A lack of strategic assets can be a deterrent to domestic investment for large pension funds
In 2023, the Government of Australia suggested that some of the country鈥檚 pension assets might be used to fund social housing or renewable energy. The idea received mixed reception, and to understand why, Lachlan Maddock of Investor Strategy News looked to Canada, where a group of business leaders called for pension funds to increase their holdings of Canadian equities.
Opening infrastructure could encourage Canada鈥檚 pension funds to invest more domestically
The Government of Canada is exploring ways to increase investments in the country鈥檚 pension fund equities, but doing so sacrifices returns, according to The Economist. Over the past decade, Canadian mid and small-cap stocks have returned just 3-4% each year, while U.S. stocks have seen a 13% return annually. Opening infrastructure to investment is another way to encourage pension funds to invest more of their capital domestically.
Domestic investment: Should Canadian pension funds focus on local companies?
Canada鈥檚 biggest pension funds are some of the world鈥檚 largest investors and their diversified portfolios span the globe. But, should they be investing more in Canadian companies? Some CEOs think so. In March, 90 CEOs signed an open letter to Finance Minister Chrystia Freeland urging her to find ways to get pension funds to invest more in Canadian companies.
Negative real estate returns have some pension funds considering a change in approach
Over the past few decades, Canada鈥檚 big pension funds have piled into direct real estate investments. But, as higher borrowing costs hit property markets, returns have gone negative. Some funds are considering whether they should take a step back and make this type of investment through third-party managers.
Sustainable investing doesn鈥檛 only mean companies that are already green鈥攍arge investors can push polluters to become greener
Many pension funds are pledging to invest in green assets with net-zero emissions, but these investments tend to yield lower returns than the broader market index. Beyond that, a hard shift toward green investments could remove the incentive for heavy emitters to clear up their act.
New York City Public Pension Fund pushes RBC for energy transparency
The New York City Public Pension Fund has pushed Canada鈥檚 largest bank to deliver greater transparency about its investments in green energy and fossil fuels. The Royal Bank of Canada (RBC) will begin publishing the ratio between the two types of energy investments in its portfolio.
After a slow 2023, exchange-traded fund listings are revitalizing
In 2023, more than 120 exchange-traded funds (ETFs) were delisted in Canada鈥攎ore than four times as many as in an average year. Even so, there was still a net gain in the overall number of ETFs, with 164 new ones launching for the year. With numbers in for the first quarter of 2024, the high number of delistings appears to have been an anomaly.
苹果淫院 Desautels faculty members and researchers celebrated at Bravo Gala
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苹果淫院 hosted its annual Bravo Gala on Thursday, March 21, which honours its faculty members and researchers who have won special awards, memberships and prizes over the past year. 苹果淫院 Desautels is proud to announce 14 of its faculty amongst the distinguished honourees this year. Congratulations to our deserving laureates! Full list below. #Bravo2024
Advanced life deferred annuities can give retirees peace of mind
For people with defined contribution pension plans, longevity risk is a significant concern. You don鈥檛 want to outlive your money. The issue is compounded because today鈥檚 retirees have longer life expectancies than ever before, writes Sebastien Betermier in Benefits Canada.
MIPC asks students to devise decumulation strategies for an inflationary environment
For its 7th edition, the 2023 苹果淫院 International Portfolio Challenge (MIPC), as part of 苹果淫院鈥檚 Sustainable Growth Initiative (SGI), gathered over 80 teams from 27 countries to address retirement challenges amidst inflation. Participants tackled the task of developing decumulation strategies for the fictional Maple Leaf Pension Plan, simulating real-world data.
Pension funds can drive greater returns by participating more directly in value creation
Pension funds manage enormous amounts of capital, but they don鈥檛 create as much value as other players in the financial sector. Entrepreneurs, venture capitalists and private equity funds all play a more direct role in launching projects and creating value.
Long-term investments help Canadian pension plans outperform international counterparts
Canadian pension funds have outperformed their counterparts elsewhere, and a recent study co-authored by Associate Professor of Finance Sebastien Betermier examines how they鈥檝e accomplished this. The study analyzes four deals 鈥� in the agricultural, railway transportation, real estate development, and financial services鈥� that diversified their holdings and enabled their success.
More Canadians are renewing their mortgages at higher rates, as economy heads toward forecasted recession
More than 3 million Canadians will be facing mortgage renewal in the next 18 months 鈥� and with interest rates still at their highest level in years, many will face payments that are 30-40% higher. 鈥淚nflation has been off the charts for the past couple years, and when the Bank of Canada raises interest rates, it is to bring inflation down,鈥� explains Sebastien Betermier, Associate Professor of Finance.
Canadian pension funds divestment of private equity holdings rebalances portfolios
Canadian pension funds are strategically divesting from their private equity holdings to realign their portfolios. Recognizing the inherent lag in private equity valuations compared to publicly traded assets, the move aims to address potential overvaluations, particularly in the context of rising interest rates.
Public pension plans in Canada and Australia achieve efficiencies through professional asset management at scale
Canada and Australia are both examples of successful pension fund management, said Prof. Sebastien Betermier in a keynote presentation to the Government Employees Pension Fund (GEPF) Thought Leadership Conference in Cape Town, South Africa. While there are differences, both capture similar efficiencies: getting people to save money early, so they benefit from compounding.
