knock on effect on funding levels, and the average buyout funding level of schemes with more than 10,000 members has been 4 to 8% higher than that of...
Ringfencing pension funds can protect people from themselves and the demands of others suggests Edmund Tirbutt, freelance journalist
Most promotional effort from those selling pensions focuses on tangible benefits such as tax advantages and income drawdown rules. But other attractions, which can be just as valuable to certain types of saver, tend to get overlooked.
Having funds locked away until you are 55 can protect you...
Allison Plager, financial journalist, looks at how consultants are getting on with investment issues for DC schemes as they gradually take over from DB
As the decline of the much loved defined benefit (DB) pension scheme continues apace, companies are offering money purchase schemes to replace them. The National Association of Pension Funds’ Annual Survey 2011 showed that 23% of final salary pension schemes are now shut to new members and...
Paul McGlone, Aon Hewitt, has some tips on plotting the investment route your scheme should take
In a jargon filled industry, it is no surprise that new phrases continue to be invented. The “flight plan” is a recent one – so recent, that there is still no consensus around the phrase, with alternatives including “glide path” and “road map”.
At the core...
UK pension funds have suffered serious damage from recent policies to stimulate growth – in particular low interest rates coupled with quantitative easing (QE) have led to significant increases in pension liabilities, which have been further compounded by the sharp rise in inflation in...
Now for the side effects: Will quantitative easing cause an inflationary headache? asks Dominic Pegler, BlackRock
If quantitative easing (QE) is intended as good news for borrowers, last month’s announcement by the Bank of England about extending its purchase of gilts was not welcomed by savers – especially pension schemes. That is because QE pushes down the long end of the yield curve,...
To hedge or not to hedge? – that is the question for many trustees at the moment explains Simeon Willis, KPMG Investment Advisory
Liability driven investment (LDI), the investment approach focused on managing interest rate and inflation risk, has attracted considerable inflows in recent years. As highlighted by the 2011 KPMG LDI survey, since 2008 the quantity of hedging through specialised LDI arrangements has increased by...
How to Value Shares and Outperform the Market by Glenn Martin, £24.99,
ISBN 978-0857190475 (264 pages)
www.harriman-house.com
The simplest way to make money in the stock market is to buy shares when they are cheap and make profits when their prices increase. This technique is known as value investing and is the creed of the world’s most successful investor, Warren Buffett. But how do you know when a share price is...
Keeping investment management in house seems to have contributed to the success of the best performing large funds explains Anthony Hilton, Evening Standard
It is well understood that several of the most challenged pension schemes are those of what we used to call the nationalised industries – the giant utilities privatised in the 1980s by the then prime minister Margaret Thatcher – and some like the Post Office scheme which never quite...
Steven Catchpole, Cardano, on how new tools can be used to improve your liability hedging strategy
Would Novak Djokovic have won Wimbledon with a wooden racket? Would Rory McIlory have won the US Open using only a nine iron? Could Jenson Button win a Grand Prix in a Citroen 2CV? Clearly the answer to all of these questions is “no”. Success, whatever the endeavour, is made much...
Diversified real asset strategies are an important weapon in the asset allocation armoury says Neill Nuttall, JPMorgan Asset Management.
In 1947, Messrs Dewey and Dakin published Cycles and the Science of Predictions in which they made a number of multi-decade forecasts including an outlook for inflation. They suggested that this inflation cycle would trough in 2006. Even if the date may not be absolutely accurate, history will show...
The National Association of Pension Funds (NAPF) and the Pension Protection Fund (PPF) have signed a Memorandum of Understanding with the government to facilitate the development of a new pension infrastructure platform to help pension funds invest more in infrastructure.
Chancellor George...
