CIO Peter Branner was interviewed recently by IPE and talked about future growth, responsible investing and his vision on long-term.
In the interview, Peter talked about where APG can find future growth for pension fund clients and its beneficiaries: “I think it’s fair to say that the return expectations in Europe are of course very much linked to the fact that we have negative yields, and every asset class is, somewhat, feeling the gravity of that fact. So, for sure it will be a challenge in liquid asset classes for the foreseeable future. And for demographic reasons, Europe will not be the place where you see global growth, for sure.”
However, Peter does sees attractive possibilities in Europe, for example sustainable investments in green technology, where he says Europe is at the forefront in areas like wind turbines: “We will continue to invest in infrastructure in Europe, an area where I think Europe is in high demand. And even with the gravity to negative yields there is still quite a good yield on those deals. I think that it makes perfect sense in Europe to focus on that area, whereas, if you look at the liquid markets, maybe our eyes are more focused on going further east towards Asia. I think it’s fair to say that more of the deals we see in infrastructure and real estate will come from Asia. That’s why we are also beefing up our presence in Hong Kong.”
With clients like ABP under intense scrutiny, ESG is a key consideration, particularly in the sensitive area of exclusions. Here, APG is driven by what its clients want in terms of ESG criteria, but in line with other pension and asset managers it has taken its own stance in recent years and has integrated ESG in portfolio management.
In terms of ESG, as Peter puts it, “the whole investment organisation is basically doing it”. He explains: “Maybe I’m talking the obvious here, but I think it’s so important that sustainability is embedded in the investment process. Because if you don’t do it, it becomes an overlay and it doesn’t necessarily benefit our ultimate clients. Whereas if it is integrated in the investment process, some of these sustainability themes work to the benefit of the companies that we invest in, and we think that they will become long-term winners by doing it. That will be to the natural benefit of our investors and our pension holders.”
Peter also has a clear vision on the APG investment organisation: “My role is to help the organisation to be able to be long-term investors. I really think that a professional investment organisation is dependent on two things: hiring a lot of investment talent, and then keeping it together for a long time. It sounds simple, but what is talent changes over time. Really, to attract and keep talent on board is top of my agenda. To make that happen, you need to create a certain level of civility and trust in an organisation. What we can call psychological safety, for employees to feel that they can act within this long-term.”
The use of technology can be beneficial for APG’s pension fund clients, says Peter: “I think technology and digitalisation will play a big role in all parts of the investment process, and the whole value chain of what we offer here. They all have to have a certain element of skill in this area. It’s like languages. They all need to speak English; now they also need to talk a little bit of digitalisation. Or at least to be able to set requirements for how they see their data being digitalised fully. I think that has happened across the company. Then you have an extremely powerful proprietary data warehouse that you can use to benefit clients in the investment process.”
Read the full interview by Liam Kennedy on the website of IPE.