2022/11/10 – The Financial Industry Sets Sights on Institutional Investors: A Relational Approach to

Over the past few decades, pension funds have emerged as major players in global financial markets as the reserves they manage have grown steadily. In this context, trustees are confronted with acute dilemmas regarding how best to generate investment returns for beneficiaries. This involves crucial decisions regarding the diversification of investment portfolios, as well as decisions on whether, when, and to whom to outsource investment functions and tasks. The literature in economic geography has frequently treated outsourcing decisions as taken by the asset-owners based on criteria such as costs of coordination, availability of information regarding market segments, governance structure, (lack of) internal expertise, amount of assets under management, etc. Focusing on the outsourcing of property investment by Brazil’s largest pension funds and drawing on a relational approach, this paper investigates the actions taken by the REIT industry to attract and retain pension fund money into their investment vehicles. It is claimed that REIT managers have acted on three dimensions to capture pension fund money: 1) by influencing the regulatory framework affecting pension funds; 2) by building networks of trust with pension fund managers and trustees; 3) by adapting internal procedures to the expectations and needs of institutional investors. Our results show that a focus on the power of financial market actors to reshape relational networks to their benefit provides a different perspective on the reasons pension funds outsource investment management, thus raising key theoretical and policy issues.

Speakers: Daniel Sanfelici, Federal Fluminense University (UFF), Brazil

Daniel Sanfelici is a professor at the Federal Fluminense University (UFF) and a researcher at CNPq. He carries out research in the field of urban studies and economic geography. Currently, he leads a research project on the role of financial and corporate investors in Brazil’s commercial real estate market.

Chair: Manuel Aalbers, KU Leuven, Belgium

Manuel B. Aalbers is professor of Human Geography at KU Leuven, the University of Leuven (Belgium) where he leads a research group on the intersection of real estate, finance and states. He has also published on financialization, redlining, social and financial exclusion, neoliberalism, mortgage markets, the privatization of social housing, neighborhood decline and gentrification. He is the author of Place, Exclusion, and Mortgage Markets (Wiley-Blackwell, 2011) and The Financialization of Housing: A Political Economy Approach (Routledge, 2016) and the editor of Subprime Cities: The Political Economy of Mortgage Markets (Wiley-Blackwell, 2012). He is also the associate editor of the Encyclopedia of Urban Studies (Sage, 2010) and editor-in-chief of geography journal TESG. Most of his papers can be downloaded from https://kuleuven.academia.edu/ManuelAalbers. Finally, Manuel is also one of the founding members of FinGeo.net, the Global Network on Financial Geography.

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