People Moves Roundup | Chief Investment Officer

Värde Partners Names New Partners, Additional Deputy CIO

Värde Partners announced the appointment of Elena Lieskovska and Haseeb Malik to partner, and the promotion of Brad Bauer to deputy chief investment officer.

Based in London, Elena is head of European Financial Services, responsible for Värde’s private equity investments in specialty finance companies and related businesses in Europe. She joined the firm in 2008 and over the past decade has helped establish it as a leader in the consumer finance space, building large credit platforms.

Haseeb is head of Asia Corporate and Traded Credit. Based in Singapore since the office opened in 2008, he joined the firm in 2006 and helped build the firm’s presence in large corporate restructurings in the region. Most recently, he led the establishment of Värde’s local presence in India, a key market for the firm.

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Based in Minneapolis since joining Värde in 2007, Brad will relocate to London in the coming months. In addition to his new role as deputy CIO, Brad is a partner and global head of private debt, transportation and energy.

Brad joins Värde’s global CIO team, comprising Ilfryn Carstairs and Jeremy Hedberg, partners and co-CIOs, and Giuseppe Naglieri, partner, deputy CIO and global co-head of corporate and traded credit. With Brad’s move to London, Värde will have a CIO presence in each region, with Ilfryn in Singapore and Jeremy and Giuseppe in Minneapolis.

BMO Announces Appointment of Kristi Mitchem as CEO, BMO Global Asset Management

BMO Financial Group announced that Kristi Mitchem has been appointed CEO of BMO Global Asset Management (BMO GAM). She will report to Joanna Rotenberg, group head, BMO Wealth Management. Richard Wilson, CEO of BMO GAM since 2014, has chosen to retire. Mitchem’s appointment is effective March 18, 2019.

Mitchem has an impressive history of leading global teams across all major asset classes through collaborative partnerships with retail and institutional investors, and clients. She joins BMO from Wells Fargo, where she was CEO and head of Wells Fargo Asset Management. Mitchem also brings experience from State Street Corp., BlackRock, and Goldman Sachs.

The changes will position the wealth business for continued global growth and enable BMO to build on its strategic advantages. BMO also recently announced the creation of BMO Private Wealth Canada and Asia, another example of how BMO is unifying to provide best-in-class service to clients.

AMP Capital Creates Team to Facilitate Infrastructure Equity Co-Investments for Institutions

AMP Capital has established a dedicated global direct investments team in response to a growing preference for large institutional investors to gain access to infrastructure through direct equity investment.

The new function will oversee direct investments made alongside AMP Capital’s infrastructure equity funds, including consortium management, negotiation and pricing, deal syndications, fund co-investments, and separate accounts, focusing on delivering attractive investment solutions and supporting investors to achieve their goals.

AMP Capital has appointed Dylan Foo as global head of direct investments, to oversee the new global function as it grows this strategic pillar of its business. Foo is currently partner and head of Infrastructure Equity, Americas, overseeing origination, execution and asset management of infrastructure investments in the region. He will continue in his existing role, supported by the Americas team across offices in New York, Chicago, and Orange County, California, in addition to his new responsibilities.

Patsy Sandys, an associate director on the Infrastructure Equity team in London, will lead the Direct Investments desk in Europe, reporting to Foo.

Northern LGPS Appoints New Chair

Northern LGPS, formerly the Northern Pool, has appointed Councillor Paul Doughty as its new chair.Doughty will lead the £45 billion pool, one of Britain’s largest public investment funds, which comprises the combined assets of the Greater Manchester, West Yorkshire, and Merseyside local government pension schemes (LGPS).

He currently chairs both the Merseyside Pension Fund and the Local Authority Pension Fund Forum, which represents 79 local government pension funds with assets of over £200 billion.

Doughty begins his new role immediately and will be supported by Brenda Warrington, who chairs the Greater Manchester Pension fund, and West Yorkshire Pension Fund Chair Andrew Thornton.

He replaces Ian Greenwood, the former chair of the West Yorkshire Pension Fund, who died after a short illness in November.

Jupiter Fund Management’s Maarten Slendebroek Stepping Down as CEO

Jupiter Fund Management announced that Maarten Slendebroek is stepping down as CEO. The Board intends to appoint Andrew Formica as CEO and as a director of Jupiter with effect from that time, subject to customary regulatory approvals.

Maarten has agreed to remain in the business until May 1 to ensure a smooth leadership transition and handover.

