UTRECHT, The Netherlands - The 12.5 billion guilder ($7.56 billion) Spoorweg Pensioenfonds has picked Fischer, Francis, Trees & Watts, London, to manage a non-Dutch active bond portfolio, said Ton Groeneveld, managing director of investments.
The size of the portfolio was not disclosed, but it represents the railway fund's first non-Dutch bond investments. Fischer Francis will invest in U.S., U.K., French, German and Japanese bonds. No consultant was used.
Last fall, the fund named Wells Fargo Nikko Investment Advisors, San Francisco, to manage its first non-Dutch equity investments. The passive portfolios invest in the same countries as the bond investments.
Restraints prohibiting foreign investments were lifted last year.
The (pounds) 840 million ($1.34 billion) Kent County Council Superannuation Fund, Maidstone, England, hired Schroder Investment Management Ltd. to manage a (pounds) 134 million balanced portfolio, said Surjit Lale, investments manager.
Schroder replaces Henderson Pension Fund Management.
Watsons Investment Consultancy assisted.
Proposed U.K. minimum solvency rules threaten the survival of defined benefit plans, Richard Lapthorne, finance director of British Aerospace PLC, said at the National Association of Pension Funds' investment conference.
Companies bear a high risk of being forced to make cash infusions into their pension funds under the proposed rules, he said. There is a 38% chance of being forced to contribute (pounds) 100 million into a (pounds) 2 billion pension fund that is 95% funded and 80% invested in equities.
Lowering equity exposure to 60% greatly reduces the risk of forced contributions to 13% but greatly increases company costs, he said.
Mr. Lapthorne said recent government easing of the proposed rules are inadequate.
However, Penny Webster, an actuary with Bacon & Woodrow, said concerns over cash infusions have been overstated.
Alistair Darling, the U.K. Labour Party's spokesman on financial services, said a Labour-appointed group will review the tax system's effect on long-term investment in Britain.
Mr. Darling said the Labour Party will revive a shelved study on long-term investment that had been spearheaded last year by Stephen Dorrell, then a junior Treasury minister.
Mr. Darling told the National Association of Pension Funds' investment conference that institutional investors and that pension funds in particular should "examine their demands on dividend flow."
U.K. pension funds have been charged with pressuring companies to maintain steady dividend growth, even during recessionary periods.
The Dorrell study had alarmed pension executives in the United Kingdom about potential tax law changes.
Separately, Mr. Darling said U.K. insider trading rules need to be reformed and regulatory authority should be handed to a government agency.
The current self-regulatory regime provides "no deterrent" to insider trading, according to Mr. Darling.
LONDON - Futures contracts based on new U.K. convertible and equity indexes were introduced by Smith New Court Securities Ltd., London.
The brokerage firm said there will be growing demand for U.K. convertibles; personal equity plans may start investing in the securities starting April 6.
Smith New Court officials estimate (pounds) 2 billion to (pounds) 3 billion will be invested in convertibles in the coming year.
In addition, current premiums over equities are low and convertibles will benefit from a low inflationary environment, according to the firm.
The SNC 35 Sterling Convertible Index is made up of the top 35 U.K.-issued sterling-based convertibles.
The SNC 35 Equity Equivalent Index replicates the underlying equity issues of the SCI index.
In 1994, the convertible index lost 13%, with dividends reinvested, while the underlying stocks fell 12.4%.
The indexes' overweighted positions in diversified industrials, household goods, transport and property stocks dragged down their performance, compared with the Financial Times Stock Exchange 100's -6.7% return for the year.
Forecasts that the FTSE-100 will reach 3500 this year and moderating expectations for dividend growth should aid the performance of convertibles this year, according to Smith New Court.
LONDON - G.T. Management PLC continues to rebuild its investment team.
Last summer, Roger Yates returned to G.T. as chief investment officer of its London operation, after six years at Morgan Grenfell Investment Services.
Now, Vivian Bazalgette is joining G.T.'s London operation as head of U.K. equities and pension funds.
He also has been named to G.T.'s board and its global investment policy committee.
Previously, Mr. Bazalgette was managing director of Gartmore Pension Fund Managers, London, where he also served as head of U.K. equities and served on the firm's global asset allocation committee.
He has not been replaced at Gartmore.
The manager runs about $6 billion in assets worldwide, of which (pounds) 1 billion is for U.K. pension funds.