Biden Win Welcomed As Positive for Markets
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November 16, 2020 PIonline.com $16 an issue / $350 a year THE INTERNATIONAL NEWSPAPER OF MONEY MANAGEMENT Election Angela Weiss/AFP Biden win welcomed as positive for markets Managers say lack of Democratic RELATED NEWS two runoff Senate elec- tions are held. For now, mandate good news for investors n Changing of the guard the Senate remains puts Department of under Republican By HAZEL BRADFORD Labor proposals on the control, while Demo- clock. Page 3 crats control the The most expensive election in U.S. history re- n Managers and plan House. sulted in the White House changing hands but not sponsors weigh in post- Even the presiden- much else so far, which for markets at least could election. Page 10 tial election won’t be be a good thing, observers say. finalized until states An estimated $14 billion was spent on the 2020 certify election results and Congress counts the election cycle, nearly half of which was for the pres- electoral votes, which is expected in January. idential race, according to political spending re- The lack of dramatic change in Congress means search group Center for Responsive Politics. It did that President-elect Joe Biden may be able to ful- not do much for the political stalemates that will fill some campaign promises — like rejoining the WORK TO DO: President-elect Joe Biden is expected to move quickly to undo some Trump policies. continue at least until January, when Georgia’s SEE ELECTION ON PAGE 26 Investing SPECIAL REPORT INDEX MANAGERS ESG laggards ETF growth becomes big could discover plus for index managers debt drying up Indexed assets up 5.4%; MORE ON INDEX MANAGERS fixed-income strategies n ESG indexes grow in tandem with Investors see way to coerce see boost from pandemic rising awareness. Page 20 those ignoring climate change n For the full report, go to pionline. By TRILBE WYNNE com/indexmanagers20 By SOPHIE BAKER Despite a global pandemic that trillion the previous year. upended markets early this year, Worldwide indexed assets man- Companies that fail to align their busi- worldwide indexed assets under aged in exchange-traded funds and BIG CHANGES: Armando nesses to commitments necessary to management rose for the fourth exchange-traded notes continued to Senra believes the achieve the goal of the Paris Agreement on consecutive year, increasing 5.4% to grow in 2020, rising 11.6% to $4.81 growth of fixed-income climate change may soon find themselves $15.35 trillion on the strength of trillion as of June 30. Over the five ETFs with managers and being denied capital they want to raise on ETF growth for money managers years ended June 30, passively man- asset owners is a major bond markets. that participated in Pensions & In- aged assets in ETFs and ETNs have shift in the market. A handful of investors have started im- vestments’ annual survey. increased 124.5%, while worldwide plementing or are considering a new man- U.S. institutional tax-exempt in- indexed assets under management tra: Deny the debt. Discussed in academic dex assets rose to $4.85 trillion as of grew 55.5% over the same period. circles over recent years, the idea is a way June 30, a 3.5% increase from $4.69 CONTINUED ON PAGE 18 for institutional investors to express their climate change views and requirements of portfolio companies in their bond hold- Pension Risk Transfer ings. By refusing to give their cash to com- panies looking to raise funds on the pri- mary bond markets, they hope to force Vincent Ricardel Buyout activity up again after pandemic-induced pause climate-related progress. The Paris Agreement is a global pact to By ROB KOZLOWSKI RELATED NEWS the quarter ended June 30, down limit the rise in global temperatures this from $4.2 billion in the second century to well below 2 degrees Celsius — U.S. corporate pension plan buy- n Insurers being forced to add more quarter of 2019, according to the and ideally below 1.5 degrees Celsius. out volume is picking up again after risk to gain better returns. Page 3 LIMRA Secure Retirement Insti- The importance of denying funding and a drop in activity in the second tute’s most recent survey of the 17 refinancing to certain companies cannot be quarter as plan sponsors shifted should total about $25 billion, down insurers that make up the U.S. pen- underestimated, and pledges to invest in their attention to addressing the from $28 billion in 2019, according sion risk transfer market. green capital is not enough, sources said. economic effects of the pandemic, to experts. For the first half of 2020, deal vol- “A necessary condition for Paris align- STOP SIGN: Ari Jacobs said the industry experts said. Much of that expected drop is ume totaled $7 billion compared with ment is actually defunding or closing the liftout market was completely Still, even with a spate of recent the result of a slow second quarter. $9 billion in the first half of 2019. SEE DENIED ON PAGE 28 shut down for most of March. activity, overall volume for 2020 Buyout sales totaled $2.3 billion in SEE PRT ON PAGE 31 SOUND BITE Winning strategies revealed for year VOYA’S JOHN SIMONE: ‘Insurance companies don’t For the top managers in do anything radical. It’s like moving the direction Morningstar’s separate of an aircraft carrier. But they are making account/CIT database, go changes.’ Page 3 to PIonline.com/top- managers 2 | November 16, 2020 Pensions & Investments IN THIS ISSUE Money Management VOLUME 48, NUMBER 23 Defined contribution Manager assets continue to bounce back The Department of Labor finalized a rule ter was the worst since the fourth establishing requirements for registering as 24 publicly traded firms quarter of 2008, when total assets a pooled plan provider for pooled employer Ng Kevin see AUM increase 17.6% fell 11.5%. plans, known as PEPs. Page 6 All but two of the 24 reporting since first-quarter fall managers saw AUM growth during Election the latest quarter. In the quarter Pennsylvania Treasurer Joe Torsella was By CHRISTINE WILLIAMSON ended June 30, all managers saw a unseated in his re-election bid, while rise in total assets, but only two incumbent treasurers in North Carolina, Aggregate assets under manage- eked out a positive growth in the Oregon and Vermont each secured another ment by the 24 publicly traded first quarter of 2020. term. Page 27 money managers tracked by Pen- Markets were favorable in the sions & Investments grew to $28.35 third quarter, with the S&P 500 in- ESG trillion at the end of the third quar- dex returning 8.9% while the MSCI An initiative by the Sustainability Accounting ter as global markets and managers ACWI ex-U.S. index was up 6.3%. Standards Board to go deeper on human continued to recover from the ef- Fixed-income returns were muted, capital management practices has fects of the COVID-19 pandemic in with the Bloomberg Barclays U.S. investors encouraged. Page 4 the first quarter of 2020. Aggregate Bond index up 0.6% and The total AUM for the universe the Bloomberg Barclays U.S. Long Discussions of social issues and diversity as of Sept. 30 was 5.9% higher than Treasury Total Return (Value Un- were front and center at recent industry the $26.76 trillion in assets as of hedged) index up 0.1%. conferences. Page 21 June 30 and up 17.6% from the Managers benefited from “the The COVID-19 pandemic is accelerating $24.11 trillion managed as of March uplift in markets,” which buoyed insurers’ moves toward adopting stricter 31. The Sept. 30 figure is also 5% both assets and revenues into the and more defined environmental, social and higher than the high of $27.01 tril- fourth quarter, said Michael J. Cy- governance policies. Page 30 lion as of Dec. 31, 2019. prys, senior equity analyst covering PAYING OFF: Jennifer M. Johnson said Franklin Resources is already The 10% decline in the first quar- SEE EARNINGS ON PAGE 26 reaping the benefits from its recent acquisition of Legg Mason. Special report: Index managers Money Management Managers with the largest percentage of Cutler Dave worldwide assets measured against ESG- specific indexes further increased those COVID causing allocations in 2020. Page 20 Washington Americans will no longer be able to invest concerns, shifts in Chinese companies that support Chinese military or intelligence activity under an executive order signed Nov. 12 by President in recruitment Donald Trump. Page 6 By DANIELLE WALKER Departments At deadline ....................28 Frontlines ........................8 Asset manager CEOs and other senior leader- By the numbers ..............14 Hirings...........................22 ship are navigating new workforce concerns Classified ......................24 Opinion .........................10 caused by the pandemic, including a pause on in- DC roundup ...................16 RFPs .............................24 person recruitment of early career professionals. Some executives say they are concerned Plan sponsor survey about how the talent pipeline from colleges and in progress universities will be impacted going forward, Pensions & Investments is accepting late while others see an opportunity to broaden their responses to the annual survey of the recruitment to a more diverse pool of candidates, largest U.S. retirement funds. Sponsors sources told Pensions & Investments. with combined U.S. pension and defined Mario J. Gabelli, founder, chairman and CEO of GAMCO Investors Inc. in Rye, N.Y., is con- contribution plan assets of $1.3 billion cerned that the pipeline from which GAMCO or more are eligible. Results will run typically recruits will be trimmed by the effects Feb. 8. of the coronavirus.