THE INTERNATIONAL NEWSPAPER OF MONEY MANAGEMENT | APRIL 15, 2024 | PIONLINE.COM | $16 AN ISSUE / $350 A YEAR
SPECIAL REPORT THE ENERGY TRANSITION
How U.S. election could affect energy investing Rachel Jessen (Biden), Christian Monterrosa (Trump)/Bloomberg
Uncertainty surrounds incentives linked to Inflation Reduction Act By BRIAN CROCE
AT RISK: The tax credits contained in the IRA may not survive a second Trump presidency, some observers said.
Pension Funds
Did 5 grad students just cook up a fix for Chicago’s pension funding troubles?
Asset managers and consultants are closely watching how the U.S. presidential election could impact renewable energy investing. Those with a focus on the sector are trying to discern whether politics around, and specific economic incentives borne out of, the Inflation Reduction Act and its myriad tax credits for clean energy will change after the November election.
”I think anybody that is going to sit there and wait until December to adjust their portfolio could really face some adverse outcomes because elections can change policy, and policy can change economics, and that can really change valuations and so forth for renewables,” said Tyler Rosenlicht, a senior vice president and portfolio manager for global listed infrastructure who also serves as head of natural resource equities at Cohen & Steers. Rosenlicht said he and his colleagues are very focused on what could happen after the election between President Joe Biden and former President Donald J. Trump, who have vastly different views on
renewable energy. Cohen & Steers is positioning itself to ensure it comes out ahead after the election, Rosenlicht said, adding that is “why we come to work every day.” “There are situations where if the IRA gets rolled back it’s a dramatically, dramatically negative outcome for the existing stock. There are situations where if the IRA gets rolled back it’s not a big deal or really good. So our day to day is spent trying to understand that range of outcomes and where the mispricings are.” Cohen & Steers manages an $8.4 billion infrastructure portfolio.
n The election notwithstanding, investing in energy is going full speed ahead. Page 14 n Like ESG, energy transition investing means different thing to different people. Page 16
SEE ELECTION ON PAGE 15
MAN WITH A PLAN:
Hedge Funds
Jonathan Halpert, owner and chief medical officer of Priority 1 Urgent Care, said tax credits and labor market dynamics factored into his decision to offer a workplace plan, but weren’t the only reason.
Fired employees detail concerns on Bridgewater Complaint over termination of execs airing dirty laundry
By ROB KOZLOWSKI A team of five University of Chicago graduate students won a Harris School of Public Policy competition with a proposal of nine initiatives designed to save the city of Chicago between $200 million and $400 million a year to shore up its woefully underfunded pension funds. The team of graduate students — Syed Ahmad, Anthony Beaupre, Liam Gluck, James Karsten and Greg Rudd — was awarded the $10,000 first prize in the inaugural Harris Policy Innovation Challenge, which tasked graduate students to come up with solutions to the city of Chicago’s pension funding crisis. The team was one of eight that competed in the challenge and one of three finalists that made presentations at an April 3 event at the school. The finalist teams were judged by a panel that included Dominic Garcia, former CIO of the New Mexico Public Employees Retirement Association and current chief pension investment strategist at CBRE Investment Management. In his presentation, Ahmad said the team generated 28 different ideas specifically intended to increase funding and growth and decrease liabilities. “The advantage of taking a simplified view like this is it makes diagnosing root
More on the energy transition:
By LYDIA TOMKIW
Retirement
Tax incentives and state mandates driving surge in new 401(k) plans Cerulli projecting a gain of 230,000 plans by 2028, raising hopes of closing ‘coverage gap’ By MARGARIDA CORREIA The age of startup retirement savings plans may just be getting started. Cerulli Associates, for one, anticipates a surge in 401(k) plans, projecting more than 900,000 by 2028, or roughly 230,000 more
than there were in 2022. “By the end of the decade, we could be looking at close to 1 million 401(k) plans,” said Shawn O’Brien, Cerulli’s director of retirement, during a March 21 webinar on the U.S. retirement market. Record keepers for retirement
plans are also bullish. Guideline, a San Mateo, Calif.-based digital record keeper, for example, is seeing sharp growth in first-time plans, signing up roughly 13,195 plans in 2023, more than double the 6,510 plans logged in 2020. “We’re seeing continued rapid growth in new plan creation,” said Jeff Rosenberger, Guideline’s chief operating officer. Other record keepers are also
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Two former Bridgewater Associates executives allege their criticism of the giant hedge fund’s performance and transactions costs were part of why they were fired, and the insiders’ complaint has raised fresh concerns among pension funds and other institutional investors. Last year, Bridgewater’s flagship Pure Alpha II fund lost 7.6% while its All Weather fund returned 10.6%. Although Pure Alpha II notched one of its worst annual declines since its 1991 inception, the fund rebounded almost 16% in the first quarter. Bridgewater is currently managing approximately $120 billion in assets for 260 clients, according to a February presentation for the Alaska Permanent Fund Corp. Alaska Permanent remains a client and declined to comment. Houston Police Officers’ Pension System has terminated hedge fund giant Bridgewater Associates from two underperforming portfolios. The $7.5 billion pension fund’s board approved terminating its investments in Bridgewater Pure Alpha and Bridgewater Major Markets Fund at SEE BRIDGEWATER ON PAGE 24
SOUND BITE BALYASNY’S HANNAH DINARDO: ‘Our
goal is to convert as many of the top-performing interns to full-time as we can.’ Page 6
Danish funds eye defense assets Some funds are raising allocations, noting that a safe society leads to a sustainable future. Page 3