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Global investor confidence rose by 3.5 points to 122.9 from July’s level of 119.4, while the confidence of North American institutional investors declined slightly by 2.2 points, from 120.6 to 118.4, according to results from the State Street Investor Confidence Index for August 2009.

The index showed that confidence among Asian investors fell 2.3 points, from 94.1 to 91.8. By contrast, European institutional investors displayed increased risk appetite as their confidence benchmark rose 4.3 points to 109.2, up from 104.9 last month.

The State Street Investor Confidence Index measures investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors.

“This month’s increase represents the eighth consecutive improvement in global investor confidence and places the risk appetite of institutional investors firmly in the range that is associated with accumulation of risk exposures,” said Harvard University professor Ken Froot, who helped develop the index.

“This month, we note some increased regional variation across the indices,” added Paul O’Connell, director with State Street Associates. “While European institutional investors continued to ‘catch up’ with their North American counterparts, in terms of reallocating out of cash, North American and Asian institutions displayed some ambivalence about further reallocations. We can see European confidence remains somewhat below that of North American institutions, and that caution prevails in Asia.”

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Sun Life wins communication award

The Insurance and Financial Communicators Association (I.F.C.A.) has awarded Sun Life Financial for communication excellence.

As part of the I.F.C.A. 2009 annual competition, Sun Life received the Best of Show Winner award for its Benefits Bulletin newsletter.

The newsletter is from the company’s group benefits division and helps plan members better understand their benefits in order to use them effectively.

Sun Life was also honoured with Awards of Excellence in four initiatives:

• The Advisor Prospecting Tool – helping advisors demonstrate the importance of retirement planning to prospective clients; • The Group Tax-free Savings Account print communications; • “What are you squirreling away?” – a campaign introducing a new defined contribution pension plan; and • “Impressions of Provence” – supporting a financial advisor convention.

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Standard announces two new appointments

The Standard Life Assurance Company has appointed Jacques Lépine as regional vice-president, eastern region, retail markets, and Mike Pastuszak to manager, business development, group savings and retirement.

Lépine’s role in the retail markets division will be to build upon distributor relationships in the east. Pastuszak’s role will be to service brokers in Ontario and strengthen the company’s distribution through the broker channel.

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Employers altering pension plan policies

In response to the recent economic crisis, corporate pension funds have been making changes to their investment programs, including reducing their target equity allocations and replacing their fund managers. In spite of the changes, few funds have taken steps to better plan and implement risk strategies or lower costs, according to a new survey by Watson Wyatt.

The survey shows that two-thirds (67%) of companies have made or are planning to make policy changes in 2009 and 2010 to their defined benefit (DB) plan asset allocations. By next year, these organizations project that they will have decreased their average target equity allocations to 47.8%, a nearly 10-percentage-point drop since last year. The survey also found that almost three-quarters (73%) of companies have hired or fired managers since June 2008, with 52% having both hired and fired managers.

In terms of the measures employers are taking to improve their DB governance strategies, the survey showed mixed results. Less than half (41%) will have implemented cost-cutting strategies by the end of 2009, while only 12% will have established a risk advisory committee. However, nearly two-thirds (62%) have taken a more stringent approach to managing fiduciary risk since June 2008, and 62% will have conducted stress tests on their ability to meet future funding requirements by the end of 2009.

“Given the current market, finding solutions to reduce exposure to risk and improve overall investment performance is critical,” said Carl Hess, global director of investment consulting with Watson Wyatt. “While some employers may be limited by the steps they can take, most should be able to find ways to better manage their risks, optimize returns and improve their overall governance strategies.”

Employers have also been making changes to the investment lineups of their defined contribution plans — more than half (56%) have already made changes since June 2008, or are planning to by the end of 2009. Many of these changes focus on adding or deleting existing investment funds. Nearly half (45%) of companies have added new U.S. equity funds to their lineups, while 62% have dropped an existing U.S. equity fund.

The survey includes responses from 85 senior-level financial executives from large U.S.-based companies.

(08/26/09)