News category: ESG

Multi-asset managers shared their viewpoints on how including systematic commodity strategies into an institutional portfolio can provide real returns, in a discussion at Europe EQD in Barcelona. Marco Aiolfi, head of multi-asset at PGIM Quantitative Solutions, explained to audience members that commodities are the forgotten child of asset allocation.

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Stability for pension plans seems to be bleaker than ever, with institutions like CalPERS sounding the alarm on potential funding ratio pitfalls over the next three decades. Investment volatility has re-emerged as a key concern for public pensions, signaling the risk that market corrections could potentially set back progress in stabilizing funded ratios and trigger higher contributions.

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Officials on the state investments team at the AUD100 billion (USD64 billion) government-owned investment company QIC are entering synthetic credit and equity option protection strategies as a way to navigate market conditions. “We like using synthetic credit to improve our liquidity profile [as] this means we can commit to holding less-liquid assets that have compelling long term return prospects,” said James Esland, an investment director in the state investments team in Brisbane.

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Nasdaq launched a Custom Basket Forwards solution on Tuesday that enables investors to create a cash settled forward contract on a customized European equity basket. Alessandro Romani, vice president and head of European derivatives at Nasdaq in Stockholm, said the product will help portfolio managers gain tailored equity exposures for ESG and climate investments, thematic investing, exchange-traded-fund replication, investing in tailor-made indexes and for equity financing, without the increasing challenges associated with over-the-counter derivatives, such as bilateral risk, bilateral dependency in liquidity provision, and costs associated with regulation.

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The generative artificial intelligence tools that have captured the public imagination this year have also created significant advances in the way portfolios are being managed. It has been well reported that the rapid and unprecedented development in AI tools are being used to generate opportunity with new investment ideas and sources of alpha, as well as

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APG, a EUR538 billion asset manager in Amsterdam, is developing an ESG friendly commodity index. Gillis Björk Danielsen, senior portfolio manager and research lead of commodities at APG, presented research underpinning the new Accelerated Commodity Transition Index to attendees at Asia EQD in Singapore on September 13.

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There was a lot of chatter this past week about zero-days-to-expiration options, again. Most of it seemed to be prompted by a new Cboe paper (covered for EQD by my colleague Dallon Lewis) as well as Goldman Sachs and other bank research desks connecting afternoon selloffs in the Standard & Poor’s 500 to waves of 0DTE put purchases.

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Munich Re Investment Partners, a climate-focused asset management firm owned by Munich Re AG, has chosen not to implement European Emissions Allowances futures in its first live fund. Instead, the EUA fund provides institutional investors with cost-efficient pure beta access to the E.U. carbon market through buying physical allowances.

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Has the economy arrived at a soft landing after all? The equity market (and inflation data) certainly seem to think so, but not everyone is convinced. Positive economic data tend to move stock markets, either by fueling rallies, or prompting a temporary selloff. So this week’s lackluster reaction to cheering U.S. inflation figures looks unusual. JPMorgan’s Marko Kolanovic said a soft landing doesn’t look as probable as some investors might think. And he isn’t alone, as financial conditions deteriorate, another veteran investor reckons a dramatic stock market crash might be on the horizon. The reality is that nobody really knows for sure*. But that doesn’t stop some investors from speculating.

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Some U.S. public pension plans are starting to consider adjusting their portfolios to prepare for a global transition to greener energy sources. In the last six months, a handful of pension systems have had board meetings featuring a discussion about energy transition, MandateConnect data show.

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