Sovereign Wealth Fund Institute » Asset Allocation

CalPERS 1.1% ROI for 2011

Web Director — Tue, 24 Jan 2012 10:26:49 +0000

Joseph Dear

The California Public Employees’ Retirement System (CalPERS) received a 1.1% return on investment for 2011. It is far short than its 7.75% rate of return assumption. Pension investors have been greatly affected by capital market volatility. Many have been forced to reduce return assumptions, increase allocation to illiquid investments, and further exposure to emerging markets. The returns in the 2nd half of 2011, erased most of the gains in the first half. Public equity returns are in a difficult time and market conditions continue to not look so promising.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

KIC Sees Opportunity in Europe and Real Assets

Web Director — Thu, 19 Jan 2012 07:58:04 +0000

The Korea Investment Corporation (KIC) views some European assets as attractive even during the current European sovereign debt crises. Middle East sovereign funds have shown lukewarm interest in direct European bank investment. Depending on individual liquidity needs, certain European governments and businesses are selling assets to raise cash, and sovereign wealth funds want to be in the position to take advantage of the valuation discounts. Korea’s SWF is stepping up their presence in Europe. They opened up an overseas office in London. Don’t expect any major direct investments in banks or in large part European banks from the KIC. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Ireland Moves Towards Strategic Domestic Development

Web Director — Mon, 16 Jan 2012 05:26:54 +0000

Ireland’s National Pensions Reserve Fund (NPRF) is allocating more money to domestic investments rather than overseas. This change in investment policy to invest more capital domestically stems from political and economic policy shifts. France and Italy have taken similar measures by creating strategic domestic investment funds. These strategic direct investment funds invest in companies that are deemed essential to the domestic economy. The Irish Government pulled the trigger on the creation of a Strategic Investment Fund which will be a portfolio of funds investing in select sectors of the Irish economy. Some of these areas will include infrastructure, venture capital, and financing for small and medium enterprises (SMEs). Ireland’s NTMA sought the recruitment of corporate finance advisers to identify such investments and find potential co-investors. The investments are to be sourced on a commercial basis but also be of strategic long-term significance to the Irish economy. With regards to investment in the specialized funds, the NPRF will be the cornerstone investor.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Korea’s NPS Receives QFII Status in China

Web Director — Mon, 09 Jan 2012 17:00:16 +0000

The fourth largest pension fund in the world, Korea’s National Pension Service (NPS) can now trade renminbi-denominated stocks and bonds in mainland China as a qualified foreign institutional investor (QFII). Korea’s NPS was founded in 1988 and established under the National Pension Act. In early 2006 the NPS launched an overseas investment team.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Temasek Creates SWE to Invest in North Asia

Web Director — Tue, 03 Jan 2012 17:26:48 +0000

Singapore’s Temasek Holdings is stepping up investment activity in the North Asia region. It created Pavilion Capital Pte, a wholly owned company to invest in closely held companies and will focus on small and medium enterprises in China. The new entity will be run by Tow Heng Tan, its former chief investment officer and senior managing director (Investments) of Temasek Holdings covering initiatives for direct investments.. Mr. Tow Heng Tan joined Temasek Holdings in 2002 and became the chief investment officer in October 2007.

By creating this sovereign wealth enterprise, it will give Temasek additional organizational flexibility to access direct company stakes the region.

According to a statement sent out by Temasek Holdings regarding Pavilion, is that it will “complement and expand our coverage and capacity for North Asia, including China.”

Old Times – Alaska Permanent Fund 1981 Asset Allocation

Web Director — Thu, 29 Dec 2011 10:49:10 +0000

In 1976, the State of Alaska amended its constitution by voter approval to create the APFC. In 1981, the actual administrative expenses were totaled at US$ 165,000. The market value at the time of June 30, 1981 was US$ 1,794,439,000.

Asset Class	Allocation from June 30, 1981
U.S. Treasury Notes and Bonds	35.3%
Banker Acceptances	29.9%
U.S. Treasury Bills	25.9%
Certificates of Deposit	7.5%
Corporate Bonds	0.5%
Federal Agency Notes	0.6%
Securities Purchased Under Agreements to Resell	0.4%

Qatar Allocates Funds to Natural Resource Companies in Indonesia

Web Director — Thu, 08 Dec 2011 16:54:32 +0000

Globally, Qatar Holding LLC has been investing in natural resource and commodity companies for quite some time. They recently picked up a significant stake in European Goldfields Limited which included funding support for the company to develop gold deposits in Greece.

Qatar Holding LLC is setting up a subsidiary called QH Indonesia to deploy $1 billion in targeting Indonesia’s raw materials and natural resources. Indonesia is centrally located near key markets such as India, China, and Australia. The sovereign wealth enterprise will be based in Jakarta. Indonesia is a heavily populated Muslim country in Southeast Asia and a major exporter of palm oil and rubber.

Nearly 85% of palm oil is produced in Indonesia and Malaysia.

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Adoption of External CIO Programs

Web Director — Wed, 07 Dec 2011 04:29:00 +0000

A small minority of U.S. based public investors are taking a closer look at the external CIO approach. The Alaska Permanent Fund has adopted the external CIO approach for its real return mandate. Another similar type of investment program is called absolute return management strategies. CalPERS still has an absolute return management unit, but has separated it from the public equities division. Absolute return management now reports directly under the chief investment officer of CalPERS. The overall goal of these programs is to add diversification to their portfolios and hopefully gain strategic insight from the external CIOs.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

KIA Reaffirms UK as a Key Investment Destination

Web Director — Sun, 04 Dec 2011 17:50:59 +0000

The Kuwait Investment Authority (KIA) has long been an institutional investor in the United Kingdom. In fact, the KIA has an office in London and a subsidiary called the Kuwait Investment Office which was established in 1953. Recently, the KIA reaffirmed its commitment to investing in the United Kingdom and plays a significant role in the UK financial sector.

One of the main reasons why the KIA invests in the UK is that the country has had a transparent economic policy over the financial credit crisis compared to the Eurozone. In addition, the KIA sees the UK as a relative safe haven compared to other Westernized nations.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

China Investment Corporation Interested in Western Infrastructure

Web Director — Mon, 28 Nov 2011 16:18:29 +0000

Lou Jiwei

Lou Jiwei, an executive at the China Investment Corporation (CIC) wrote in an op ed piece in the Financial Times. He stated the United States and Europe needs more investment in infrastructure, especially the United Kingdom. Many popular politicians on both sides of the pond agree that the West can spur some demand by repairing and building infrastructure. A number of the larger sovereign wealth funds are willing to fill the finance gap, but want domestic managers to share the risk. Infrastructure spending can be a good or bad thing for deficit-plagued economies depending on the funding sources. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]