The total deficit of FTSE 100 pension plans fell by £8 billion ($15 billion) to £42 billion from Oct. 1 to Oct. 30, a reduction of 16% in a month and the second lowest in the past four years, according to an analysis by Watson Wyatt Worldwide. The funds were boosted by robust equity markets and rising bond yields. The previous low was in £34 billion on April 30. "Shares are now above the level they were then, but bond yields, which are used to determine liabilities under IAS 19, are still below their recent peak," Stephen Yeo, a senior consultant at Watson Wyatt, said in a statement.
NEWS BRIEFS: Funding improves for FTSE plans
U.S. educational endowment returns averaged 10.9% for fiscal 2006, up from 9.7% a year earlier, preliminary results of the 2007 Commonfund Benchmarks Study of Educational Endowments show.
Pennsylvania SERS will invest up to $320 million in private equity and venture capital funds, confirmed Bob Gentzel, spokesman for the $30 billion fund. The fund will make follow-on commitments to three private equity funds: up to $125 million to Hellman & Friedman VI; up to $80 million to AXA Secondary Fund VI; and up to $50 million to Providence Equity Partners VI. It will also make new investments in three venture capital funds: up to $30 million to Sofinnova Venture Partners VII; up to $20 million to VIMAC Ventures I.T. III; and up to $15 million to InterMedia Partners VII.
The system will also make a follow-on commitment of up to $25 million to BPG Investment Partnership, a real estate fund. Funding for all will come from cash; final dollar amounts are pending contract negotiations.
The SEC is investigating 27 mutual fund firms for possibly accepting kickbacks from Bisys totaling hundreds of millions of dollars, said Randall Lee, the agency's Pacific regional director. He declined further comment. The new investigation follows the $21.4 million settlement the SEC reached in September with Bisys Fund Services. The SEC had alleged that Bisys rebated a portion of its administrative fees to the 27 fund companies to ensure they would recommend retaining Bisys as the fund administrator. Amy Conti, spokeswoman for Bisys, said, "Bisys Fund Services terminated the agreements in question. Employees involved with those agreements were either terminated or disciplined."
Barclays Capital's principal investing and private equity unit bought a 40% stake in NGP Energy Capital Management, a private equity firm specializing in energy investments. Barclays did not disclose the purchase price. The move is expected to strengthen Barclays' commodities business and help expand its U.S. footprint in private equity, Bob Diamond, president of parent company Barclays PLC, said in a news release.
RREEF closed its Real Estate Opportunities Fund II at $1.6 billion, according to a news release. The fund invests in global real estate and real estate-related assets such as joint ventures, loan portfolios and operating companies. The original target was $1.2 billion, said Mayura Hooper, a spokeswoman for RREEF parent Deutsche Asset Management.
One investor in fund is the $148.4 billion California State Teachers' Retirement System, Sacramento, which committed $300 million in March.
BATON ROUGE, La. — The Louisiana State Employees' Retirement System returned 11.9% for the fiscal year ended June 30, confirmed Byron Henderson, spokesman for the $8 billion plan. The expected minimum return was 8.25%.
COLUMBUS, Ohio — The Ohio State Teachers Retirement System returned 13.6% on its investments for the year ended July 1, bringing total assets to $65.1 billion. The plan is 76% funded.
NEW YORK — Venture capitalists invested $6.2 billion in 797 deals in the third quarter, according to the PricewaterhouseCoopers/National Venture Capital Association's MoneyTree Report, based on data from Thomson Financial. That's down from $6.8 billion invested in 907 deals in the second quarter, but still represented the third consecutive quarter over the $6 billion mark, the report said. "We are at a point in the investment life cycle where many venture capitalists are deploying fresh funds that have been raised within the last 18 months or so," Mark Heesen, NVCA president, said in a news release. "VCs are finding themselves at the beginning of a fairly long runway, betting more on those seed and early stage companies that they believe will have the most promise five to seven years from now."
BOSTON — Evergreen Investments appointed State Street Corp. to provide investment manager operations outsourcing services — including trade matching and confirmation, data management, reconciliation, performance measurement and portfolio record keeping — for more than 2,500 portfolios representing $150 billion in assets, according to a State Street news release. As a result, 60 Evergreen employees are transferring to State Street.
NEW YORK — The Segal Co. acquired Irwin Tepper Associates, a consulting firm that specializes in asset-liability analysis for defined benefit plans and other employee benefit programs, said Mary Feldman, spokeswoman for Segal. Irwin Tepper, the founder and president of Irwin Tepper Associates, joined Segal as senior vice president and asset-liability modeling practice leader.
WASHINGTON — International Finance Corp. awarded a grant to develop an index of emerging-market companies based on their environmental, social and corporate-governance performance. The index will be created by Standard & Poor's, CRISIL — S&P's majority-owned securities ratings affiliate in India — and KLD Research & Analytics, a social and environmental investment research company. The group plans to create a pilot index for India, comprising major Indian companies that meet certain ESG criteria, and market it to local and international investors, Noel Friedman, KLD managing director of research products, and Martin Winn, S&P vice president-communications, said in separate interviews. If the group can develop the new index into a viable product, it plans to expand its work to develop such ESG indexes in other emerging markets, they said. "We haven't set any asset goals and we haven't determined specific measures of success," Mr. Friedman said. But viability would include getting the index licensed for investment and benchmarking products and selling research, he added. IFC, an investment unit of the World Bank, is providing $250,000 for the project, which Mr. Friedman estimates will be about half the amount needed. The group has agreed to commit additional resources. Mr. Friedman said the group expects the project to start in early 2007 and finish in 12 to 13 months.
LONDON — Fund managers continue to be very cautious about the overall outlook for the economy, despite the recent rally in the equity markets, according to Merrill Lynch's latest global fund manager survey. In general, fund managers believe that the business cycle is in its "late cycle" phase and that general market activity will weaken in the coming 12 months, according to the survey. Only one-third of the 210 managers surveyed said that they expect double-digit corporate earnings growth over the next year. While they expressed general concerns, however, these managers did not indicate that they expect the slowdown to develop into a recession. Also, even though fund managers remain cautious about the economy, the decline in oil prices during the last two months has "shaken them out of their risk aversion and prompted them to put their high cash balances to work," according to a report with the survey. Fund managers surveyed said they are now less averse to risk than they were earlier in the year, and their collective cash balance has dropped to 3.8% in September, down from 4.4% in August.
ZURICH — Siemens AG dismissed Roland Ruemmeli, portfolio manager for the company's €1.1 billion ($1.4 billion) Swiss pension fund, who had been arrested in connection with an insider-trading scandal, according to Siemens spokesman Benno Estermann. The termination followed an interim report of Siemens' internal investigation that determined Mr. Ruemmeli violated the company's professional standards, Mr. Estermann said. Mr. Ruemmeli was arrested in September on suspicion of receiving kickbacks for selling 390,000 shares of Swissfirst AG a few days before the bank announced it was acquiring Bellevue Group. The share price increased by about 30% following the announcement, resulting in a hypothetical loss to the pension fund. The case led to a criminal investigation by Swiss authorities of Swissfirst and other institutional investors, including pension funds.