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Stressing the issues about mega agreements, new production methods, global value chains and rising global trends, Zeybekci drew attention to the improvement of the global investment and economic environment.
Speaking at the opening of the G20 Organisation for Economic Co-operation and Development (OECD) Global Forum on International Investment, Interim Economy Minister Nihat Zeybekci underscored that countries that are party to the regional mega agreements should be taking precautions in order to prevent the marginalization of underdeveloped and developing countries that are not party to such agreements. He also expressed his satisfaction with hosting the forum with the cooperation of the OECD.
He stressed that new production methods, small and medium-size enterprises (SMEs), global value chains and regional mega agreements and similar rising trends in the global economy is also creating new obstacles that require new solutions. Liberal policies which are comprehensive of all actors in order for the service sector to achieve its full potential need to be determined and applied, Zeybekci added.
Reminding that in the first forum organized in 2006 under the theme Improving Investment Conditions: Infrastructure as an Example, the meeting was productive in terms of improving the volume of trade and investment and creating a better global economic environment, Zeybekci highlighted the importance of holding the forum simultaneously with the G20 Trade Ministers Meeting.
Zeybekci also said during the Presidency of Turkey for the G20, investments are one of the three priority areas along with comprehensiveness and implementation. He added Turkey deems investments as the driving force behind growth and development as well as the cornerstone for employment, welfare and renovation. Both capital exporter and importer countries are highly aware of the power investments hold in terms of economic transformations. In order to achieve sustainable growth, investments are required and increasing investments is still the priority policy of various countries, Zeybekci said.
While the global economy was in a much better state when the first Global Investment Forum was held in 2006, Zeybekci stressed that the 2008-2009 global economic and financial crisis caused sharp falls in the international direct investments of developing countries. He also underlined that despite the relative recovery, international direct investments are still 40 percent lower than before the crisis.
He also said in these volatile and uncertain times, instead of repeating the previous policies, new economy policies that will support sustainable recovery and revive investments are required. Underlining that the macro targets of all economies is growth, the driving force behind growth is investment and the source of investment is savings, Zeybekci said companies should be introduced to capital market instruments and be trained on how to efficiently use these tools, especially in developing countries.
Zeybekci emphasized that Turkey will continue to negotiate and sign the regional mega agreements and he also underscored Turkeys demand to be involved in the Transatlantic Trade and Investment Partnership Agreement (TTIP).
Stressing that the service sector is becoming more important in the global economy due to the changing dynamics of trade and investment, Zeybekci said the restrictions imposed on the service trade is more strict than the restrictions on the manufacturing sector in both developed and developing countries.
Highlighting the integration of SMEs into global value chains through large-scale companies in their respective countries, Zeybekci discussed the importance of SMEs and policies that will integrate developing countries with global value chains. He also encouraged all stakeholders to adopt policies that will enable the OECD to benefit fully from the global value chains. Zeybekci added that he hopes the political dialogue that will take place on Monday will help define alternative policies to fight against economic problems, and finished his speech by wishing for a productive G20 meeting that the global economy can benefit from.
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TRENTON-- New Jerseys giant public worker pension system lost $2 billion in the fiscal year that ended in June as investment returns sagged to 4.16 percent, state investment officials said Wednesday.
And the volatile stock market this summer brought an even bigger hit to pensions.
The value of the fund was $79 billion at the end of the fiscal year in June, down from about $81 billion a year before. The value dropped to less than $76 billion by the end of August, the chairman of the State Investment Councilsaid.
Last year, the investments returned 16.9 percent, and over the past five years the fund has yielded 10.81 percent.
Weve all known returns like that were unlikely to last forever, said Tom Byrne, chairman of the State Investment Council, said at a meeting Wednesday.
RELATED:NJ pension fund trustees angry over stalled audit
The funds investments returned 4.16 percent in the fiscal year that ended in June, according to unaudited figures releasedWednesday While that was higher than the 2.93 percent benchmark of what other investments returned in various markets, it fell short of the pension systems 7.9 percent long-term assumed rate of return.
The pensionssystem lost money because while the investments added about $3.2 billion, about $8 billion is distributed to retirees each year, Byrne said. It needs to earn 10 percent a year just to keep up.
Thats not great news for a pension system that is estimated to be underfunded by $54.7 billion, but the results could have been worse, Byrne said.
Byrneoffered the results from last year as further proof that the states increasing stake in alternative investments -- which have come under criticism by some lawmakers, pension fund trustees and labor leaders -- is paying off.
Byrne praised the states investment staff for its skilled investment, saying that beating the benchmarks over the past five years contributed $4.5 billion more for the fund.
The four best-performing asset categories for the fiscal year that recently ended were all part of the alternative investment program, he said. Alternatives as a whole returned about 7.9 percent for the year, nearly double the returns we made elsewhere.
Seven investment categories performed better than the overall fund, and six of those are alternative investments, according to a Division of Investment report.
Had we been 70 percent stocks and 30 percent bonds in the last five years, as some have advocated, our results would have been considerably worse, Byrne said.
Byrnes remarks were aimed those criticsof the states investment strategy who say the shift away from traditional investments and into alternatives, like private equity and real estate, has not paid off.
Much of that criticism stems from the costs of investing in alternatives. The state paid $600 million in fees and bonuses to private investment managers in 2014. Christopher McDonough, director of the Division of Investment, said costs for 2015 wont be available for several months.
Investment council members have defended the bonuses, which they said only reward managers for exceptional performance, and the strategy, which they said protects the pension investments in downturns.
In the past 10 years, the state has outperformed 69 percent of its peers while taking 85 percent less risk, , according to the divisions report.
