GLOBAL - The impact of sovereign pension funds (SPFs) on global financial markets has been debated, with pension commentators acknowledging there is a lack of knowledge about the subject.
It comes after new research from Morgan Stanley said investors should pay attention to some prospective changes in the way that SPFs, such as the New Zealand Superannuation Fund, and the Japanese Government Pension Investment Fund (GPIF) may be invested.
This is because Morgan Stanley said it believed that there would be a general rise in SPFs’ exposure to foreign assets and equities.
The company said: “We believe that SPFs in many countries will become much more outward-orientated than before, just like the sovereign wealth funds (SWFs) ie., the home bias is likely to decline sharply for many of these massive funds with important implications for the capital markets. We urge investors to pay attention to this category of funds.”
Responding to the research, Andrew Cheseldine, a Hewitt consultant, said SPFs were not something which had crossed his radar.
Acknowledging that in macro-economic terms they would be significant, he said there were other major factors which would also impact heavily on financial markets.
Cheseldine said: “It is just one element. There are other issues which are also great for example there will be lots of second and third pillar funds and there is also the demographics time bomb.”
Bram van Els, a spokesman for PME, the Dutch metal and electro-technical engineering sector fund, PME, said he had not really heard about the subject of SPFs.
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