1 / 36

Managing Pension Assets Worldwide

Managing Pension Assets Worldwide. Investment Approach Operations & Administration. • Alice Ho, Investment Director Global Portfolios Group - Hong Kong • 22 September 2000. Managing Pension Assets Worldwide Recent Trends.

arlie
Télécharger la présentation

Managing Pension Assets Worldwide

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Managing Pension Assets Worldwide • Investment Approach • Operations & Administration • Alice Ho, Investment Director Global Portfolios Group - Hong Kong • 22 September 2000

  2. Managing Pension Assets WorldwideRecent Trends • Deregulation, privatisation, reform and enhanced coverage will continue • Pension Fund assets - larger in size and more specialisation • Accountability and responsibility - formal channels for evaluation • Unique pension needs / characteristics - different risk / return profiles • Performance measurement - set standards / customised benchmarks • Search for quality investment services - clear & lucid investment philos0phy

  3. Preserving and Growing Real Value of Assets $29.53 Value of $100 with 5% inflation • After 25 years, the value of $100 today is only worth $29.53 then. • The law of diminishing return.

  4. Equities are the best hedge against inflation ...... hence long-term preference $1,000,000 Equities $100,000 Bonds $10,000 Retail Prices $1,000 $100 $10 '18 '22 '26 '30 '34 '38 '42 '46 '50 '54 '58 '62 '66 '70 '74 '78 '82 '86 '90 '94 '98 Equities, Bonds and Inflation Source: CSFB UK Equity-Gilt Study - January 1999

  5. Managing Government Assets –Key Building Blocks Risk / Return Profile - Selected Assets From January 1970 to December 1999 • Looking at history as a reference – long term * Local Currency

  6. Pension assets in major markets increased by more than 50% from 1993 to 1998 The U.S. institutional market remains the largest in the world at about 57% of total Estimated Value of Pension Fund Assets (US$bn) Source: Watson Wyatt

  7. Equities as a Proportion of Institutional Pension Fund Assets End of 1993 (%) End of 1998 (%) United States 47 66 Japan 45 55 Netherlands 25 39 Germany 4 13 Switzerland 16 18 Canada 46 52 Ireland 62 64 Australia 51 53 UK 72 70 Hong Kong 70 62 Source: Watson Wyatt • Equity proportion is growing rapidly • Seems to be capped around 70% in mature markets

  8. Foreign Equities as a Proportion of Total Equities End of 1993 (%) End of 1998 (%) Hong Kong 44 45 Netherlands 16 23 Canada 15 16 Japan 8 19 United States 5 11 Germany 1 6 Source: Watson Wyatt • Growing willingness to invest in foreign assets • Growth has typically been constrained by local governments who are now liberalising

  9. Increasing propensity to outsource to external specialists Pension Fund AssetsAssets Managed by External Managers End of 1998 Source: Watson Wyatt

  10. Level of Internal Resources in Pension Investment Matters Small Scale Large Scale Source: Watson Wyatt • The needs to outsource to external specialists has much to do with the • degree/level of internal resources in pension investment.

  11. Extent of Influence Exercised by Investment Consultants* Small Scale Large Scale Source: Watson Wyatt * Green area represents global consultants influence, and yellow relates to domestic consultant sway. • The lower the level of internal resources in pension investment the • higher the extent of influence exercised by global consultants.

  12. Self-Administered Occupational Funds Using a Defined Contribution Arrangement 1998 % of Assets Source: Watson Wyatt

  13. Managing Pension Assets –Investment Manager Structure • Single manager • Multiple managers • Specialists • Generalists • style • risk profile • investment approach • Mixed • internal / external • specialist / generalist • Understanding the client’s needs

  14. Managing Pension AssetsFactors to Consider Objectives Growth Meet pension liabilities Time Horizon Long (how long) Unique Needs Regulatory requirements Distribution / cash needs Tax considerations • Setting long term strategic policy

  15. Managing Pension Assets Setting Investment Guidelines and Benchmark Indices • Agreeing on performance measurement yardsticks • Defining risk tolerance in qualitative and quantitative terms whenever possible • Use a clear and easy-to-follow format on investment guidelines and restrictions • Setting review schedules • Key to success – communicate and review