Formica previously was the co-CEO of Janus Henderson Group plc and before that, CEO of Henderson Group plc between 2008 and the merger with Janus Capital in 2017. He was at Henderson from 1998 and held various senior roles, joining the company’s executive committee in 2004. Prior to being appointed chief executive, he served as joint managing director of the Listed Assets business (from September 2006) and as head of equities (from September 2004). In the early part of his career, he was an equity manager and analyst for Henderson. Formica was the deputy chairman of the board of The Investment Association until September 2018 and has served as a non-executive director of Hammerson plc since November 2015.

Dash Names Scott Patrick Chief Financial Officer

Dash Financial Technologies, the industry’s leading capital markets technology and execution provider, announced the addition of Scott Patrick as chief financial officer. Reporting directly to CEO Peter Maragos, Patrick will be responsible for leading financial operations and strategic planning for the firm.

Patrick brings 25 years of experience in financial services and financial technology from his previous roles as an investment banker, an equity research analyst, and a strategic communications advisor. He joins Dash from Brunswick Group, where he served as a partner, specializing in M&A transactions, IPOs and investor relations matters. Prior to Brunswick, Patrick was a managing director in the Financial Technology Group at investment bank GCA Advisors, and before that he spent over 10 years at Evercore Partners, most recently serving as head of Payments Investment Banking. He began his career at Morgan Stanley, where he worked for over 12 years, including in roles in M&A and as the firm’s lead equity research analyst covering the financial technology industry.

Tags: AMP Capital, BMO, Dash, Jupiter Fund Management, Northern LGPS, People Moves, Varde Partners

The funding levels of the top 100 US pension plans have risen, but their assumed rates of return are shrinking.

The aggregate funding ratio of the sizable institutions sat at 72.1% by the end of the first half of 2018, with median assets totaling $3.67 trillion, according to Milliman’s latest public pension fund study, released Thursday. The plans are up by an estimated 1.3 percentage points from last year’s study, and 4.4 percentage points higher than the 2017 study.

Despite this good news, the average plan did not perform well in the first half of last year due to market volatility, compared to the year prior. For example, Q1 and Q2 2018 measured negative 0.75% and 0.70%, respectively, returns while 2017 reported 4.29% and 3.06% respective gains in the same period.

Liabilities have also climbed higher than $5 trillion, reports Milliman.

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That said, the assumed rate of return for these pension plans has diminished. Since 2000, the average rate has fallen from 8.29% to 5.77%. Of the 100 plans involved in the study, 80 are assuming 7.5% returns and below. About 84 plans have lowered their assumption rates at least once during the surveys.

“We’re seeing that these plans have not really made much progress over the past four or five years in terms of funded ratios rising,” Rebecca Sielman, Milliman’s principal and consulting actuary told CIO, adding that the funding ratios have “bounced around a little bit in response to the investment market bouncing around” in 2018. “I think plans have faced a significant headwind, if you will, in terms of lower and lower interest rate assumptions, which have pushed up liabilities and therefore pulled down funded ratios.”

Milliman’s capital market assumption-based hypothetical asset allocation is 35% broad US equities, 15% foreign equities, 25% core fixed income, and 10% mortgages, and divides the remaining 15% evenly across real estate, high-yield bonds, and short-term investments. The plans were analyzed using a 2.5% interest rate.

Although funded ratio normally does not vary much by plan size, the 10 smallest plans are at the highest funding levels, averaging 81%. Additionally, the 10 smaller plans above that group experienced the opposite, at 55% funded, according to Sielman.

There is no correlation between either half of these 20 plans. Poor funded status has typically been a result of lackluster returns following the 2008 financial crisis and even weaker contributions paid from sponsors, which cause liabilities to surge.

“We still have significant unfunded liabilities in aggregate in what seems like a stagnant funded ratio in aggregate, but it’s really important to remember that the plans have been making a lot of progress in terms of lowering their interest rate assumptions to levels that are more appropriate given the long-term expected returns on their portfolios,” said Seilman. “That’s a painful process in terms of increasing liability and increasing contributions, but a necessary one.”

For these 100 massive plans, asset allocations remained essentially unchanged from 2017. The average 2018 portfolio held 48% in equities, 25% in private equity, real estate, and other investments; 23% fixed income; and 4% cash. The only differences from the year prior were fixed income (24%) and cash (4%).

“I’m sure that there have been smaller changes under the hood…but big picture we’re not seeing much change at all in the overall allocation,” Sielman said.

The study only measured the performance of the 100 largest public pension funds based on their most recent fiscal year ends.

Sielman stressed the importance of assumptions used for the lower return rates to calculate funding requirements being both strong and “not unduly ‘rose-colored.’”

“It’s important to have a solid basis for calculating liability so that we have a solid basis for funding the plans,” she said.

Tags: Assumed Rate of Return, Funding Status, Milliman, Pension, Rebecca Sielman