Wednesday 26th November 2014
NEWS TICKER: TUESDAY, NOVEMBER 25TH 2015 - Morningstar has downgraded its Analyst rating for the Fidelity European Opportunities fund to Neutral. Jeremy Beckwith, director of manager research, Morningstar UK comments: “We have assigned the Fidelity European Opportunities fund a Morningstar Analyst Rating™ of Neutral. The fund had previously been placed Under Review following the fund’s management change announced in the summer. It was previously rated Silver. Alberto Chiandetti—who has gained most of his investment experience in the Italian market—took over from former manager Colin Stone on 1 October 2014. He is also responsible for two single-country strategies: Fidelity Italy since 2008, which has a Morningstar Analyst Rating of Silver, and Fidelity Switzerland since 2011, rated Neutral”. According to Beckwith: “This is Chiandetti’s first time running a European mandate and we expect to see him bring in relevant changes to the strategy. Over a full market cycle, he has proven able to execute his process well at the helm of Fidelity Italy; that said, his past results are not fully relevant for this product, given the differences in the investable universe and the opportunity set compared to the country funds. We have therefore assigned a Neutral rating to reflect the uncertainties surrounding the future of this strategy.” - Among the five China ETFs listed on Singapore Exchange (SGX), the three most active China ETFs in the 2014 year-to-date have been db x-trackers CSI 300 UCITS ETF, db x-trackers MSCI CHINA INDEX UCITS ETF, and United SSE50 China ETF. These first two are traded in US dollars, and the latter in Singapore dollars. These three China ETFs are synthetic ETFs that use derivative instruments such as swaps to track the reference index as compared to physical ETFs that hold the securities or assets of the reference index. These three ETFs generated an average 2014 year-to-date total return of 8.4% - The Straits Times Index (STI) ended +4.46 points higher or +0.13% to 3344.99, taking the year-to-date performance to +5.69%. The FTSE ST Mid Cap Index gained +0.21% while the FTSE ST Small Cap Index declined -0.47%. The top active stocks were SingTel (+0.26%), Olam Intl (-2.27%), DBS (+0.20%), ComfortDelGro (-2.71%) and CapitaLand (+0.30%). Outperforming sectors today were represented by the FTSE ST Technology Index (+1.14%). The two biggest stocks of the FTSE ST Technology Index are Silverlake Axis (+2.40%) and STATS ChipPAC (-1.11%). The underperforming sector was the FTSE ST Basic Materials Index, which declined -0.84% with Midas Holdings’ share price declining -1.70% and Geo Energy Resources’ share price unchanged. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (-0.77%), SPDR Gold Shares (+0.43%), STI ETF (unchanged). The three most active Real Estate Investment Trusts (REITs) by value were Suntec REIT (+1.58%), Ascendas REIT (+1.76%), CapitaMall Trust (+0.25%). The most active index warrants by value today were HSI23800MBeCW141230 (unchanged), HSI23600MBePW141230 (-3.23%), HSI24400MBeCW141230 (unchanged). The most active stock warrants by value today were DBS MB eCW150602 (-2.96%), OCBC Bk MBeCW150413 (+1.08%), UOB MB eCW150415 (+6.25%) - Inter-American Development Bank (IDB) is providing financing under a Regional Public Goods Programme (RPG) that will be managed by Caribbean Export Development Agency in its capacity as the Secretariat for the Caribbean Association of Investment Promotion Agencies (CAIPA. The IDB has provided US$900.000 to CAIPA to support several initiatives geared towards increasing foreign direct investment (FDI) into the Caribbean and will be implemented over a two year period - Mexico has posted record FDI of $35.2bn inflow in 2013, nearly double the level seen in 2012, mainly due to Belgian brewer Anheuser-Busch InBev's acquisition of Mexican beer giant Grupo Modelo, which brought in over $13bn, according to figures released by the economy ministry - Eight Italian regions have hired banks to manage a round of bond buybacks for them, the treasury said on Tuesday, in a move aimed at giving indebted local administrations more time to repay their loans. Abruzzo, Campania, Lazio, Liguria, Lombardy, Marche, Piedmont and Puglia have hired Barclays, BNP Paribas, Citigroup and Deutsche Bank to manage any offers to buy back their bonds.

Is trustee confidence in managing DB risks waning?

Monday, 23 July 2012
Is trustee confidence in managing DB risks waning? As Defined Benefit (DB) scheme sponsors and trustees in the UK work to put their schemes on a more stable footing amid continued market volatility trustees' confidence in their ability to successfully manage the DB risks facing their plans may be waning, according to MetLife Assurance Limited’s 2012 UK Pension Risk Behaviour IndexSM (UK PRBI).   http://www.ftseglobalmarkets.com/

As Defined Benefit (DB) scheme sponsors and trustees in the UK work to put their schemes on a more stable footing amid continued market volatility trustees' confidence in their ability to successfully manage the DB risks facing their plans may be waning, according to MetLife Assurance Limited’s 2012 UK Pension Risk Behaviour IndexSM (UK PRBI).  