  16. Fleming Asset Management WorldwideGlobal Reach 209 investment professionals The Americas New York 16 Rio de Janeiro 10 Europe, Africa and the Middle East London 96 Moscow 2 Prague 3 Cairo 5 Cape Town/ Johannesburg 7 Gaborone 1 Harare 2 Asia Pacific Tokyo 14 Taipei 18 Hong Kong 21 Mumbai 2 Bangkok 4 Singapore 3 Melbourne 5 •Global reach

  17. Fleming Asset Management Global Assets London US Assets New York European Assets London Asian Assets Hong Kong Japanese Assets Tokyo Fleming Asset Management

  18. Adding Value - The Chase Fleming Approach • Need to have investment professionals in local markets to understand local issues and be close to companies • Choosing the best stocks is the best way of adding value in the long term • Need to view the forces acting on stocks and markets in a global context

  19. The Global Portfolios Group • 194 clients in 12 countries, 159 benchmarks • $17 billion under management as at 30 June 2000 • $11 billion managed via integrated global approach •Product range tailored to clients’ specific objectives

  20. London 15 Investment Professionals Global Portfolios Group US$17bn under management Hong Kong 6 Investment Professionals Tokyo 3 Investment Professionals Global Portfolios Group • One team managing all global portfolios

  21. Global Portfolios Group Team Members Investment ProfessionalsPrimary ResponsibilitiesYears Industry Experience Peter Harrison Head of Desk; Chair, Portfolio Review Group 12 Howard Williams Chair, Model Portfolio Group 18 James Fisher EAFE Mandates 15 Ian Henderson Specialist Global Sector Funds 23 Jonathan Lowe** HK Pension Fund Mandates 18 David Atkinson* Kokusai Mandates / Chairman Sector and Themes 13 Sandeep Bhargava Fund Manager / Analyst 6 Peter Warnes** Fund Manager / Analyst 11 Simon O’Sullivan Fund Manager / Analyst 6 Shoichi Mizusawa* Fund Manager / Analyst 3 Tai Nakagawa* Fund Manager / Analyst 10 Hugo Alexander Fund Manager / Analyst 3 Che Chow Fund Manager / Analyst 6 Edward Walker Analyst 3 Tanya Clarke Analyst 2 Roger Bacon Analyst 7 Shane Duffy Analyst 1 Tom Murray Analyst 4 Anna Yeung** Implementation 2 John Felicite Implementation 7 Rob Lay Global Product Manager 11 Alice Ho** Investment Director / Client Service Director 14 Betty Au** Client Service 14 Kwenny Sung** Client Service 7 Gayda Humphries New Business Service Support 6 *based in Tokyo ** Based in Hong Kong

  22. Global Portfolios GroupInvestment Process – Highlights • Process designed to satisfy most rigorous institutional clients • Stock selection is key source of added value • Use best ideas from the regional specialist teams • Construct portfolios globally not as regional ‘silos’ • Use global sector analysts and quantitative techniques to ensure optional global industry exposures • Clear focus on risk control and consistent incremental outperformance

  23. Sector & Themes Group Asset Allocation Committee Stock Ranking Global Sector Research Model Portfolio Group/ Optimisation Model Portfolios MSCI EAFE Model MSCI World Model Hong Kong Model MSCI Kokusai Model Tailor Made Client Portfolio GPG’s Investment ProcessThe coming together of key inputs • All clients’ funds consistent with model portfolio

  24. Value Business characteristics EPS Revisions Financial characteristics Price momentum Management factors Research Our Research Process Fundamental Quantitative Stocks ranked 1-5 (strong buy - strong sell) Thematic Macroeconomic factors Themes Sectorial implications • A clean, disciplined and systematicprocess to asses growth and quality

  25. Global Portfolios GroupDefining Characteristics • Our portfolios own stocks which have the following characteristics • improving returns • inherent volume growth • good business model • improving ROE/ROC • attractive valuations • Process and philosophy aligned

  26. Regional analysts (stock rankings) Model Portfolio Group Basic Industries Technology / Telecoms Financials Industrials Consumer Staples Consumer Discretionary Research GPG’s Research FunctionGlobal Sector Research • Global industry comparisons: not primary research • Global valuation comparisons - best in industry globally Global Sector Research

