Happy New Year and welcome to the first edition of [i3] Insights for 2017.
After our editorial bulletin closed off its first calendar year, we decided to keep a tally of the best-read articles of 2016 to see which issues resonated most with readers.
The record is somewhat incomplete as [i3] Insights only started publishing in March 2016, but the 10-month results are nonetheless fascinating.
Perhaps it was part of a wider interest from the English-speaking world in the Northern Europeans last year – after all, 2016 was the year where the Oxford Dictionary short-listed the Danish term ‘hygge’ (convivial) as word of the year – but the top 3 of most-read stories all featured Scandinavians.
Kasper Ahrndt Lorenzen, Chief Investment Officer of the Danish pension fund ATP, took out the crown with his narration of the fund’s overhaul of its risk management framework.
He was closely followed by a profile of Lisbeth Rasmussen, Chief Investment Officer of State Super. Although Rasmussen has worked and lived for several decades in Australia, she shares her country of birth with Kasper and even went to the same university.
Co-incidentally, Rasmussen left the fund shortly after the interview.
Finally, one of [i3] Insights’ first interviews completed the top 3. Tomas Franzén, Chief Investment Strategist at Swedish pension fund AP2, demanded attention with his reminiscence of how the pension fund started implementing what today would be called a ‘smart beta’ strategy and constructing their own indices well over a decade ago.
The results varied slightly between asset owners and fund managers; where ATP was most-read by asset owners, Rasmussen did better among fund managers.
Also high scored articles dealing with governance and the continued trend of insourcing asset management.
Well-known pension and governance advisor Keith Ambachtsheer made the point not to overthink governance. Good governance comes from groups of people who have complementary skills and have a sense of public duty, he said.
Former Ontario Teachers’ Chief Executive Officer Claude Lamoureux added that in the end pension funds are about wealth creation and there is no replacement for investment expertise.
But you do have to explain to all staff in an organisation as to why you make the decisions that you do in order to maintain a healthy culture.
Finally, Professor Michael Drew pointed out that good governance is not just about implementation, but also about setting a clear objective.
If the objective is to provide members with a healthy level of income in retirement, then it becomes quickly clear that the focus should be on long-term investment issues, including asset allocation, rather than short-term issues, such as manager selection.
From this perspective, good governance is about how well you progress in reaching those objectives rather than showing off your award for employer of the year.
Interesting was also that geopolitics did well as a topic, which is perhaps a reflection of the emphasis on risk last year.
Professor Alan Dupont argued that we have entered a prolonged period of political instability and said to be ready for ‘flocks of black swans’ in global markets as a result of this.
With the assent of Donald Trump as President of the United States, that certainly is a possibility in the years to come.
In this bulletin, you’ll find [i3] Insights most-read stories of 2016. I hope you’ve enjoyed reading [i3] Insights and please feel free to provide me with any feedback, requests or comments at: [email protected]
Have a great year.
Wouter H. Klijn
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[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe.