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Q&A with Roger McIntosh, Head of Investments at LUCRF Super

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Roger McIntosh

Roger McIntosh, Head of Investments at LUCRF Super

This interview will appear in the 2Q Y2014 (July 2014) Superannuation World issue of the Sovereign Wealth Quarterly.

This is a Q&A with Roger McIntosh, Head of Investments at LUCRF

1. In the past five years, how has the Australian superannuation investor class evolved when it comes to institutional investing?

There has been an increasing level of sophistication in developing, implementing and evaluating strategies across all asset classes. Superannuation investors are more critically appraising the suitability of a manager’s approach in a whole-of-strategy context, not just in isolation. Investment managers are trying to align with superannuation investors’ strategy and aiming to position themselves as investment solutions implementers, rather than just providing products. The increased reporting and governance requirements in the regulatory regime has also increased the level of knowledge and importance of investment risk as a primary input into the construction of investment strategies and required enhanced investment risk management systems and processes.

Having a statement of ESG beliefs and incorporating this as part of the investment process is important as companies who better manage ESG issues will provide opportunities for enhanced long term investment performance.

2. Many U.S. public pensions heavily rely on external managers; do you see more of the large superannuation funds bringing investment capabilities internally or the reverse?

There will be some continuing increase in internal investment management, but the majority of funds will continue to rely on external managers.

The factors that lead to internalisation will be Fund dependent: the quality and experience of the investment team leadership; the degree of interaction and trust from the investment committee; an appropriate risk management framework and an objective performance measurement framework. Bringing investment management in-house cannot be justified purely from a cost basis as there has been long term pressure on investment managers fees to decline.

For larger funds, there is more movement towards increasing internal investment capabilities because of a perception of manager capacity constraint, particularly within the domestic equity market. The challenge will be ability to attract and retain sufficiently skilled staff in a competitive environment, not just front office staff, but the middle and back office support functions. I believe there will be a more hybrid approach with some functions managed internally based on strategy, research and asset selection and increasingly sophisticated control of tailoring portfolio exposures in conjunction with external managers implementing more customised strategies.

3. When selecting investment managers and partners, what criteria are essential to you?[ 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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