Assets at Altitude: Which Investors Went to Davos?

(January 29, 2013) — Of the 2631 international financial celebrities who attended the World Economic Forum in Davos last week, only a tiny proportion – just 17 people – were institutional, asset-owning investors.

Barely 0.7% of attendees at the most prominent discussion on global finance represented well over $2 trillion dollars of “secret capital” – the potential plug for funding gaps and deficits around the world, say many economists – according to an attendee list seen by aiCIO.

Included in this diminutive group, which found itself sprinkled among hedge fund managers (Highbridge, Brevan Howard, Moore Capital) and investment bankers (Goldman Sachs, Citi, JP Morgan) were several of aiCIO‘s Power100.

Takahiro Mitani – President of the Government Pension Investment Fund, Japan – Number 16 on the Power 100 list and custodian of the largest retirement fund on the planet ($1.39 trillion in assets).

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Yngve Slyngstad – CEO, Norges Bank Investment Management, Norway – Number five on aiCIO‘s list and in charge of the Norway Government Pension Fund Global ($625 billion).

Mark Wiseman – President and CEO, Canada Pension Plan Investment Board, Canada – Number one on our list and in charge of C$166 billion.

Danny Truell – CIO, Wellcome Trust, United Kingdom. Number 15 on the Power 100 list and responsible for one of Europe’s largest charitable organisations (£14 billion).

Jim Leech, CEO of the Ontario Teachers’ Pension Plan, was in the Swiss ski resort, as were George C. Halvorson, chairman and CEO of the Kaiser Foundation Health Plan, and Michael Sabia, president and CEO of the Caisse de dépot et placement du Québec.

Kwang-Woo Jun, chairman and CEO of the National Pension Service in the Republic of Korea, and Lim Siong-Guan, group president, Government of Singapore Investment Corporation in Singapore also attended.

Bader M. Al Sa’ad, managing director at the Kuwait Investment Authority, and Jin Liqun, chairman of the board of supervisors at the China Investment Corporation, were also there.

Representatives from the Ford, Rockefeller, and United Nations foundations were in Switzerland for the summit, along with James Cuno, president and CEO of the J. Paul Getty Trust.

The top brass from investment and personnel consulting firms, Mercer and Towers Watson also made the trip to Davos.

Notable others included Hilda Ochoa-Brillembourg, founding partner, president, and CEO of Strategic Investment Group, who scooped the aiCIO Lifetime Achievement Award in December

Former aiCIO cover stars, Ray Dalio, CIO of Bridgewater Associates and Scott Minerd, CIO of Guggenheim Partners were welcomed to the highest city in Europe for the forum too.

Michel Barnier, commissioner for internal market and services at the European Commission, was also amongst the high altitude throng.

Related story: The Year of Secret Capital

Full-service shops are holding less appeal as institutional investors increasingly seek out specialty managers, according to the results of survey from Cogent Research.

(January 28, 2013) – Asset owners moved to invest with their own herds in 2012—pensions in one direction and endowments/foundations in another—a broad survey shows, and the biggest asset management firms are suffering for it.

Major institutional investors (with holdings of $20 million and above) entrusted 40% of their assets to the 41 largest managers in 2012, down from 45% the year prior, the survey by Cambridge, Mass.-based Cogent Research showed. The firm polled 650-senior investors from pension funds (43% of the sample) and non-profit institutions (57%).

Linda York, Cogent’s director of syndicated research and a lead author of the report, attributed investors’ shifting tastes in managers to their shifting tastes in assets.

“Across the board, we saw that respondents anticipate decreasing their holdings in US public equities,” York told aiCIO. “Overwhelmingly, the investors surveyed would only consider the leading asset management firms”—giants like Vanguard and J.P. Morgan—“to be strong in US public equities. They don’t consider those firms to be very strong in other places. Either investors are not aware of the capabilities of leading asset managers, or it’s not what they want.”

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Endowments and foundations seem to want just the opposite of the one-stop-shop management giants: small, niche firms with narrow mandates, which now control 54% of non-profit wealth. These institutions cut nearly a quarter of their average allocations to the big players between 2011 and 2012, from 40% to 38%.

“The thing that really stood out to me about these results was the divergent path that pensions and non-profits are taking in their approach to managing their asset pools,” York said. “Pensions are much more focused on de-risking, managing liabilities, and seeking competitive returns to meet future payouts. Non-profits, in contrast, are acting much more opportunistic. They’re looking for ways to capitalize on alternatives and seeking higher returns. If you’re one of these big firms, you really do have non-profits who are saying, ‘What new ideas do you have?’”