Categories: IPE Conference & Awards 2023 reference version

COMMITMENT TO DIVERSITY

Diversity and inclusion are increasingly topical and many pension funds are now developing policies and strategies to address diversity and inclusion both internally and externally. For this award, the judges would be keen to see evidence of at least one of the following:

commitment to improving diversity and inclusion within your own organisation
achievements in improving diversity and inclusion within pensions, asset management and financial services generally
accomplishments and commitment to diversity and inclusion within corporate governance
industry level contribution on any level in raising awareness of diversity and inclusion issues

Your entry should relate to at least one key diversity and inclusion area, including::

ethnicity
gender equality
age
sexual orientation
able-bodiedness

LONG-TERM INVESTMENT STRATEGY

As this is a gold level award, the judges’ expectations are demanding. You should make full use of the entry form beginning with a high level summary of the fund’s history and overall objectives within the Overview & Investment Strategy area.
In addition, the entry should show:

a detailed explanation of your long-term investment objectives
a detailed account of your long-term strategy and asset allocation model

Particular detailed attention should be paid to:

clarifying your current strategy
how often your regular long-term reviews take place
integrating your long-term risk models, budgets and management
how successful it is
how it has changed over recent years with a minimum period of five years
your vision of the evolution of your investment strategy to meet your long-term objectives in your next review period of three to five years
your historical benchmarked results and detailed analysis of the outcomes of your strategy, supported by performance figures, to attain your pre-set targets
any long-term changes you have introduced if current performance deviates too far from your pre-set targets
any innovative concepts or models you have developed or are developing to meet your long-term objectives

PENSION FUND LEADER/TEAM OF THE YEAR

ACTIVE MANAGEMENT

For this silver level award, the judges are looking to see whether you run your own in-house active management, use external managers or a mix of both. Among the areas of interest to them are:

why you have chosen the active route
do you actively manage across asset classes, or just particular classes?
what are your return expectations on a risk adjusted or other basis?
your risk management and controls
any use of tactical overlays
benchmarked and/or absolute return strategies
the use of external managers and how you select them

PASSIVE MANAGEMENT

For this silver level category, the judges would like to see how you approach your passively managed mandates and factor investing strategies to ensure the most efficient returns.

There are many innovative approaches to passive management that pension funds use. These could include:

enhanced index strategies
factor investing strategies
the factors you consider as a source of beta
how these sources interact and complement each other
mutual fund strategies
use of other derivatives such as futures
use of exchange traded funds
use of index funds
dynamic indexing strategies
enhanced portfolio construction

How you implement these could be part of your strategic asset allocation, the basis for tactical adjustments or form creative overlays. Your entry should outline your approach to these or any other innovative passive management and factor investing solutions that you have devised.

SMALL PENSION FUND

This silver award is for pension funds with maximum assets under management of one billion euros and seeks to demonstrate how small pension schemes devise innovative solutions to meet the challenges posed by their size and lack of resources that larger schemes may not encounter.

Most pension funds that enter this silver category use their country/regional draft for this award, although you can prepare a separate entry if you wish to, focusing on being a small fund with limited resources and how you manage both your investments and your members’ expectations.

For your country or regional award, you should present a general, detailed overview of your recent activity in the past 12-15 months, focusing on any areas where you believe you have displayed excellence and / or innovation.

If your recent activity relates to a specific area that could also feature as a themed award, then please go ahead and base your country or regional award on that topic but make it clear to the judges that this constitutes your main area of activity in the period under review. For instance, if you undertook a large scale review of your risk management, you may want to consider opening the main text part of your country or regional award with a phrase such as: "Risk was the main area of concern for us the past year."

Or if, for example, you implemented a new emerging market programme, you could open your main text with a sentence such as: "Integrating emerging markets into our investment strategy was the focus of our attention most recently." This would help the judges understand why your country or regional entry is devoted to a particular theme, innovation or development.

CARBON NET ZERO STRATEGIES

This is a highly specialised category that relates to your targets to become net zero and the opportunities as well as risk that enhanced carbon reduction strategies present as part of your long-term overall strategy and objectives. Detailed accounts of one or more of the following are key to a strong entry:

how you have integrated net zero targets and climate change into your statement of investment principles and / or other main documents of association
how you implement and integrate practically your climate-related risk management and carbon reduction across the different asset classes you invest in
niche sectors such as renewable energy sources and bio-mass technology as potential investments
how you have adapted your active engagement policy accordingly
how you include climate-related risk factors and net zero strategies in your research, analyses and manager searches
any bespoke mandates you have innovatively created
how you use innovative investment products and processes to off-set or hedge the carbon risk in your portfolio
how you engage and interact with peers, regulators, governments and consultants with respect to reducing and managing your carbon footprint and incorporating your net zero ambitions
how you monitor and report on your climate-related risk management and investments and your net zero targets

EMERGING MARKETS

This category is aimed at attracting entries from pension funds or equivalent institutions of any level of experience in investing in emerging markets. In addition to describing your strategy, expectations and implementation, entries should cover:

any innovative steps taken to enhance the benefits of investing in emerging markets
the risk controls you have in place across the wide range of emerging market exposures
the countries and regions you invest in and why you choose these areas
distinct management tools for any associated risks such as currency management and political stability

Lessons learned that have affected your approach and process can also be a valuable part of submissions.

DC & HYBRID STRATEGIES

For this award, the judges would like to see entries that describes how your defined contribution or hybrid model is structured and show how it seeks to innovatively:

meet your members’ return and pension income expectations
structure the plan in terms of governance and risk sharing between sponsor and member
manage contributions and costs
offer the best investment choices

Full details about any guaranteed income element you offer would also strengthen your case, especially for hybrid schemes.

