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Corporate Moves

Future Fund’s PE Leaders Leave to Start Their Own Firm

Veterans Steve Byrom, David Simons, and Jasmina Osmanovic look to model venture after Hamilton Lane of ROC Partners.

By Chris Butera

The $107.1 billion Australia Future Fund has gotten a shakeup, as three of its top private equity professionals have exited the nation’s sovereign wealth fund to start their own firm.

Veterans Steve Byrom, head of private equity; David Simons, director; and Jasmina Osmanovic, investment director, left the fund recently. They will be launching their private equity business in the near future, although there are few details about the new venture.

According to Investor Strategy News, the three are looking to model their business after another private firm, Hamilton Lane of ROC Partners.

Byrom had been with the fund since 2007. Simons and Osmanovic had worked there since 2008 and 2013, respectively.

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The Future Fund will begin to search for Byrom’s replacement next year. In the meantime, Stewart Tillyard, the fund’s head of unlisted property, will take the helm as acting head of private equity.

The sovereign wealth fund, which handles the assets of five of Australia’s public asset funds (Future Fund, DisabilityCare Australia Fund, the Medical Research Future Fund, and two Nation-building Funds), had a 14% allocation to private equity as of September 30. 

““We thank Steve, Dave and Jasmina for their important contributions and wish them all the very best,” a Future Fund spokesperson told CIO via email. “Stewart Tillyard, will take on responsibility for the private equity team and portfolio on an acting basis as we commence a recruitment process for a new person to lead the team. In the meantime, it is business as usual for the program which remains an important part of our diversified portfolio.”

Raphael Arndt, the Australia Future Fund’s chief investment officer, could not be reached for comment.

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Home > News > Research > US Corporate Pensions Will Likely Miss Return Assumptions
Research

US Corporate Pensions Will Likely Miss Return Assumptions

Investment performances miss mark for third time in 10 years.

By Michael Katz

The 100 largest US corporate pension plans will likely miss their expected return assumptions for 2018—only the third time in the past 10 years that has happened, according to a report from consulting and actuarial firm Milliman, Inc.

In November, an investment gain of 0.72% led to a $7 billion increase in the funded level of the largest 100 corporate pension plans in the US. This brings the year-to-date investment performance to a loss of 1.49%, making it less likely the plans will match or beat their expected return assumption for 2018, Milliman said.

“It’s looking likely that the Milliman 100 plans will miss their target investment returns for the third time since the financial crisis,” Zorast Wadia, co-author of the Milliman 100 PFI, said in a release. “On the other hand, interest rates have been rising for most of the year, primarily contributing to the year-to-date funded status improvement of $121 million. All eyes are now focused on where interest rates will end up at year-end.”

Pension plan liabilities improved by $1 billion in November as the benchmark corporate bond interest rates used to value the liabilities increased to 4.41% from 4.40%. As a result, the funded ratio of the Milliman 100 PFI increased to 93.7% as of Nov. 30, from 93.2% at the end of October. 

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Milliman said that under an optimistic forecast with interest rates rising to 5.06% by the end of 2019, and 5.66% by the end of 2020, with annual asset returns of 10.8%, the funded ratio of the pensions would climb to 110% by the end of 2019, and 127% by the end of 2020.  However, under a pessimistic forecast with a 3.76% discount rate at the end of 2019, and 3.16% by the end of 2020, with annual returns of just 2.8%, then the funded ratio would decline to 87% by the end of 2019, and to 80% by the end of 2020.

In its annual Corporate Pension Funding Study (PFS), Milliman reported that during 2017, the private single-employer defined benefit plans of the Milliman 100 companies made “significant funding improvements,” rising to 86.0% from 81.1% at the end of 2016. The funding deficit dropped by $72 billion, ending the year at $252 billion.

“Corporate plan sponsors made the strategic decision in fiscal year 2017 to contribute $62 billion to their plans, pushing 2017’s total assets to a record $1.55 trillion,” said the study. “This year’s contributions represent a 45% increase from the $42.6 billion contributed in 2016, and are tied with 2012 for the highest amount contributed to the Milliman 100.”

Milliman added that 17 of the employers contributing last year gave at least $1 billion, with seven of them contributing more than $2 billion.

“Soaring global equity markets contributed to very strong investment returns in 2017 with the average plan earning about 12.7%,” said Milliman. “Overall, investment returns added $175 billion to plan assets.”

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