  27. Themes Thematic Research • Provides macro-economic input needed • Key investment themes identified and their implications for each market sector analysed • Current themes include • digitalisation • disintermediation • globalisation • intermediary pricing environment • To ensure consistency with long-term economic and strategic views

  28. Asset Allocation Asset Allocation - Inputs • Based on rate of change analysis • Identify major turning points in markets: not short-term tactical Quantitative Fundamental Asset classrankingsaggressively overweight - aggressively underweight Value Fund flows Quality Valuation Momentum Earnings revisions Economic forecast & revisions Politics/sentiment Thematic Global Regional

  29. Asset Allocation - Information Flows QuantTeam Fixed Income &Currency Team Regional Specialists Medium term bond and currency forecasts (quarterly) Interpretation of economic inputs and fundamental drivers (quarterly) Output from quant model (monthly) Economic Analysis Market updates (monthly) Thematic views Asset AllocationTeam Asset preferences matrix Regional analysis/minutes “House View” presentation Global Group and Distribution Businesses

  30. Global Portfolios GroupInvestment Process - The Key Steps Asset Allocation Sector Analysis Risk Control Portfolio Construction Security Selection

  31. Portfolio Construction ProcessLevels of Risk • 1. Economic and financial risk • Real risk lies in the companies we own • Investment process delivers • rigorously researched stock ideas • global thematics • stock screening model • 2. Benchmark risk (portfolio) • Statistical controls • tracking error • i. disaggregated (stock country, style, industry) • ii. stability • iii. regional covariances • scenario testing • downside risk • assessment • external threats • Minimum number of stocks • 3. Benchmark risk (stocks) • Active money controls • country • sector • stock • Three levels of risk control

  32. Risk Control • Take stock rankings and build initial optimal portfolio • Optimal portfolio characteristics: • stock risk ó70% • country risk ó15% • sector risk ó10% • style risk ó10% • Main sanity checks: • consistency with regional desk portfolios • consistency with Sector & Themes output • risk profile • Control of risk key to achieving objectives

  33. Portfolio ManagementMonitoring and Control • Investment Directors monitor day-to-day decisions of portfolio managers • Front office software system • - tracks holdings and weightings of portfolios • - on-line access to portfolios and dealers • Accounts and Settlements Department monitor activities within a portfolio. e.g. • - share transaction reports • - valuations etc. • External custodian - all trades details are sent to external custodian for settlement and reconciliation purposes • Compliance Department monitors adherence to investment guidelines, internal policies, external regulations, etc. • All deals centralised through separate dealers • Internal audit performs independent reviews of systems and controls Investment Directors Monitoring And Control of Portfolio Internal Audit Front Office Software System (OSIRIS) Internal Compliance Central Dealing Transaction Monitoring Systems (UNIX (AS400)) • Clear accountability

  34. Risk Management & Middle OfficeIM Business Information Process Flow • stock master • broker master • settlement • others • fund valuation Confirmed Trades NOVA* JAFFA Fund Info Portfolio Holdings Stock Info Trades Info Market Breach Report Back Office Process Back office Tripwire Front office Tripwire Front Office Process Accepted Order Potential Advertent Breach OES OSIRIS Fund Manager Dealer Report Order • Decision Support • view portfolio holdings • view transaction history • view cash movement • view bank balance • other queries • generate orders • Generate Reports • mgmt reports • compliance reports • trade reports • Monitor Orders • monitor progressof order process • create orders • Execute Orders • acknowledge orders • release orders • execute/allocate orders • close orders • cancel orders • VWAP : NOVA is not an IM system. Note: The diagram above depicts the major systems and data feeds involved in the IM business information flow; it does not cover all detailed data transmission between systems.

  35. Summary • Global organisation with local regional expertise • breadth of expertise • depth of investment resources • Team approach to investment management rather than ‘star’ system • consistent application of investment disciplines and method • All clients receive our very best investment ideas and performance • elimination of manager specific risk

  36. Client Services • Monthly valuation reports • Quarterly portfolios review reports • Quarterly meetings • Special market reports • Ad hoc reports / meetings • Full documentation tailored to clients’ requirements • Performance analysis

More Related