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Capacity Building in Asset Management

Over 20 years experience in consulting and capacity building

 

Over 60 years experience in asset management with approx. US$140 billion in assets under management

Since the early 1990s, the World Bank has provided policy advice to its member countries on the design of pension systems. The advice emphasizes the importance of flexible system design within a broad five-pillar framework, customized for individual country conditions, using the principles of affordability and financial sustainability
as touchstones.

The World Bank Treasury assists in enhancing the financial sustainability of funded official-sector pension and social security schemes in member countries by strengthening their investment operations and infrastructure. In doing so, it draws on its long experience with managing the World Bank Group’s pension funds as well as other assets across a broad spectrum of asset classes in global markets, with a track record of optimizing investment returns within a framework of prudent risk parameters.

A pension fund engagement is led by an experienced investment professional with an understanding of pension-specific issues as well as front, middle, and back office aspects of investments. These colleagues bring a solid understanding of the environment and the organizational structure in which official-sector pension funds operate to each project and serve in an advisory role to senior policy makers.

While customized to individual needs, most pension fund engagements can cover the following areas:

Governance and Institution Building

Assist pension funds and plan sponsors in devising governance structures which meet the specific parameters of the investment scheme, align the incentives of fiduciaries with those of multiple stakeholders and, in the process, ensure transparency and accountability of results. Historically, good governance of official-sector pension and social security schemes has been a major determinant of financial performance.

Developing an Investment Policy appropriate to their liability structure

Assist in developing an appropriate investment policy taking into account the nature and structure of plan liabilities and the main factors driving their buildup. Assist in evaluating appropriate asset classes and instruments for pension investments, taking into account size and liquidity of domestic financial markets and asset classes, international investment options, where appropriate, and innovative ways to manage the resultant currency risk, where needed. Assist in bringing home to policymakers the implicit financial costs of the legal and political constraints which frequently characterize the investment of pension assets.

Expanding Asset Management Capacity

Assist fund managers in expanding asset management skills across a range of asset classes, by building external manager programs and/or internal capacity to manage a broad range of fixed income sectors, such as money markets, high-grade government and agency bonds, interest rate futures, and agency mortgage backed securities (MBS).

Risk Management and Analytics

Assist in developing a multi-faceted risk management function with robust
quantitative and qualitative risk indicators encompassing market risk, credit risk, and operational risk.

Legal Support

Provide legal training to in-house lawyers on protecting pension fund interests under contractual arrangements for securities lending, futures transactions, external asset manager programs, private sector custodians, and sovereign immunity issues.

Financial Technology

Provide a diagnostic assessment of financial technology needs and assist in building a robust information technology platform for portfolio and risk management requirements.

Developing a Public Communication Strategy

Assist in developing a communication strategy and reporting framework to provide transparent reporting and address frequently asked questions by various stakeholders regarding ability to meet pension obligations, investment strategy, and risks.