Investment decisions for pension funds by intangible value capital
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Investment decisions for pension funds by intangible value capital

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    Investment decisions for pension funds by intangible value capital Investment decisions for pension funds by intangible value capital Presentation Transcript

    • Investment Decisions for Pension Funds By Intangible Value Capital An IBCM© Research Presentation 1
    • Pension funds real, net investment rate of return inselected OECD countries, Dec 2010 - Dec 2011 - [Source - OECD] Denmark 12 Netherlands 8 Australia (1) 4 Iceland New Zealand (1) 2 2 Pension fund assets Canada Mexico (2) 1 2 in OECD countries Switzerland 1 hit a record USD Czech Republic 1 Korea 0 20.1 trillion in 2011 Norway 0 Hungary -1 but return onWeighted average -1 Simple average -2 investment fell Slovenia -2 Luxembourg -2 below zero, with an Spain -2 United Kingdom -2 average negative United States -3 Italy -3 return of -1.7%s, Japan (3) Slovak Republic -4 -4 according to the Finland Belgium -4 -5 OECD’s latest Greece Austria -6 -6 Pension Markets in Chile Portugal -7 -6 Focus. (Source Estonia Poland (4) -9 -8 OECD - Turkey (2) -15 -11 -10 -5 0 5 21/09/2012) 10 15 2
    • Pension funds real, net investment rate of return in selected OECD countries, Dec 2010 - Dec 2011 - [Source - OECD]In 2009 and 2010 buoyant Pension fund performance stock markets brought good was also hampered by returns for pension funds bond portfolios in after the steep declines at pension funds most the height of the global exposed to the financial crisis. Renewed European sovereign uncertainty in the world debt crisis. On the other economy in 2011 reversed hand, pension funds the positive trend in stock with high exposure to markets and impacted sovereign bond safe negatively on many pension havens benefited from funds, especially those most major revaluation gains. exposed to equities. 3
    • Top pension funds assets by regions, 2006-2011 - in billions of USD [Source - OECD]25000 IBCM© Research defines Intangible as an energy force:20000 Energy is liberated matter: matter is energy waiting to happen.15000 [Like finished goods] 20 There is a huge amount - a really 06 2010000 11 huge amount - of energy bound up in every material thing, verily 5000 so in Pension Funds of USD 20.1 trillion( that had RoI with an 0 average negative return of Total selected non-OECD (1) Euro area Total OECD Total G20 (2) Latin America BRICS (1) Asia -1.7%) 4
    • WhatsIntangible Value Capital 5
    • Build-up of Intangible Value Capital - 1 Subject-object distinction Intangible Value Capital = ( Intellectual Value Capital + Emotional Value Capital ) /2 Input Subtle GrossProcess Creative Action Creative Process Identical for all Action Process unique to theby Nature animate & inanimate object Quality of the relative substance Output Substance Task Accomplishment (Policies) (Practices) Qualitative QuantitativeCharacteristics Emotional IntellectualEmphasis Managerial Operational 6
    • Build-up of Intangible Value Capital - 2 Organisational Atomic Structure Intangible Value Capital = ( Intellectual Value Capital(Policies) + Emotional Value Capital (Practices) ) /2 Responsibility Resource Team Responsibility 1. Ethical 1. People 1. Ethical 2. Fiscal 2. Managerial 2. Fiscal 3. Fiscal KPIs 3. Technology 3. Fiscal 4. Fiscal 4. Operational 4. Fiscal 5. Fiscal 5. Finance 5. Fiscal - + Proton Policies + Nucleus 1.Neutrons do not influence an atoms Neutron People identity, but they do add to its mass. 2. Protons and Neutrons are packed + - Electron Practices into the nucleus, while electrons spin - n around outside. Organisational Structure of 3 Ps - Policies (Protons), Practices (Electrons) and People (Neutrons) together form one block, of 5 KPIs forming a Resource Team. People add to org Mass, CSR is acountable for Ethical Responsibility 7
    • Build-up of Intangible Value Capital - 3 Intangible Value Intangible Value Capital = ( Intellectual Value Capital (Policies) + Emotional Value Capital (Practices) ) /2 Responsibility Resource Team Responsibility 1. Ethical 1. People 1. Ethical 2. Fiscal 2. Managerial 2. Fiscal KPIs 3. Fiscal 3. Technology 3. Fiscal 4. Fiscal 4. Operational 4. Fiscal 5. Fiscal 5. Finance 5. Fiscal Intangible Energy Force Intangible 6 Stages 0 to 5 Stages of development 6 Stages 0 to 5 1 Energy Force Denominator Intangible Unit 1 1 or 0 Stages of Development Numerator Intangible 1 or 0 Present (1) or absent (0) - Binary Value 5 Optimised output Value each KPI 5 Intangible Value Capital =Average (Integer) (Intellectual Value Capital + Emotional Value Capital)/2 (25/5 + 25/5)/2 = 5 8
