A newly-expanded Pacific Islands government fund organisation plans to use its enhanced collective bargaining power to strike better investment deals for members.
At its eighth forum for fund CEOs held in Tuvalu late in October, the Pacific Provident Funds and Social Security Forum (PPFSSF) resolved to collaborate on direct investment opportunities as well as sourcing mandates from external managers.
Damien Beddoes, PPFSSF secretariat and head of the Cook Islands National Superannuation Fund, said the group agreed to form a “structured co-investment hub” to streamline joint investing activities across the diverse membership.
Beddoes said the new arrangement would allow members privileged access to direct investment deals in each others’ jurisdictions while opening the way for joint negotiations with offshore fund managers.
“We all use different underlying fund managers,” he said. “If we work together as a group then we can save costs.”
In a move that will almost double member numbers and significantly boost collective investment power, the PPFSSF also agreed in Tuvalu to allow the regions’ sovereign wealth and trust funds to officially join the group.
“Currently, we have 13 members but we should be up to 20 after the change,” Beddoes said.
Prior to the Tuvalu motion, PPFSSF restricted membership to national pension funds but the new ruling has seen both the $35 billion NZ Superannuation Fund (NZS) and the US$16 billion Timor Leste Petroleum Fund join the forum. For the first time, too, a Māori fund – Ngāti Awa Group Holdings – has signed on with the PPFSSF.
Excluding NZS and the Timor fund most members manage less than $1 billion, Beddoes said, but the combined funds of even the smaller groups would represent a significant increase for the PPFSSF.
“Before now we looked after in total about $12 billion,” he said. “The big driver for change has been how to make the PPFSSF more relevant so we can offer members better educational and co-investment opportunities – we need to expand to do that.”
As well as shoring up collaboration on investment and education, the PPFSSF Tuvalu forum also resolved to launch a “easibility study” on a joint insurance offer across member funds.
“Many of the funds offer life and other insurance to members,” Beddoes said, but to date have negotiated individual contracts with suppliers.
He said a combined insurance approach could see members benefit from economies of scale.
With Pacific Islands in the front-line of global warming, Beddoes said the PPFSSF also agreed to consider climate change in their investment policies.
“We can’t ask other countries for assistance [in combating the effects of climate change] if our funds are seen to be exposed to high-carbon investments,” he said. “We need to address that in our portfolios and we’re asking all members to commit to working towards that goal.”
While some groups had already begun the process Beddoes said the NZS, which recently implemented a carbon-reduction screen across its investments, would offer technical assistance to funds looking to adjust their portfolios in line with climate change goals.
The PPFSSF has slated its next forum for the end of May 2018 in the Cook Islands.
Beddoes said the growing importance of the forum as suppliers of equity in the Pacific Islands had also been recognised with an invite to the top-level political gathering in the region next year.
He said the PPFSSF secretariat had been invited for the first time to present at the Pacific Islands Forum annual meeting in 2018.
“We will be talking at the meeting of finance ministers at the forum,” Beddoes said.