JAPAN/NETHERLANDS - ABP, the pension scheme for the Dutch civil service, has appointed Hermes to help undertake its share ownership responsibilities for its equity investments in Japan.
The Dutch e177 bn pension scheme, which is the largest pension fund in Europe, has appointed Hermes’ Equity Ownership Service (EOS) to tap their knowledge of the Far East markets.
EOS will now provide ABP with a full ownership service, including a voting service, entailing communication with all companies where management recommendations are voted against, and a full engagement service.
At the end of 2004, ABPs equity investments in Japan were valued at e4.9bn, but combined with Hermes e3.4bn of equity investments in the Far East, will now account for e8.3 bn.
Roderick Munsters (pictured), CIO of ABP, said the situation in the Japanese equity market made it very difficult to make use of their shareholder rights internally.
Munsters commented: “As institutional investors we believe that corporate governance and stewardship are not only responsibilities of share-owners but also serve as opportunities to add value.
“The Japanese market in particular is interesting for an active voting and engagement policy, as corporate governance of Japanese companies is lagging their American and European peers.
“But Hermes’ unique resources, coupled with their substantial equity holdings in Japan, creates a service which provides the most effective way achieving this in a consistent manner across our Japanese equity holdings.”
Charlie Metcalfe, deputy chief executive of Hermes, also said the engagement and voting service should enable the scheme to add value to the investments for the company’s 2.6 million members.
Metcalfe added: “In conjunction with the Hermes Focus Funds and the power brought via our index holdings, EOS is a key component in our overall approach to ensuring companies are run in shareholders best interests and so maximising returns over the longer term.”
Previously, Hermes’ largest client was the BT Pension Scheme (BTPS) in the UK.
PTL has appointed Karein Davie as a client director in its Birmingham office.
The level of interest rate hedging increased to £29.5bn of liabilities in the second quarter as pension funds continued to de-risk, according to BMO Global Asset Management's research.
UK inflation has risen for the first time since November to 2.5% in July, up from 2.4% in June, thanks to rising fuel costs and the price of computer games.
The number of DB pension scheme trustees targeting a buyout with an insurer has increased significantly in the past five years, latest research from Willis Towers Watson shows.