As Defined Benefit (DB) scheme sponsors and trustees in the UK work to put their schemes on a more stable footing amid continued market volatility, scheme trustees’ confidence in their ability to successfully manage the DB risks facing their plans may be waning, according to MetLife Assurance Limited’s 2012 UK Pension Risk Behaviour IndexSM (UK PRBI).   The study of 89 sponsors and trustees analysed how each group viewed 18 investment, liability and business risks that affect their pension schemes, and assessed how well they believed they were managing those risks.

The overall index value of the 2012 UK PRBI,which measures the importance that sponsors and trustees ascribe to each risk, their perceived success at managing each risk and the consistency between the two,remained consistent from 2011 to 2012 at 79 out of 100. However, the Index value for trustees fell another two points year-on-year to 78 in 2012 from 80 in 2011 and 82 in 2012. Conversely, the Index value for scheme sponsors is steadily rising, increasing by two points to 80, from 78 in 2011 and 75 in 2010. These movements, taken together, account for the overall 2012 Index value remaining level.



The drop in self-reported success at managing several key DB-related risks, including Scheme Governance and Inflation Risk, helps to partially explain the inverse relationship of the Index values between sponsors and trustees over the past three years.  In 2012, trustees rated their overall success at managing risks a 4 or 5 (out of a scale of 1-5, with 5 indicating success) 77% of the time, down from 80% in 2011 and 83% in 2010.

“Constant regulatory changes appear to undermine trustees’ confidence, as evidenced by the fall in the reported success of Scheme Governance and Inflation Risk.  Increasing levels of uncertainty being generated by issues such as Guaranteed Minimum Pension (GMP) Equalisation and Solvency II for pension schemes are impacting trustees’ confidence in managing some of the critical risks facing their schemes. Where once there was a degree of certainty, the revisiting of GMP Equalisation by the Department for Work and Pensions now requires that trustees again reconsider and tackle this issue,” holds Wayne Daniel, chief executive officer of MetLife Assurance Limited. 

Funding deficits is the most important risk facing scheme sponsors and trustees for the second year in a row, according to the 2012 UK PRBI. The ranking of Funding Deficits as the most important risk for the second year in a row reflects significant fluctuations in scheme assets and liabilities, mainly as a result of the volatility in equities and rising bond prices. At the same time, schemes may have also seen their liabilities grow due, in at least part, due to corporate bond and gilt yields, and continued uncertainty around the Eurozone.

Scheme sponsors and trustees continue to face unprecedented challenges on the economic and regulatory front. Volatile markets, driven in part by the Eurozone crisis, have demonstrated how quickly and significantly pension liabilities (and funding deficits) can change. "As a result, we expect sponsors and trustees to pay even greater attention to the connection between investment strategies and the risks that impact a scheme’s funding status. Additionally, scheme sponsors and trustees should consider incorporating triggers for de-risking the scheme in order to protect it.,” adds Daniel.

To ensure the viability of their schemes and safeguard members’ benefits, sponsors and trustees, says the report, are continuing to closely monitor the Employer Covenant. This risk ranked second among trustees for the second year in a row, and third among scheme sponsors.  Interestingly, the Importance Selection Rating, or the number of times the risk was selected by respondents when presented alongside other risk factors, for Employer Covenant is rising considerably among scheme sponsors: from 41% in 2011 to 49% in 2012. This may reflect the increased focus among scheme trustees on the Employer Covenant following The Pensions Regulator (TPR) guidance issued in November 2010.

The results of the 2012 UK PRBI demonstrate that scheme sponsors and trustees are continuing, and strengthening, their focus on a handful of key risks.  The overall Importance Rankings for the top four risks remained consistent from 2011 to 2012.

2012 vs. 2011 UK PRBI Overall Importance Ranking

RISK FACTOR                   

2012 RANKING

2011 RANKING

Funding Deficits

1

1

Employer Covenant

2

2

Asset and Liability Mismatch

3

3

Meeting Investment Return Targets

4

4

Measurement of Technical Provisions/Liabilities

5

7

In addition, the range between the Importance Selection Rates for the most important risk and least important risks this year is 66 percentage points, compared to 57 percentage points in 2011. This continues the trend established in the inaugural UK PRBI in 2010. 

Scheme sponsors and trustees continue to move toward a co-ordinated holistic approach to pension risk prioritisation, according to the 2012 UK PRBI. The importance rankings between trustees and sponsors are aligned within one or two ranking spots for all but one risk factor:  Asset Diversification. Trustees rank this fifth in importance whilst sponsors rank it 10th.

More details on the 2012 UK PRBI can be found at: www.metlifeassurance.co.uk/knowledge-centre/research

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