All Aboard the World Cup (Investment) Bandwagon

(June 13, 2014) – Football’s World Cup—soccer, if you prefer—kicked off last night and financial services companies have wasted no time in finding spurious ways to link their research to the tournament.

After Goldman Sachs last week launched a lengthy report into the economic and political statuses of all 32 competing nations, the bar had been set quite high.

Research firm Preqin has arranged 11 facts about Brazilian alternative investments into a 4-3-3 formation to illustrate the host nation’s strengths—and weaknesses—in hedge funds, real estate, infrastructure, and private equity.

These nuggets of knowledge include: Brazil-based hedge fund managers are responsible for $52 billion in assets; there are 61 private equity funds focused on Brazil currently in the market; and Brazilian pension funds with an allocation to hedge funds invest on average 4.5% in this asset class.

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Elsewhere UK-based consultancy Punter Southall has compared England’s chances of lifting the coveted Jules Rimet trophy to important longevity statistics.

“England have as much chance of reaching the World Cup final in the famous Maracana as a 65-year old man has of living to 100,” wrote Martin Hunter, senior consultant at Punter Southall Transaction Services. Spoken like a true actuary.

Turning to the prospect of penalty shoot-outs, Hunter said “the odds of an ‘average’ World Cup penalty taker achieving [a 100% conversion rate] are equivalent to a 65-year old man surviving until the age of 118”. As Hunter also points out, as the world’s oldest man died on Sunday aged 111 and the oldest ever male only made it to 116, “it may be wise to hang on to your cash”. aiCIO certainly won’t be betting the Christmas party money on it.

Stéphane Barthélemy, a senior portfolio manager at State Street Global Advisers, is obviously not getting in the carnival mood. Despite all the hype about new investments in Brazil’s infrastructure in anticipation of both the World Cup and the Olympic Games in Rio de Janiero in 2016, Barthélemy simply says: “With some key economic indicators already showing a decline, the event is unlikely to have anything more than a marginal economic impact on the Brazilian economy.”

Past footballing victories are no guide to future economic performance, in other words.

(June 13, 2014) — David Neal, the CIO of Australia’s sovereign wealth fund, has been appointed managing director of the A$100 billion pot.

In August, Neal, who has lead the fund’s investment since 2007, will take over the top role made vacant following the resignation of Mark Burgess in September 2013. In the interim, the Future Fund’s CFO, Paul Mann, will continue to stand in as acting managing director.

“David is a world class investor and leader and the search process confirmed that he was the best qualified person for the role of managing director,” said Peter Costello, chairman of the Future Fund Board of Guardians and former Australian Treasurer. “He has played a pivotal role in establishing the fund, building its credibility, and delivering strong returns for Australia.”

Neal joined the fund at inception, initially as an advisor to the government in 2006 while head of investment consulting at Watson Wyatt in the country.

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He consulted on and guided core aspects of governance, mandate, investment philosophy, and implementation. In 2007, he was appointed CIO and has since led the fund to grow from A$42.6 billion.

Neal was ranked in second place in aiCIO’s list of leading investors—the Power 100—in 2013.

The promotion leaves an opening at the top of the fund, which has begun a search for a new CIO in accordance with Australian Public Service recruitment requirements.

Over the past 12 months, the fund has appointed several leading sector specialist to its staff roster, including the former hedge fund chief at the California Public Employees Retirement System.

To discuss the burning issues of the day with the Asia Pacific region’s top investors, join us on October 30 in Melbourne for aiCIO’s fourth annual CIO Summit Australia.

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