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Exploring the Best Business Schools for Asset Owner Executives

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The full out ranking will be released in concert with the April issue of the Sovereign Wealth Quarterly.

SWQ-Q1Y2015-coverI often speak to young finance graduates about how to succeed in a career in investment management and what career options are available. This got my wheels turning – how have these captains and chiefs of pension funds and sovereign wealth funds reached their positions? Personality, ambition, drive, integrity, yes, these traits are essential. But what about education? It seems, in most cases, a minted degree from a prestigious educational institutional like Harvard or Oxford, is all but a necessary prerequisite for a successful career in investment management. These types of institutions tend to open the doors for coveted internships and first jobs. These first jobs, in turn, pave the way for more responsibility and advance the careers of young professionals.

I, however, unlike many of my peers in this industry, did not attend a fancy Ivy League school. Instead I matriculated into Sacramento State University – at the time dubbed a commuter school. However, this commuter school is a funnel to the largest pension fund in the United States – CalPERS. Upon graduating, the investment job options in Sacramento were fund accounting at Investors Bank & Trust (now State Street), Franklin Templeton, CalPERS or CalSTRS. I ended up taking a CA state employee exam, was ranked and landed a job at CalPERS. This gave me a taste to the complex world of institutional investors.

Best Business Schools – Public Institutional Investors

Over the past three months, SWFI’s research team has compiled, analyzed and assembled a ranking of the top business schools for asset owner executives. In this April issue, we will explore the rankings and see which universities will groom the next leaders in the world of sovereign wealth fund and pension investment executives, which universities will make the ranking and which will own the #1 spot?

The Importance of Membership

Lastly, I would like to highlight our growing SWFI membership program which is attracting organizations that conduct business with the largest asset owners on the planet. This program has been designed to foster greater collaboration, access to information and networking among participants in the world of public institutional investors. Many of our members have enjoyed great success sharing thought leadership at our events and on our website. If your organization wants to get involved, please feel free to reach out to us.

We would be happy to welcome more peers to enter into a dialogue with this large and influential market segment.

The views in this article are expressed by Michael Maduell.
Michael Maduell is President of the SWFI.
www.swfinstitute.org

SWFI First Read, January 18, 2018

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Celgene Eyes Juno Therapeutics

Celegene Corporation is in discussions to buy Seattle-based Juno Therapeutics. Juno Therapeutics has backers which include the Alaska Permanent Fund Corporation (APFC). Celgene has roughly US$ 12 billion in cash and already has a relationship with Juno Therapeutics.

Auckland International Airport Sells Down Airport Holdings in NQA and Cairns

Perron Investments and The Infrastructure Fund, current investors in North Queensland Airports, which includes Cairns Airport, agreed to acquire Auckland International Airport’s 24.6% stake in the holding entity for A$ 370 million. Perron Investments is the privately-owned investment entity of Australian billionaire Stan Perron.

Pemex and Mitsui in Final Talks on Tula Project

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Apple’s Ginormous Corporate Cash Pile Plans to Come Home

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The positive economic effects of U.S. President Donald Trump’s tax reform have already altered the financial behaviors of major U.S. companies such as Wal-Mart Stores, Apple Inc. and AT&T.

In response to the tax law reform, many American businesses, large-to-small in annual revenues, have issued bonuses, granted awards and signaled plans to increase capital expenditures in the United States. For example, Apple announced plans to give its employees US$ 2,500 each in stock awards. A key section of the new U.S. tax reform law includes a provision for firms to take advantage of a one-time payment of 15.5% on repatriated funds down from the 35% rate.

Initial Plans

With the Dow Jones Industrial Average (DJIA) reaching new highs and the tax reform deal signed into law, Apple revealed they would invest US$ 350 billion into the United States economy over a period of five years, as they repatriate massive piles of money from overseas. The iPhone maker estimates they will payout roughly US$ 38 billion in tax payments from the overseas repatriation – thus shifting back some US$ 245 billion out of the US$ 252.3 billion it has held offshore. Apple also plans to spend an estimated US$ 30 billion in capital expenditures over the next five years, with roughly US$ 10 billion in U.S. data centers, according to the company. Apple has plans for 20,000 more jobs to create. The company that was once led by Steve Jobs had faced substantial criticism in the press over outsourcing its manufacturing to China to avoid paying U.S. taxes and lower manufacturing costs. Many of those facilities in China had labor issues such as environmental concerns, slave-like wages and extremely long work hours.

“We believe deeply in the power of American ingenuity, and we are focusing our investments in areas where we can have a direct impact on job creation and job preparedness,” said Apple CEO Tim Cook in a statement on January 17, 2017. He added, “We have a deep sense of responsibility to give back to our country and the people who help make our success possible.”

Liquid Financials and Fixed Income Changes

The sales growth of the iPhone has been a major factor in the growth in Apple’s cash pile. In 2006, Apple moved to act, forming a subsidiary in Nevada to manage investments, initially starting with around US$ 13 billion to manage. Nevada has no corporate income tax and no capital gains tax. Apple manages its investments through an outfit in Reno, Nevada called Braeburn Capital Inc. (Braeburn is a type of Apple), a subsidiary of Apple. Apple also employs some 40 to 50 external fund managers to handle the massive portfolio, according to sources. Braeburn has tried to reduce money management costs by using more separate accounts, while reducing dependence on money market funds.

As of September 30, 2017, Apple has a large investment portfolio worth an excess of US$ 300 billion, with US$ 194.714 billion in long-term marketable securities. Some US$ 128.645 billion are in current assets, with US$ 20.289 billion in cash and cash equivalents.

Focusing on the investment portfolio, some US$ 152.724 billion is held in corporate securities, with US$ 55.245 billion in U.S. Treasuries. Most of the portfolio is held in fixed income investments, including mortgage-backed securities – generally mandating investments be investment-grade and the avoidance of losing principal. Since 2012, Apple has been hoarding more corporate debt, rivaling some bond funds. Only about US$ 799 million are held in mutual funds (non-money market). Apple is also a major buyer of commercial paper across the globe. For example, the company participated in a US$ 500 million issue of 3-year floating notes from Hyundai Capital Services. The tech giant even uses derivatives to hedge against currency and interest rate movements.

The Old Scheme Ends

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CPPIB Partners with Lendlease on £1.5 Billion U.K. Build-to-Rent Venture

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The Canada Pension Plan Investment Board (CPPIB) has announced the launch of a £1.5 billion venture with Australian listed construction giant Lendlease Group centered around the development of build-to-rent private housing in the United Kingdom. The new infusion of capital will bolster the £800 million already committed to various projects in the Britain’s housing sector by Lendlease, which will develop, construct, and manage homes built through the partnership.

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