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S&P Dow Jones Indices Launch Smart Beta ESG Index

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Environmental, social and governance (ESG) and factor-based investing are two themes gaining traction among institutional investors. Pension investors like APG incorporate ESG into its investment criteria and process. On March 30th, S&P Dow Jones Indices launched a smart beta ESG index. The DJSI Ethical Europe Low Volatility Index combines two investment themes into a singular index. The DJSI Ethical Europe Low Volatility Index will measure the performance of the 50 least volatile stocks within the Dow Jones Sustainability Europe Index. The index will exclude alcohol, tobacco, gambling, armaments and firearms and the Adult Entertainment Index.

Sovereign wealth funds like the Kuwait Investment Authority (KIA) are prohibited from investing in alcohol and gambling stocks, and given the interest in factor-based investing, it could attract both Gulf sovereign funds and Dutch pensions. Furthermore, sovereign funds like the New Zealand Superannuation Fund (NZSF) believe ESG factors are material in achieving large investment returns – according to reports.

S&P Dow Jones Indices has licensed the index to Commerzbank AG.

Shaktikanta Das Named as New CB Governor for India

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The Indian government named Shaktikanta Das as the new Governor of the Reserve Bank of India. He will be the 25th governor to lead the central bank. Das is India’s former economic affairs secretary who stepped down in May 2017.

Das replaces Urjit Patel, who stepped down as central bank governor for “personal reasons.”

Urjit Patel had been arguing with India’s finance ministry on matters such as easing lending policies versus what the appropriate size of foreign reserves should be.

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UBS and APG Form Japanese Residential Property Venture

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Long horizon institutional investors are keen on taking advantage of appealing underlying fundamentals in select Japanese residential submarkets that have experienced population growth versus rural areas. The housing market in Tokyo has decoupled from the rest of Japan due to attractive demographics and low interest rates. Real estate valuations for Japanese housing in Tokyo is still at a distance relative to the very-much inflated market of the late 1980s. UBS Asset Management Real Estate & Private Markets business and APG Asset Management, which oversees the assets of Stichting Pensioenfonds ABP, formed a new property joint venture to invest in residential properties in Japan. UBS Asset Management will manage the fund and partnership, while APG will play a strategic role. APG will contribute US$ 175 million into the venture.

This platform will pursue a build-to-core investment strategy with some allocation to the reconfiguration of income-producing operating assets in cities such as Tokyo and Osaka.

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GIC Sells 2 Chifley Square to Charter Hall

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Singapore’s GIC Private Limited sold a 100% ownership stake in a large building in Sydney, 2 Chifley Square, for A$ 98.5 million to the Charter Hall Prime Office Fund, a wholesale real estate fund. Charter Hall Group owned the building next to Chifley, the Gresham building at 167 Macquarie Street.

Advisors for the transaction are Colliers International and KPMG Real Estate Advisory.

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