A group representing chief investment officers of major private retirement plans in the United States is concerned about proposals restricting pension investments in commodities.
Testifying before the Senate Homeland Security and Governmental Affairs Committee on Tuesday, William Quinn, chair of the Committee on Investment of Employee Benefit Assets (CIEBA), said pension plans should not have to comply with lists of permitted and impermissible investments.
“Our concern is both with specific restrictions on pension plan investments in commodities and with the precedent that action will set for allowing the government to intrude on pension investment decisions,” he testified. “Regulating pension investments would only make it difficult for pension plans to adequately diversify investments to hedge against market volatility and inflation.
Speculators, such as institutional investors, have been blamed for driving up the price of oil. Crude prices reached a record of nearly US$140/barrel last week and have almost doubled over the past year.
According to CIEBA survey data, plans have less than 1% of assets invested directly in commodities and a similar amount in natural resources. The actual percentage of assets invested in commodities is modestly greater through hedge funds and other indirect investment vehicles.
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CFA Launches Code of Conduct for Pension Plans
The CFA Institute Centre for Financial Market Integrity has launched a code of conduct to help governing bodies manage their ethical responsibilities.
The Code of Conduct for Members of a Pension Scheme Governing Body sets forth 10 fundamental ethical responsibilities for individuals who sit on the governing bodies of pension funds worldwide.
Although the code is voluntary, the CFA Institute Centre encourages pension plans to adopt it to establish and ethical framework for governing board members and to demonstrate their commitment to serving the best interests of participants and beneficiaries.
“Just as shareholders trust corporate directors to look out for their best interests in a corporate setting, trustees are charged with looking out for the interests of the participants in and beneficiaries of pension schemes,” says Jon Stokes, the standards of practice director at the CFA Institute Centre for Financial Market Integrity. “The code establishes just that through the provision of 10 fundamental ethical principles.”
The 10 principles are:
• Act in good faith and in the best interest of the scheme participants and beneficiaries
• Act with prudence and reasonable care
• Act with skill, competence, and diligence
• Maintain independence and objectivity by, among other actions, avoiding conflicts of interest, refraining from self-dealing, and refusing any gift that could reasonably be expected to affect their loyalty
• Abide by all applicable laws, rules, and regulations, including the terms of the scheme documents
• Deal fairly, objectively, and impartially with all participants and beneficiaries
• Take actions that are consistent with the established mission of the scheme and the policies that support that mission
• Review on a regular basis the efficiency and effectiveness of the scheme’s success in meeting its goals, including assessing the performance and actions of scheme service providers, such as investment managers, consultants, and actuaries
• Maintain confidentiality of scheme, participant, and beneficiary information
• Communicate with participants, beneficiaries, and supervisory authorities in a timely, accurate, and transparent manner
To view a copy of the code on the CFA Institute’s website, click here.
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BetaPro Launches U.S. Dollar, 30-Year Bond ETFs
BetaPro Management has launched four new exchange-traded funds (ETFs) based on the U.S. Dollar and the U.S. 30-year Bond.
These ETFs are the first in Canada to offer inverse and magnified exposure in the currency and fixed-income space.
The four ETFs, which began trading on the Toronto Stock Exchange on Wednesday, are:
• The Horizons BetaPro U.S. Dollar Bull Plus ETF, which is designed to provide investment results that correspond to two times the inverse of the performance of the Canadian dollar nearby futures contract denominated in U.S. dollars.
• The Horizons BetaPro U.S. Dollar Bear Plus ETF, which is designed to provide investment results that correspond to two times the performance of the Canadian dollar nearby futures contract denominated in U.S. dollars.
• The Horizons BetaPro U.S. 30-year Bond Bull Plus ETF, which is designed to provide investment results that correspond to two times the performance of the nearby futures contract for the U.S. 30-year Bond.
• The Horizons BetaPro U.S. 30-year Bond Bear Plus ETF, which is designed to provide investment results that correspond to two times the inverse of the performance of the nearby futures contract for the U.S. 30-year Bond.
“Adding currency and fixed-income coverage to our successful equity and commodity based ETFs increases the number of investment strategies available to investors,” says Howard Atkinson, president of BetaPro. “Given recent currency volatility and concerns over the possibility of rising inflation, we believe our latest ETFs are a timely addition to our growing family of leveraged and inverse ETFs.”