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3 Considerations in Liquidity Management for Sovereign Funds

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Sovereign investors and central bank reserve managers continually monitor price trends in exports, commodities and other macro-level inputs, as these factors can have a material impact on liquidity management strategies.

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On the sovereign wealth front, some of these institutional investors have a wide range of liabilities depending on government policy, applicable withdrawal legislation, funding sources and other factors. For example, Norway’s Government Pension Fund Global (GPFG) has a rule that 4% of the fund’s assets can be used for the country’s national budget per annum. In 2015, 179.6 billion NOK was transferred from the GPFG to the national budget. These scheduled cash calls and flows between official institutions, as well as anticipating unexpected events, supporting monetary policy, emerging funding, or urgent cash calls, are vital considerations when constructing an optimal liquidity profile. Another example is China’s central bank and the application of currency stability goals.

1. Reliable Institutions and Partners

Sovereign funds are engaging in greater scrutiny when selecting external managers for cash strategies and/or deposits. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

White House Nominates Heath Tarbert for CFTC Chairman

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The White House announced Heath P. Tarbert will be nominated to serve as Commissioner and Chairman of the Commodity Futures Trading Commission (CFTC). Tarbert currently serves as Assistant Secretary for International Markets at the U.S. Treasury Department. Before joining the U.S. Treasury, Tarbert was a Partner at law firm Allen & Overy. Tarbert was confirmed by the U.S. Senate for his current Treasury post at 87 (yes) to 8 (no).

Upon Senate confirmation, Tarbert’s CFTC term would start on April 14, 2019 and last for five years. Tarbert is taking over from J. Christopher Giancarlo whose term ends in April 2019. Tarbert will need a U.S. Senate confirmation to take the head CFTC post.

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KIA Could Sell Stake in North Sea Energy Business

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The Kuwait Investment Authority (KIA), through its unit Wren House Investment Management, is nearing a deal to sell a 40% stake in its North Sea energy business to JPMorgan Asset Management. In July 2018, KIA closed on a deal to acquire oil and gas pipeline firm North Sea Midstream Partners from ArcLight Capital.

More details to follow –

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Pensioenfonds PGB Hires BMO Global for Equity Protection Strategy

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Pensioenfonds PGB is a Dutch multi-sector pension fund. PGB awarded a mandate to implement a protection strategy for its €12 billion equity portfolio to BMO Global Asset Management. PGB is a €26.5 billion fund. PGB has been using BMO Global’s responsible engagement overlay since 2017.

The Chief Investment Officer of PGB is Harold Clijsen.

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