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Friday SWFI News Roundup, October 10, 2014

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New Zealand Superannuation Fund Has Total Return of 19.36% for 2013-14

The New Zealand Superannuation Fund (NZSF) returned 19.36% versus the reference portfolio of 19.47% for 2013-2014. Led by NZSF CEO Adrian Orr, in the 2012-2013 period, the NZSF posted 25.83% in total return. NZSF Chairman Gavin Walker cautioned that returns over the last 5 years should not be considered normal returns.

In a press release Walker stated, “Fund returns over the last few years have been exceptional and are unlikely to continue at this level.”

SNB Not in Favor of Proposed “Save our Swiss Gold” Initiative

The “Save our Swiss Gold” proposal produced by the populist Swiss People’s Party demands that the Swiss National Bank hold at least 20% of assets in gold. Currently, 7.5% of the bank’s assets are in gold. Furthermore, the Swiss central bank has 1,040 tons of gold, 70% is stored in the country. Other measures of the initiative would make sure that all of the bank’s precious metal holdings must be stored in Switzerland. Lastly, the Swiss National Bank would be prohibited from selling any gold in the future. The central bank’s Vice President Jean-Pierre Danthine commented that the proposed policy would severely limit the bank’s ability to conduct monetary policy. Swiss elections for the proposed initiative are set for November 30, 2014.

Bank of Lithuania Invests in Chinese Short-Term Government Bonds

Earlier this week, the Bank of Lithuania announced its first investment in China’s capital market. A small portion of the bank’s foreign reserve assets were allocated to Chinese securities. The central bank received a US$ 100 million quota from the Chinese regulator and approval to invest in China’s interbank bond market. The bank already used the whole quota, investing in Chinese short-term government bonds, a bit more than 1% of official international reserves of Bank of Lithuania.

Singapore’s GIC Participates in Series E Round for Square

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Crown Property Bureau Moves Assets to Thailand King Under 2017 Law

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In December 2016, Crown Prince Maha Vajiralongkorn became King of Thailand, succeeding his father King Bhumibol Adulyadej who passed away in October 2016. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Three Successful Traits in Asset Management CEOs

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by Michael Maduell

In my frequent and vast interactions with chief executives of small-to-large asset management firms, I’ve witnessed a number of traits that successful firms – meaning growing and retaining assets under management plus getting real respect in the industry – are able to properly execute. Besides generating amazing returns and matching the right solutions for the asset owner clients, CEOs need to be advancing their firms. Of course, quality client service should remain front of mind for fund management firms. In this short piece, I will focus on three traits that successful fund managers tend to possess.

1. Abundant Charisma from Founders
What is memorable and what will stick in one’s mind? A cadre of asset managers possess charismatic chief executives. BlackRock’s Larry Fink, DoubleLine’s Gundlach and Rajiv Jain of GQG Partners are some prime examples that come to mind. DoubleLine is a relatively new player compared to BlackRock and already amassed over US$ 100 billion in assets. Being a founder of the fund management company also helps, as CEO hires (often bringing a book-of-business contacts) may tend to look elsewhere unless generously compensated.

Having an effective cheerleader CEO is essential in nurturing and growing a sustainable franchise in a monochromatic industry of imitators. Too often, CEOs of some asset management firms are pure “salespeople” – too pushy or fake, or a highly-bright number-cruncher with low or nil emotional intelligence.

2. Not Drinking Too Much of One’s Own Kool-Aid
“We are a data-driven, technology, ESG-focused, smart-beta, solutions-led provider of services.” Hey, 2018 did I get that right?

Yes, your stuff does not stink. Like a broken clock, many CEOs rely on the flavor of the year or grappling a playbook, beating the idea over the heads of pensions and sovereign fund clients and prospects. In the long-run – meaning maintaining assets over a lengthy period of time – I find it’s better to be more objective when discussing potential strategies. I’m talking about a healthy dose of informative marketing. However, being overly-transparent or even talking yourself out of the strategy is not what I am directly advocating. It is important to be realistic about the strategy or thematic idea, as the attractiveness of these concepts shift over time.

3. Stirring up Controversy – Strategically
Shaking the tree and stirring the pot – this trait can surely backfire if not properly executed. Being the brightest crayon in the box can work. Even virtue signaling – latching onto a social current – can work in some instances, but CEOs that can deliver impactful counter-culture statements that shock the conscience tend to draw attention – and capital. This might not be the best example; however, upon the ascendancy of Abraaj Group, the firm’s founder, Arif Naqvi, often commented to not describe countries like China, India, etc. as emerging markets but as global growth markets – then creating a comparison to Wall Street and its risks. Abraaj was able to raise a ton of capital, before its downfall stemming from early 2018.

Boards need to diligently examine the CEOs they select. Does the firm want to grow or hold the line for the planned dividend? My belief is that if you are not growing, you are decaying, as the world moves faster and faster.

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

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SWFI First Read, June 16, 2018

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State Street Names Maria Cantillon for Head of Sectors Solutions, EMEA

State Street named Maria Cantillon as head of sectors solutions for Europe, Middle East and Africa (EMEA). She will report to Liz Nolan, CEO of EMEA at State Street. Cantillon replaces Joerg Ambrosius who moved to another role at the firm. Previously, Cantillon was Global Head of Alternative Asset Manager Solutions at State Street.

Theranos Founder Elizabeth Holmes and Ramesh Balwani Face Federal Charges

Elizabeth Holmes, the founder of blood-testing company Theranos, is facing federal fraud charges. Also facing charges is Ramesh “Sunny” Balwani. Both individuals were indicted on charges that they engaged in schemes to defraud investors, doctors and patients, according to the U.S. Department of Justice (DOJ). They both face two counts of conspiracy to commit wire fraud and nine counts of wire fraud. These criminal charges were levied after Holmes had settled civil fraud charges initiated by the U.S. Securities and Exchange Commission (SEC).

Russian Investors Chopped Treasury Holdings in April

Revealed in a report from the U.S. Treasury, Russian investors dropped U.S. Treasury holdings in March 2018 from US$ 96.1 billion to US$ 48.7 billion in April 2018. Before March 2018, U.S. Treasury holdings by Russian investors remained steady in the US$ 100 billion range.

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