Temasek is doing the same: investing in companies directly, not taking them public, and holding them longer. This eliminates fees paid to investment bankers and other financial institutions like PE / Hedge funds.... Aivars Lode
For years, they’ve been some of the biggest and most profitable risk-takers among global pension funds. Now, as the rest of the world joins them in an increasingly desperate hunt for yield, the Australians are having to find new ways to bolster returns.
Australia’s A$2.9 trillion ($2 trillion) pension pool is the fastest-growing among the seven biggest economies and is projected to almost double in size to A$5.4 trillion in a decade. The rapid growth has largely been driven by a mandatory savings system and the fact that the funds have traditionally had a higher appetite for risk than their counterparts in other advanced economies.
That’s because 86% of their assets are tied to “defined contribution” plans where the savers bear the risk, not the employer. With a limited domestic pool of securities and debt, they have for years sought returns around the world. Australian funds allocated 16% of their investments on average in bonds last year, compared with 60% in Japan and 53% in the U.K., according to data from global risk adviser Willis Towers Watson Plc.
Now, funds globally are grappling with $14 trillion of negative-yielding bonds, with only 1% of the $56 trillion investment-grade bond market yielding more than 5%. As big funds from G-7 nations muscle in on the higher-risk territory in a desperate search for yield, many Australian funds are tapping ever more exotic ways to service their clients.
No comments:
Post a Comment