He said this would depend on pension funds’ future choices, such as their pensions target and the desired level of risk.“Smaller financial buffers would create more potential for better investment results, but would also increase risks,” the CEO said. Van Olphen indicated that APG’s preparations for the introduction of a new pensions system included a focus on simplification of pension arrangements.“During the past 40 years, collective labour agreements and transitional measures have created an accumulation of well-meant schemes and exceptions, which have caused complexity, costs and risks,” he said.“Together with our pension fund clients, we are now trying to push back the multitude of arrangements.”APG carries out the pensions administration for nine pension funds in total, including the €403bn civil service scheme ABP.In October, ABP agreed with workers and employers at the Ministry of Defence that it would replace the final salary scheme for defence workers with pension benefits linked to employees’ average salary, from 2019. Pension funds’ returns could suffer if, in a new Dutch pensions system, their financial buffers were not allowed to temporarily turn negative during times of economic stress, Gerard van Olphen, chief executive of the €453bn asset manager APG, has warned.The Dutch government has said that pension funds’ financial buffers must remain positive at all times as part of a new system currently being negotiated. APG’s CEO said this meant schemes would have to implement rights discounts earlier.“The risk would be that pension funds would want to increase their focus on certainty, which would limit their investment options,” he said.In an interview in IPE’s Dutch sister publication Pensioen Pro, Van Olphen said that a new pensions system with less concrete promises and less fixation on schemes’ funding ratios would in principle offer more freedom for investment, as well as potential for improved returns.
Recent research conducted by investment consultancy bfinance shows that rather than a slowdown in manager search activity, the first quarter of the year brought a rise in new mandates launched by the firm’s clients.This was particularly true in private markets, which represented 52% of all searches initiated in the quarter.The data is from a recently completed quarterly report assessing how different diversifying strategies have performed in Q1 2020, alongside equity, fixed income and private markets.Most equity searches in 2019 had a quality or defensive undertone and these styles were strongly rewarded in Q1: a composite of quality-focused active equity managers outperformed the MSCI World by almost 8% and also beat quality-tilted indices, the research showed. Private markets – which include private equity, real estate, infrastructure, private credit and others, accoding to bfinance – represented 43% of all searches initiated in the 12 months to 31 March 2020, and a record 52% of those initiated in Q1.“Indeed, Q1 has not only seen a surge in private markets activity but a surge in search activity overall,” bfinance said. The quarter saw 32% of the year’s new mandates, and the number of searches was up 17% against Q1 2019.“This activity falls into two main categories: investors proceeding with their previous plans across all asset classes despite the COVID-19 turmoil and investors seeking to position themselves appropriately for a new environment, although the latter is still at a very early stage and we have not yet seen activity based on terminations,” the firm said.It added: “Private markets strategies are a logical beneficiary of current conditions, given the historically outstanding results of post-crisis vintages and the lower sensitivity to market timing: the date of the commitment does not determine the date of entry, since – depending on the strategy – it can take months or years for money to be deployed.”Investors await valuation “capitulation” in private markets, with the buyer-seller expectation mismatch likely to take a further one or two quarters to resolve, bfinance disclosed.The study has found that it was a ”rough quarter for investment grade credit managers who struggled to beat their benchmarks due to high credit risk exposure”. Only 32% of European active managers beat the benchmark in March, as did 40% of US active managers.High yield bond managers, on the other hand, benefited from being conservatively positioned relative to their benchmarks, the consultancy found.The research also showed that multi asset strategies continue to dominate new mandates in the liquid alternatives sector, in part due to the trend towards “outcome-oriented” or “sector-agnostic” manager searches.Certain sectors within multi asset showed impressive resilience in Q1, with the global absolute return strategy (GARS) cohort down just 2.1%.Setter Capital survey shows managers expect a 18.5% decrease in fundraisingAdvisory firm Setter Capital has produced a special report that shows that fund managers expect fundraising in 2020 to decrease by 18.5% from the record level raised in 2019.Debt-related fund managers were the most optimistic, as they expect fundraising to increase by 5%, while venture managers felt it would decrease by 29.1%.The firm’s report summarizes the results of a 12-question survey completed by global managers of alternative investment funds conducted in mid-April 2020.“Given the recent market turbulence, we wanted to ascertain the likely effects the coronavirus pandemic will have on private market fund investors and managers,” the firm stated.Setter Capital asked general partners (GPs) the same questions that GPs, limited partners (LPs), and secondary buyers and sellers have asked the advisory firm directly relating to fundraising and capital calls under the current volatile climate.The firm received responses from 72 fund managers, who agreed to share their confidential views.According to the research, 94% of respondents thought “we are heading into a recession”, while only 1% were unsure and 4% thought a recession would be avoided.Results also showed that 69% of respondents expected public markets would retest March lows, sometime in the next six months, and respondents predicted that the public markets at the end of 2020, would be down 12.6% from the start of the year.Respondents on average felt capital calls would not change much in the coming nine months, as they estimated a 0.7% decrease versus the prior nine months.Debt-related fund managers were the exception, as they expected capital calls to increase by 20% on average, the study revealed.Over the next nine months, 35% of all capital calls would expected to be used to support existing portfolio holdings and the balance to make new investments, it showed.While this is the average across all strategies, venture capital (VC) fund managers expected 48.9% of capital calls would be used to support existing holdings, while buyout funds expected that figure to be 28.7%.The study also showed that respondents expect distributions to fall 34.3% over the three quarters, as compared to the preceding nine months.VC fund managers were most bearish, as they estimated distributions would drop by 43.5%, while debt-related fund managers felt they would only drop by 22.5%.Setter Capital also found that fund managers, across the board, expected an increased need to tap the secondary market over the next nine months, as an alternate source of financing and liquidity.To read the digital edition of IPE’s latest magazine click here.
It might be possible to reverse permanent brain damage induced by stroke, a USC-led study published on Monday has found.Funded by the National Institute of Neurological Disorders and Stroke, the study was carried out by the Zilkha Neurogenetic Institute at the Keck School of Medicine. It was released in Nature Medicine, a medical journal specializing in “basic findings that have clear implications for disease pathogenesis and therapy to the earliest phases of human investigation,” according to the journal’s website.“This USC-led animal study could pave the way for a potential breakthrough in how we treat people who have experienced a stroke,” said Jim Koenig, a program director at the NINDS. “If the therapy works in humans, it could markedly accelerate the recovery of these patients.”An estimated 800,000 people have a stroke every year, according to the Center for Disease Control. Seventy percent of those affected experience some degree of neurological damage such as paralysis or deterioration of muscular tissue. The study identified a protein that stimulates damaged neural stem cells to become functional again. Senior author of the study, Berislav Zlokovic, along with the rest of the research team, identified the protein as “3K3A-APC, a variant of the human protein ‘activated protein C,’” according to a USC News press release.Zlokovic is the founder of ZZ Biotech, a company founded in 2006 to develop innovative treatments for neurological diseases.“We showed that 3K3A-APC helps the grafted stem cells convert into neurons and make structural and functional connections with the host’s nervous system,” Zlokovic said in an interview with USC News. “No one in the stroke field has ever shown this, so I believe this is going to be the gold standard for future studies.”Zlokovic and his fellow researchers aim to start with the second phase of experimentation. They will be testing whether their findings, which were studied using mice, will be successful in human trials. Should they succeed, they plan to expand the uses of the treatment beyond strokes to other neurological diseases.