    • Build-up of Intangible Value Capital - 4 Intangible - the only sustainable energy resource Intangible Value Capital = ( Intellectual Value Capital (Policies) + Emotional Value Capital (Practices) ) /2- 5 KPIs are the 5 energy resource deployed for 1. Corporate + creative process of Intellectual Value Capital (Policies), 2. Corporate Action Process of Emotional Value Capital + (Practices) and 3. CSR of People (Value System), CSR - representing Regulatory, Human Rights, Labour Rights,+ Policies Environmental Rights, Anti-Corruption, incorporated within each block. Nucleus People Each KPI a substance of energy keeps its independence- Practices even while performing tasks yoked with another, enabling accomplishment of infinite succession of finite purposes by controlling each goal. Granular data enables rating to 0 to 5 with multiple process areas converging into a single dimension of Intangible. 9
    • Build-up of Intangible Value Capital - 5 Integrated rating for Quantitative & Qualitative elements 10
    • Investment Decisions By Intangible Value Capitalfor Pension Funds of USD 20.1 trillion 11
    • Pension fund assets at record high in selected OECD countries, Dec 2010 - Dec 2011 - [Source - OECD]Pension fund assets in OECD countries hit a record USD 20.1 trillion in 2011 but return on investment fell below zero, with an average negative return of -1.7%sThe United States had the largest market, with assets worth USD 10.6 trillion. But the US’s share has fallen over time, from 67.3% in 2001 to 53.2 in 2011.The weight of equities in portfolios was at a historical low in 2011. Australia had the highest, at 49.7%. The only other countries where equities outweigh bonds are the US (26.0% in bonds to 48.1% in equities) and Finland (35.4% in bonds to 41.3% in equities). 12
    • Investment rate of return in US Dec 2010 - Dec 2011 - [Source - OECD]United States Pension fund assets return on investment was a negative return of -3.0% in 2011 on assets worth USD 10.6 trillionThe weight of equities in portfolios of US was USD 5.4 trillion.The pension funds allocation to public equities declined significantly compared to past years.Based on OECD calculations, a person who had saved for retirement for 40 years in a pension plan investing 60% in equities and 40% in long-term government bonds and retired at the end of 2010 would have experienced an annual investment performance of 2.8% in Japan, 4.2% in Germany, 4.4% in the United States and 5.8% in the United Kingdom. 13
    • Pension Funds Equity Portfolio & Corporate Critical DensityA person who had saved for retirement for 40 years in a pension plan investing 60% in equities and 40% in long-term government bonds primarily is looking for sustainability of returns even if it is just 5%.Corporate Critical Density is a factor of three components - i. efficiency, ii. value system and iii. profits, that as cosmologists call critical density as the goldiilocks effect - that just everything is just right.<Martin Rees>.Intangible Value Capital is the resultant rating of the three components where People forming a nucleus with Policies provide the sustainability of - efficiency, value system and profits. 14
    • Pension Funds Equity Portfolio Management by Intangible Value CapitalPension fund performance was also hampered by bond portfolios in pension funds most exposed to the European sovereign debt crisis. On the other hand, pension funds with high exposure to sovereign bond safe havens benefited from major revaluation gains. <OECD>Running away from Equity Portfolio to Bond does not necessarily assure a better RoI, but strengthening the Equity Portfolio Management is crucial for market stability.Pension Funds to start with - get rated for Intangible Value Capital. What is missing at the moment is knowledge of their own rating.Secondly, get every equity portfolio rated for Intangible Value Capital. Invest in those in 4 (0-5) and influence the rest to reach 4. (Note -People dont change the corporate identity but add to its mass.) 15
    • IBCM© ResearchIBCM© Research having defined Intangible as a singular force of energy common to all, from a potter to a nuclear scientist, it is like zero found first as a number on its own merit and applies to all tangible matter.In the context of micro-macro analysis the usefulness is immense and furthermore pulls out granular data with ease.OECD as well as market will find the use of Intangible Value Capital in presenting data on real-time, instead as of now.Jayaraman Rajah Iyer29 September 2012Interested in rating? Send me an email: jayar.ibcm@gmail.comAlso see: DIY Corporate rating 16