ESG STRATEGY

The judges would like to see clear evidence of a carefully conceived and implemented innovative socially responsible investing and environmentally protective policy across the various asset classes you invest in. Where possible please include detailed examples of:

voting and engagement policies
exclusions and exclusions policies
carbon-footprint management
monitoring and/or a proactive approach to ensuring your scheme supports a streamlined and inclusive governance framework
how you measure success and benchmark your ESG performance
how the principles of sustainable investing complement your overall objectives

Other factors to consider include declaring any codes of practice you are signed up to and follow.

IMPACT INVESTING

The concept of ESG integration is now well established among pension funds, which practice this to different degrees and in different ways. The notion of impact investing takes this one step further and allows institutional investors to directly consider how their long-term investments can influence and sustain society, the environment and economies. Frameworks such as the UN’s Sustainable Development Goals (SDGs) can guide investors looking to shape impact-oriented investments and portfolios. For this award, the judges would ideally like to see:

the range and scope of your impact investing strategy
the principles driving your impact investing approach and your objectives
how your impact investing differs from but complements your ESG policy and practice
evidence of integrating frameworks such as the SDGs
your achievements thus far
your risk management with respect to impact investing

INVESTMENT INNOVATION

This award allows you to showcase the creativity and industry-leading concepts that you devise in implementing your investments to maximise your returns and support your long-term investment objectives. Entries should highlight in detailed fashion as clearly as possible:

the real innovation involved
the context in which it was developed and the resulting benefits
how the concept is implemented practically

In addition, entrants should cover how and why they believe their innovation will potentially benefit their European pension fund peers.

PORTFOLIO CONSTRUCTION & DIVERSIFCATION

This is one area where pension funds have developed innovative and varied approaches to structuring portfolios and diversifying to meet their needs. A strong entry in this category should outline your overall long-term objectives, level of diversification within and between assets classes and then look at how your portfolio is built, using examples where possible, covering:

the asset allocation strategy being implemented
the constraints imposed
the risk budgeting and control aspects
use of any overlays and tactical management
clear evidence of a diversified investment strategy
regions, sectors and/or investment style
use of benchmarks

Please also demonstrate how you implement this strategy to ensure an appropriate level of diversification through structured mandates that respond cyclically while benefiting your strategy in the long-term within a clear risk framework. You should then endeavour to describe how all these aspects combine to successfully meet the desired outcome. For this, you should consider:

how robust the assumptions you used were in practice
·how the portfolio you put in place has had to change over time
the success of the fully constructed portfolio at overall fund level

PRIVATE MARKETS

Investing in Private Markets, especially private equity, private debt and real assets and infrastructure, has become an increasingly popular source of return for pension funds in recent years. Niche real asset classes such as timberland, forestry, agriculture, mobile transmission masts and utility transmission lines are also regarded as having a special place in long-term portfolios alongside traditional real estate investments. Thanks to their distinctive and long-term nature, the overall impact private markets and infrastructure can have in liability matching is significant

Judges would thus be keen to assess:

the types and sectors of private markets that you prefer
why you invest in private markets, infrastructure and/or other real assets and how they complement your other asset classes in your overall portfolio
how they support your long-term objectives
the reasons for the level of your commitment any restrictions either at institutional or regulatory level
examples of your investments, especially recent deals and activity
your vision for their future role such as increasing your commitments
the costs of investing and running private market mandates
your mandates and types of vehicles used to obtain exposure
the risks private markets investments incur and how you manage them

RISK MANAGEMENT

This award applies to a wide range of pension fund activities and invites entrants to outline their approach to the often complex and technical issues in this field, by giving clear and as simple as possible explanations of their risk management strategies and policies, in whatever area, and show how these are key to success in the long-term. Points to consider that you could and should expand upon in detail in your entry:

any novel approaches you have conceived in risk management
who decides your risk budgets and how these are calculated
how you implement your risk budgets in practice
the use of stress-testing
your approach to managing volatility in different asset classes
any risk trigger processes you use
practical solutions using overlays and other hedging techniques

SUSTAINABLE BONDS & CREDIT (formerly Credit & Alternatives)

Seeking alternative sources of yield and returns is increasingly crucial for pension funds and traditional fixed income instruments are suffering from the persistent low interest rate environment. Many pension funds are now exploring different types of credit, financing and debt to diversify out of low-yielding bonds while maintaining consistent and stable yields and returns. In addition to explaining how new types of credit will complement your existing investments and how they will impact on your risk, types of new credit alternatives the judges will look for in your entry include:

absolute return bond strategies
multi-sector fixed income
multi-asset credit strategies or ‘macs’
private placement
emerging markets corporates
bank loans
smart beta fixed income
liquid alternatives
infrastructure debt
high-yield
credit arbitrage
insurance-linked securities such as catastrophe bonds
preferred securities
leasing
senior loans

STEWARDSHIP AND ENGAGEMENT NEW

TECHNOLOGY

Digital systems, artificial intelligence and use of the internet are increasingly influential in a pension fund’s investments, governance structures and general operations. This new category is designed to allow you to highlight how you integrate and benefit from technological developments, either at organisation or industry level. Your entry would benefit from including and explaining:

the rationale behind integrating various technological innovations
the type of technology and scope of the integration
which parts of your organisation and/or investment strategy the technology is applied to
the key benefits of any technological integration
the risks associated with integrating technology
how any technological integrations and developments are managed