Despite being hailed as the panacea for the UK’s pension deficit ills,
pension fund managers are still wary of ploughing assets into hedge funds
promising strong returns.
With the FTSE100’s combined pension deficit estimated at £55bn after the
introduction of FRS17, the new accounting standard for pensions, fund managers
have faced increasing pressure. The potential returns offered by hedge funds
have been touted as a solution.
A survey of 550 executives in 35 countries by Big Four firm KPMG and
researcher CREATE, however, found that approximately 50% of pension funds had
not invested in hedge funds.
Of those that had, around half did not expect to increase their allocations
substantially, even though the size of their existing investment was less than
3% on average.
The report found UK trustees were especially cautious. Apart from rumours
that fund manager Hermes, responsible for BT (pictured), has considered moving
into hedge funds, few others intend to follow suit.
‘UK trustees are dipping their toes in the water, but with extreme caution,’
the survey’s report said. ‘They prefer to invest in assets that are intelligible
to them. Besides, few have the resources, due diligence or frequent monitoring.’
UK fund managers have been hesitant to jump on the hedge fund bandwagon
because of a lack of governance structures to monitor the complex investment
methods used by hedge funds.
The improvement in the equity market since the bear runs of 2002-3, when
hedge funds came to the fore, has also convinced some managers that traditional
asset classes can deliver the necessary returns with proper governance.
Anglo Americanand Standard Chartered manage to slash theireffective tax rates
A reduction in the South African and Ghanaian statutory tax rate helped
Anglo American reduce its effective tax for the first six
months of the financial year from 31% to 26.1%. The reduction saved the FTSE100
miner $136m (£76m) in deferred tax. The company said that without this one-off
benefit the effective tax rate for the period would have been 30.9%. Anglo
American, expects its future tax rate to remain above the statutory level of
Despite reporting a 20% increase in pre-tax profits, which climbed from
$1.1bn (£614.7m) to $1.3bn for the six months to the end of June,
Standard Chartered still managed to reduce its effective tax
rate from 29.9% for the six months to the end of 2004 to 27.5%.
Somerfield group finance director David Cheyne earned £298,200
during his first eight months with the group. Cheyne earned a salary of
£184,500, £51,300 in other emoluments and a bonus of £59,200. Cheyne was also
paid £2,400 for expenses chargeable to UK income tax and £800 in benefits.
Delays in closing out the sale of contracts have forced software developer
Brady to recognise future revenues later than hoped. Further
sales of Brady’s Trinity software, agreed in the rest of 2005, will now fall
partly into the 2006 financial year. The company said this was ‘a reflection of
the long lead times on Trinity implementation, Brady’s revenue recognition
policy and acceptance of the installed software by the customer’.
Media company Landround has taken a £1m hit to its books,
after the liquidation of a ‘substantial’ debtor. The company said the debtor had
met the first payment date on time, but warned that the prospect of ‘any
recovery’ of further amounts owing was ‘slim’. Meanwhile David Owen, a
non-executive director since 1997, has been appointed as Landround’s executive
vice-chairman and will conduct a review of the business and its prospects.
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements
Charles Tilley's departure from CIMA leaves the accounting world quieter, but his institute with an exciting foundation