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The French oil giant Total, Russias Novatek and China National Petroleum Corp. are developing a joint $27 billion Yamal liquefied natural gas (LNG) project in the Kara Sea. While most of the projects western financing was cut off due to Western sanctions against Russia, the partners have turned to Chinese state banks for loans, Pouyannetold the Wall Street Journal. They want to attract some $12 billion.
READ MORE: Chinese banks to invest over $10bn in Siberian LNG project
Earlier this month, Chinese $40 billion Silk Road Fund acquired 9.9 percent stake in Yamal LNG, the price of the purchase was not disclosed. Chinese state-owned infrastructure fund will thus join the project as part of Chinas contribution, according to Total CEO.
This project is part of an intergovernmental agreement between Russia and China, Pouyanne told WSJ, adding that Yamal partners are still seeking investments from Chinese banks.
The Yamal LNG project involves the construction of a plant with a capacity of 16.5 million tons of LNG per year. The launch of the first stage is scheduled for 2017. Novatek has a 60 percent share in the project, while Frances Total and Chinas CNPC have 20 percent each.
Russias National Wealth Fund has contributed $1.4 billion to the project, with the remaining tranche of around $1 billion to be released soon, Pouyanne said.
READ MORE: Total to raise $15 billion in China for Russian projects
He added that $3-4 billion in funds are still expected from the Russian banks while up to $5 billion from export credit agencies in Asia and Europe.
In March, Pouyanne said he expects Russia to become his companys most important region for oil and gas production by 2020, with an output of around 400,000 barrels per day. Totals stake in Russias largest independent gas producer Novatek currently stands at 18.9 percent and the company has plans to buy up to 19.4 percent in future.
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(Adds Deutsche Bank and Personal Capital)
The German bank hired Sebastien Galy as director of foreign-exchange strategy, Bloomberg reported.
The financial adviser appointed Mark Goines its chief marketing officer.
The investment bank said it hired Carter Driscoll to its equity research business.
BROOKDALE CAPITAL MANAGEMENT LLC
The investment management firm appointed Jessica Spruiell managing director of operations and Hardin Sullivan managing director of business development.
FINANCE WALES GROUP
The company, which provides funding to small- and medium-sized businesses in Wales, said Gareth Bullock would replace Ian Johnson as chairman, effective Oct. 1.
The asset manager made two hires and promoted company veteran Mike Reardon to boost its institutional consultant relations practice in the United States. (Compiled by Arunima Banerjee and Sruthi Shankar in Bengaluru)
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Plan administrators, investment committees and any other plan fiduciary responsible for selectingthe investment options of an employee benefit plan subject to ERISA should take note of the recent US Supreme Court ruling in Tibble v. Edison Intl. In Tibble, the Supreme Court expressly held that ERISA fiduciaries have an ongoing duty to monitor plan investments and remove imprudent investments.
In 2007, a class action lawsuit was filed against Edison International (Edison) by certain participants and beneficiaries in the Edison 401(k) Savings Plan (Plan) alleging various fiduciary breach claims associated with the selection, monitoring and removal of certain investment options in the Plan. The plaintiffs sought to recover damages suffered by the Plan when Edison added six retail mutual fund options to the Plans available investment options in 1999 and 2002. The plaintiffs alleged that the Plans fiduciaries acted imprudently by offering the retail mutual fund options instead of similar institutional-class mutual funds that charged lower administrative fees. The district court ruled that the plaintiffs claims related to the investment options that were added to the Plans investment options in 1999 were untimely because they had been added more than six years prior to the filing of the complaint. The Court of Appeals for the Ninth Circuit affirmed and held in part that the statute of limitations for a fiduciary breach claim alleging that the Plans investments were imprudent begins to run from the date when the investment is included in the Plan, not from the date fiduciaries of the Plan failed to remove the investment option.
The Supreme Courts Decision
On appeal, the Supreme Court determined that under trust law a fiduciary is required to conduct a regular review of its investments, with the nature and timing of the review dependent on the circumstances. The Court explained that this duty exists separate and apart from a fiduciarys duty to exercise prudence in selecting investment options in the first place. As such, the Supreme Court unanimously held that the Court of Appeals erred in failing to consider the ongoing role of the fiduciarys duty of prudence under trust law when it rejected the plaintiffs claim as untimely. Pursuant to the Tibble decision, a participants claim alleging a breach of fiduciary duty for failing to monitor an investment is timely so long as the claim of imprudence occurred within six years of filing the lawsuit.
The Court also remanded the issue of the scope of the continued duty to monitor plan investments to the lower court to consider whether the Plan fiduciaries breached their duties, based on analogous trust law. Citing trust law, the Court noted that a fiduciary must systematically consider all the investments of the trust at regular intervals to ensure that such investments continue to remain appropriate.
Implications of the Tibble Decision
As a result of the Tibble decision, the general consensus is that litigation based on an ERISA plan fiduciarys failure to monitor investments will increase. Although the duty to monitor investment decisions is not new, the Tibble decision points plan fiduciaries to trust law to determine how to monitor such investments. Thus, plan fiduciaries are advised to (1) establish a reasonable procedure in line with industry standards to monitor plan investment options and related fees, (2) diligently follow that procedure when monitoring plan investment options, and (3) maintain written support, such as meeting minutes, reflecting that the procedure was followed. Failure to document either the deliberation process or the decisions made may rouse the suspicions of a judge who may review the procedure. To succeed against a claim of failing to monitor, fiduciaries need to be able to show due diligence not only in the selection process but in the ongoing monitoring process.