Pension Pulse

Last Saturday, Lisa Schmidt of the Calgary Herald reported that AIMCo sees returns rebound : The province's investment manager has won back significant ground over the past year, its chief executive said Thursday, following tough losses in 2008. Alberta Investment Management Corp., known as AIMCo, said overall returns are running in the range of about 17 per cent, said Leo de Bever, who will mark two years at the helm next week. "If you look at the return on the Heritage Fund, that's sort of indicative of what we did on the endowments and for the pension plans," he said. The rainy day fund gained $2 billion to $14.4 billion for the 2009-10 year, compared with a $2.6-billion loss a year earlier. But the recent market volatility has already pared back some of those overall investment gains, de Bever also cautioned. "So far, we're still above water, but it's mostly been because of our effort in active management. The markets themselves haven't ...

Luca Di Leo and Darrell Hughes of the WSJ report, U.S. Growth Slowed in 2nd Quarter : The U.S. economy slowed in the second quarter as the government said the recession was deeper than earlier believed, adding to concerns over the recovery's strength. The Commerce Department Friday said U.S. gross domestic product, or the value of all goods and services produced, rose at an annualized seasonally adjusted rate of 2.4% in April to June. In its first estimate of the economy's benchmark indicator, the government report showed growth was lifted by business investments and exports. Consumer spending, a key growth engine for the U.S. economy, made a smaller contribution to growth. Economists polled by Dow Jones Newswires were expecting GDP to rise by 2.5% in the second quarter. Stock futures weakened after release of the data; Standard & Poor's 500 futures were recently down about 11 points to 1086; Dow Jones Industrial Average futures were off 82 points to 10327. ...

A senior officer at the Caisse inadvertently brought something to my attention yesterday. When the Caisse released its 2009 results back in February , the annual report wasn't made available then, and I didn't provide a full discussion on it. The Caisse did publish its 2009 Annual Report in mid-April, stating that accountability has greatly improved : The Caisse de dépôt et placement du Québec released its annual report for fiscal year-end 2009 this morning, after it was tabled in the National Assembly by the Finance Minister. In addition to the detailed analysis of the financial results published on February 25, the 2009 annual report contains a new section that, among other things, includes all the accountability reports requested by the Quebec government following the May 2009 Parliamentary Commission. Here are the highlights from these reports. Report on the Caisse’s Contribution to Québec Economic Development • The Caisse uses three levers to support its action in...

Daniel Thomas of the FT reports, CBRE upbeat on global recovery : CB Richard Ellis, the world’s largest real estate consultancy, has reported the strongest growth in revenue and earnings since 2007 as it has benefited from the global recovery in commercial property activity. CBRE, whose main business is advising on the acquisition and leasing of commercial property around the world, has been one of the main beneficiaries of improving market conditions. Commercial property markets slumped for almost two years after peaking in 2007, but have stabilised in most countries over the past year. Brett White, chief executive of CBRE, told the Financial Times that the rebound in global commercial real estate was progressing apace. “We are a good proxy for the global property market. Virtually all global economies are in early stages of recovery and others such as China are in full-blown expansion phase, and [so] the majority of property markets are either flat or slightly improved...

Living in Montreal, I tend to focus way too much on Quebec and Ontario based funds. I was skimming through BC Investment Management Corporation's ( bcIMC ) website today and saw they posted their 2009-2010 Annual Report . bcIMC doesn't get a lot of press coverage but they're one of the largest public pension funds in Canada and have performed well over the long-run sticking to sound principles. I briefly covered their 2008-2009 results last year in my post on cleaning up pension funds , and mentioned the following: How did it perform in 2008-2009? From the annual report, we see that they lost 14.6% in 2008-2009 relative to their benchmark of -11.1%. In other words, they underperformed their benchmark by 3.5%, which is considerable, but their overall results are among the best of the large funds. Interestingly, bcIMC which is known to be "less sophisticated' than its counterparts in Canada, managed to lose a lot less than most of them and its senior managers ...

The Netherlands CPB Bureau of Economic Policy Analysis just released its world-trade monitor for the month of May : World trade volume Based on preliminary data, world trade volume increased by 1.8% in May from the previous month, following anupwardly revised decrease of 1.1% in April. Import volumes went up in the advanced economies as well as emerging Asia and emerging Europe, whereas Latin America and Africa / Middle East posted sizable declines. Import growth was extraordinarily high in Japan. Export volume increased in all major regions with the exception of emerging Europe. In May, world trade was 3% below the peak level reached in April 2008 and 23% above the trough reached in May 2009. Monthly trade figures are volatile and focus on ‘momentum’ is therefore preferable. Momentum remains strongly positive. In the three months up to May, world trade was up by 5.0% from the preceding three months. Momentum was again highest in Latin America, while it declined somewhat in emerging A...

From systemic risk of capitalism , we move on to more current events. I had lunch today with Greg Gregoriou , a professor of Finance at SUNY (Plattsburgh) Greg has published many books and articles, and his most recent article with Razvan Pascalau on the optimal number managers in funds of hedge funds has garnered much attention. Interestingly, while some major funds of hedge funds lost out in the crisis , assets from global pensions remain stable. Moreover, hedge funds are much more focused on meeting institutional demands : Pension funds globally typically allocated less than 5 per cent of their portfolio to hedge funds or funds of hedge funds (while targeting an allocation of 6-10 per cent), and while this share has increased over the last few years, many expect it to double or triple in the years ahead. In the US, private sector pension funds look to allocate on average up to 10 per cent of assets to hedge funds, a little ahead of America’s public sector pensions, which t...