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Investment Decisions for Pension

Funds

By

Intangible Value Capital

An IBCM© Research Presentation

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Turkey (2)Poland (4)

EstoniaPortugal

ChileAustriaGreece

BelgiumFinland

Slovak RepublicJapan (3)

ItalyUnited States

United KingdomSpain

LuxembourgSlovenia

Simple averageWeighted average

HungaryNorway

KoreaCzech Republic

SwitzerlandMexico (2)

CanadaNew Zealand (1)

IcelandAustralia (1)Netherlands

Denmark

-15 -10 -5 0 5 10 15

-11-9

-8-7

-6-6

-6-5-4

-4-4

-3-3-2-2-2

-2-2

-1-1

00

11

12

22

48

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Pension funds' real, net investment rate of return 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%s, according to the OECD’s latest Pension Markets in Focus. (Source OECD - 21/09/2012)

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Pension funds' real, net investment rate of return in

selected OECD countries, Dec 2010 - Dec 2011 -

[Source - OECD]

In 2009 and 2010 buoyant stock markets brought good returns for pension funds after the steep declines at the height of the global financial crisis. Renewed uncertainty in the world economy in 2011 reversed the positive trend in stock markets and impacted negatively on many pension funds, especially those most exposed to equities.

Pension 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.

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0

5000

10000

15000

20000

25000

2006

2011

Top pension funds assets by

regions, 2006-2011 - in billions of

USD [Source - OECD]IBCM© Research defines

Intangible as an energy force:

Energy is liberated matter: matter is energy waiting to happen. [Like finished goods]

There is a huge amount - a really huge amount - of energy bound up in every material thing, verily so in Pension Funds of USD 20.1 trillion( that had RoI with an average negative return of -1.7%)

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What's

Intangible Value Capital

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Build-up of Intangible Value

Capital - 1

Subject-object distinctionIntangible Value Capital

=Intellectual Value Capital Emotional Value Capital+( ) 2

Subtle Gross

Process

by Nature

Creative Action

Output

Input

Task Accomplishment(Practices)

Creative Process Identical for all animate & inanimate object

Action Process unique to the Quality of the relative substance

QualitativeIntellectual

QuantitativeEmotional

Substance(Policies)

Emphasis Managerial Operational

Characteristics

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Build-up of Intangible Value

Capital - 2

Organisational Atomic StructureIntangible Value Capital

=Intellectual Value Capital(Policies) Emotional Value Capital (Practices)+( ) 2

Resource Team1. People2. Managerial3. Technology4. Operational5. Finance

Responsibility1. Ethical2. Fiscal3. Fiscal4. Fiscal5. Fiscal

Responsibility1. Ethical2. Fiscal3. Fiscal4. Fiscal5. Fiscal

+

-

-

++

-

Policies

Practices

People

Proton

Electron

NeutronNucleus 1.Neutrons do not influence an atom's

identity, but they do add to its mass.2. Protons and Neutrons are packed into the nucleus, while electrons spin 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

KP

Is

n

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Build-up of Intangible Value Capital - 3

Intangible ValueIntangible Value Capital

=Intellectual Value Capital (Policies) Emotional Value Capital (Practices)+( ) 2

Resource Team1. People2. Managerial3. Technology4. Operational5. Finance

Responsibility1. Ethical2. Fiscal3. Fiscal4. Fiscal5. Fiscal

Responsibility1. Ethical2. Fiscal3. Fiscal4. Fiscal5. Fiscal

KP

Is

Energy Force IntangibleIntangible

Stages of development 6 Stages 0 to 56 Stages 0 to 5

Energy Force Denominator Intangible Unit 11

Stages of Development Numerator Intangible Present (1) or absent (0) - Binary Value

1 or 01 or 0

Optimised output Value each KPI 55

Intangible Value Capital =

(Intellectual Value Capital + Emotional Value Capital)/2 (25/5 + 25/5)/2 = 5

Average (Integer)

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Build-up of Intangible Value Capital - 4

Intangible - the only sustainable energy

resourceIntangible Value Capital

=Intellectual Value Capital (Policies) Emotional Value Capital (Practices)+( ) 2

+

-

-

+

+

-

Policies

Practices

PeopleNucleus

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, Environmental Rights, Anti-Corruption, incorporated within each block.

Each KPI a substance of energy keeps its independence 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.

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Build-up of Intangible Value Capital - 5

Integrated rating for Quantitative &

Qualitative elements

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Investment Decisions By

Intangible Value Capital

for Pension Funds of USD 20.1 trillion

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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%s

The 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).

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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 trillion

The 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.

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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.

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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 don't change the corporate identity but add to its mass.)

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IBCM© Research

IBCM© 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 Iyer

29 September 2012

Interested in rating? Send me an email: jayar.ibcm@gmail.com

Also see: DIY Corporate rating