Australian Pension Report Shows Governance Changes on Horizon

The Cooper Review, releasing an interim report, suggests that greater trustee skill and levels of governance should be instituted in the island nation’s pension sector.

(December 17, 2009) – An Australian government-appointed panel’s proposals to tighten pension governance would have only moderate consequences for the nation’s retirement industry.

The Cooper Review, as it is called, has issued an interim report on Australia’s pension industry. In it, it suggests that governance standards at pension funds be raised to meet that of listed companies, and that trustees be held to a basic standard of knowledge and skills, as well as undergo performance appraisals on a regular basis.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

However, the report stops short of recommending that pension funds avoid securities lending—a hot topic after severe problems in 2008 – and does not recommend greater government involvement in directing trustees how to invest. Instead, greater transparency of risks for securities lending has been suggested. Overall, it recommends that the “twin peaks” structure of Australian pension fund regulation—where the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission have distinct responsibilities—be retained due to a lack of benefits from a single regulator.

The report also does not force smaller funds to merge with others, as some had expected, although it does suggest that small funds be forced to justify their independence in the face of economies of scale.

The Review’s final report is due June 30, 2010.

To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>

According to the latest Global Private Equity Barometer from Coller Capital, 75% of Asian and European private equity investors were unsatisfied, while the same percentage of North Americans were satisfied.

(December 10, 2009) – A new study suggests that Asian and European institutional investors are more weary of private equity investments than their North American peers.

According to the latest Global Private Equity Barometer from Coller Capital, 60% of European asset owners are very or slightly disappointed with the recent performance of private equity, while the same percentage of North American investors stated that they were “satisfied.” The figure for Asian limited partners (LPs) is even higher than that seen for European LPs, with nearly 75% claiming that they are disappointed.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

Overall, half of the Asian and European segment claimed that they had an unfavorable view of the industry, while only 28% of the North American segment has similar qualms.

However, all three groups see 2010 as a good vintage year for private equity, with 85% saying that this will be likely (a “good” or “excellent” chance), as opposed to only 2% who believe it to be unlikely. As a result, 70% plan to maintain their allocation targets for the asset class for the next 12 months.

While there is disagreement over performance and satisfaction, the three geographic groups agree that changes need to be made to the way LPs manage their private equity portfolios. Polled as a group, 60% plan to modify their risk appetite, while 50% plan to increase due diligence. Nearly 50% claim they plan to demand better reporting standards from private equity general partners, while 40% plan to enhance their internal team’s skill level.

The study makes one thing clear: Targets are simply targets. Investors realize, to a varying degree, that they likely will exceed or fail to meet these targets. According to the survey, nearly 45% of Asian LPs believe they will be below their stated targets, while more than 30% of Europeans agree. Seventy-five percent of north American funds, however, think that they likely will match or exceed their stated targets, implying—as much of the study does—that the North American private equity picture is a rosier one, at least for general partners searching for funding.

The survey includes responses from 108 global private equity investors, with 20% coming from Asia, 38% from Europe, and 42% from North America. To see the full report, click here .

To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>