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Michael Maduell, President of the Sovereign Wealth Fund Institute

Michael Maduell, President of the Sovereign Wealth Fund Institute

This is the third year SWFI has constructed its Public Investor 100 list, a ranking of top public fund and government executives compiled by SWFI staff. This list (will be released soon) is intended to highlight executives who have had a notable impact on the industry and/or their specific organization. Coming up with the top #25 was a seemingly insurmountable challenge due to the uniqueness and influence of each person. We even had to change our minds midstream due to real-time events such as monetary policy, asset owner innovation, adoptive strategies and investment returns. The New Zealand Superannuation Fund, with its aptly titled “Kiwi” model, outperformed Yale’s endowment this June fiscal year. And Canadian pension giants like CPPIB, which netted 18.7%, trounced U.S. pensions in 2015.

2015 has put pressure on U.S. pensions to rethink how they interact with private equity and real estate managers. As financial media pundits yammer over alternative fees and disclosure, pension executives are stuck trying to hit their annual return hurdles, while making sure they are not getting ripped off by mendacious insiders. With that being said, larger U.S. plans demand action on co-investments, feeling neglected behind sovereign funds and Canadian pension giants. Texas Teachers’ made the bold move to open an office in London, an action unheard of with U.S. plans.

Steady Sovereign Fund Growth

When I started writing about sovereign funds in 2007, the institutional investor class barely surpassed the US$ 3 trillion mark. To the financial press, wealth funds were the hedge funds of the early 2000s. Yet, today, even with the rapid fall of oil prices and shrinking Asian surpluses, wealth fund assets stand at over US$ 7 trillion. This number is far below investment bank estimates of 2007. In May 2007, Stephen Jen (then at Morgan Stanley) penned a research paper “How Big Could Sovereign Funds Be by 2015,” the assumption was sovereign funds would reach US$ 12 trillion by 2015.

Decarb Diet

The topics of ESG and decarbonization of portfolios has gathered tremendous attention. Endowments like University of California and Yale Investment Office have been under political pressure to drop their carbon holdings. Heavily pitched and marketed, our Institute Fund Summit 2015 Europe in Amsterdam, reflects this adoptive trend of sustainable investing. Consultants and advisors have propagated terms like “stranded assets,” forcing asset owners to rethink what is really in their portfolios.

This article is written by Michael Maduell and his opinions are his own and not officially of the Sovereign Wealth Fund Institute.

Why BlackRock Angled the EU Toward a Massive Supranational Pension Fund

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BlackRock is the world’s largest asset management firm and the company wields tremendous political power whether operating in the United States, Mexico, and parts of Europe. Before the populist wave that led to Brexit, BlackRock bet large in Europe by increasing headcount and lobbying efforts. By 2015, BlackRock CEO Larry Fink proposed the formation of a cross-border personal pension fund for Europe. Fink was keenly aware of the Capital Markets Union project that was revealed in July 2014 by European Union Commission President Jean-Claude Juncker. For BlackRock, why compete in each eurozone country when you can possibly win a mandate for the whole pie of Europe. The European pension fund market is hyper-competitive for asset management firms. Other asset managers like Vanguard have lobbied Brussels over issues like the cross-border distribution of funds, but data shows that BlackRock is far more active than its U.S. peers.

EU’s Definition of PEPP

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Malaysia’s Federal Land Development Authority Seeks to Restructure

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Malaysia’s Federal Land Development Authority (FELDA), a government agency, is looking to restructure its investment holdings in a bid to reduce debt. The restructuring on the real estate side started in the middle of 2017. The government agency wants to lower its debts of 8.03 billion MYR (US$ 1.94 billion) down to 6.5 billion MYR. The restructuring could take over two years.

FELDA is seeking to dispose of assets which includes real estate in London. FELDA is an investor in student housing in London through its main unit called Felda Investment Corporation (UK properties owned by FIC UK Properties Sdn Bhd). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Former Iran Central Bank Governor Banned from Leaving Country

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Iran remains in a very fragile financial state as more Iranian bank loans appear to delinquent, while the currency continues to lose value against the U.S. dollar. State-run Tasnim news agency reported that Valiollah Seif, the former Governor of the Central Bank of Iran, is banned from leaving Iran. Seif is under investigation by the Iranian government over possible corruption in the currency market. Some of the central bank’s deputies have been arrested. Abdolnaser Hemmati replaced Valiollah Seif as central bank governor in July 2018. Valiollah Seif was dismissed from his post as governor.

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