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SWFI First Read, July 4, 2016

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GPIF Likely Had a Rough Start into Equities for 2015

Japan’s Government Pension Investment Fund (GPIF) may have lost more than ¥5 trillion in its fiscal year 2015. If this information holds true, it would be the first loss for GPIF in five years. The Japanese government will release the official data on July 29, 2016, after the July 10 Upper House election.

Infrastructure Fund of Deutsche Asset Management Acquires 50% Stake in Akiem

Deutsche Asset Management, on behalf of its second European infrastructure fund, purchased a 50% stake in Akiem, the second largest locomotive leasing business in Continental Europe, from Ermewa Group. The transaction will create a joint venture with Ermewa Group with the long-term view to support the growth of Akiem. Akiem was created in 2008 by French National Railways (SNCF) and wants to expand its position in the European freight locomotive leasing market. Ermewa Group is SNCF Logistics’ asset management subsidiary. Akiem also secured a €125 million loan from Germany-based HSH Nordbank.

Kuwait Seeks to Raise $9.9 Billion Internationally

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Should Pension Giants Still Back Low-Vol Strategies?

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As occidental central banks cautiously signal a retreat from loose monetary policy, will there be greater bouts of volatility in the near future? The low-volatility trade has worked like magic – post the global financial crisis.

The early February sell-off rankled the feathers of U.S. pension trustees, sending plausible-sounding studies in low-vol strategies to the toilet. CBOE’s Volatility Index, or VIX, closed high during the period of market mayhem. For CIOs, should the selling of volatility continue, or should the trade be nixed?

Selling risk or volatility has been profitable for a cadre of U.S. pensions as they sought yield in a low interest rate world of quantitative easing. The falling of interest rates to near zero, zero and even negative in some countries, forced asset owners to rethink yield strategies to help pay for liabilities such as pensions, insurance claims or college expenditures. Public pension funds in the United States and even in Europe have augmented investment proportions in real estate, credit and private equity at the expense of lower-yielding bond instruments over the past 20 years. Investment giants like CPPIB and the Abu Dhabi Investment Council have participated in selling off risk via investments in the reinsurance industry, while smaller pensions have utilized option strategies.

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Temasek Invests in Shaver Company Harry’s

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Harry’s, the subscription shaving company that is taking on companies such as Gillette, which is owned by the multi-national corporation Procter & Gamble, has raised US$ 112 million in a new round of financing.

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New CEO at Dubai Holding

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In early February, Dubai Holding LLC, an entity that once oversaw an aggressive Dubai International L.L.C. buyout player, hired a new chief executive officer. Dubai Holding hired Amit Kaushal as CEO, who replaces Edris Alrafi.

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