Pension Pulse

Arlene Jacobius of Pensions & Investments reports, Ontario Teachers CEO calls alternative investments ‘too expensive’ : Ontario Teachers’ Pension Plan, Toronto, is starting to step back from investing in alternative investments such as real estate and infrastructure because they are “too expensive,” said Ron Mock, president and CEO of the C$154.4 billion ($126.4 billion) pension fund, while speaking on a panel at the Milken Institute Global Conference in Beverly Hills, Calif., on Wednesday. “There’s a lot of money crowded into the broadly defined alternatives space,” Mr. Mock said. “We find it too expensive. It’s time for us to step back.” Instead, Ontario Teachers executives are investing “between the asset classes where we found the most interesting deals today,” he said. For example, Ontario Teachers is an investor in the U.K. and Irish lotteries for their stable cash flows and high rate of return, which can be improved with technological upgrades, Mr. Mock said. ...

Martin Feldstein, Professor of Economics at Harvard University, wrote a comment for Project Syndicate on America’s risky recovery : The United States’ economy is approaching full employment and may already be there. But America’s favorable employment trend is accompanied by a substantial increase in financial-sector risks, owing to the excessively easy monetary policy that was used to achieve the current economic recovery. The overall unemployment rate is down to just 5.5%, and the unemployment rate among college graduates is just 2.5%. The increase in inflation that usually occurs when the economy reaches such employment levels has been temporarily postponed by the decline in the price of oil and by the 20% rise in the value of the dollar. The stronger dollar not only lowers the cost of imports, but also puts downward pressure on the prices of domestic products that compete with imports. Inflation is likely to begin rising in the year ahead. The return to full employment re...

BNN reports, Federal budget promises to review pension investment rules : The government says it will review a rule that prohibits federal pension funds from holding more than 30 percent of the voting shares of a company. The Federal Budget said Canadian pension funds are among the most experienced private sector infrastructure investors in the world, but currently face limits on their investment activities. The government plans to launch a public consultation “on the usefulness” of the current prohibition. But Ian Russell, President of the Investment Association of Canada, tells BNN rolling back investment limits for pension funds will have big consequences. “Those pension funds do not pay tax. So the dividends that flow from those investments would not be non-taxable,” said Russell. “Secondly, there is scope for a significant concentration of corporate Canada and voting control among these large tax-exempt pension funds.” The rule covers large federal government pen...

Greece's Finance Minister Yanis Varoufakis wrote a comment for Project Syndicate, A New Deal for Greece : Three months of negotiations between the Greek government and our European and international partners have brought about much convergence on the steps needed to overcome years of economic crisis and to bring about sustained recovery in Greece. But they have not yet produced a deal. Why? What steps are needed to produce a viable, mutually agreed reform agenda? We and our partners already agree on much. Greece’s tax system needs to be revamped, and the revenue authorities must be freed from political and corporate influence. The pension system is ailing . The economy’s credit circuits are broken. The labor market has been devastated by the crisis and is deeply segmented, with productivity growth stalled. Public administration is in urgent need of modernization, and public resources must be used more efficiently. Overwhelming obstacles block the formation of new companies...

Netty Idayu Ismail of Bloomberg reports, Hedge Fund That Made 18% on Dollar Strength Now Bets on Drop : Charlie Chan, a former Credit Suisse Group AG proprietary trader who now runs his own hedge fund, reduced bets the dollar will strengthen and added trades that would profit from a decline. Chan said he trimmed his fund’s long dollar position versus the yen last week after the U.S. currency’s rally stalled following gains of more than 10 percent in each of the past three years. He’s now betting the greenback will weaken against Asian currencies including Singapore’s dollar, South Korea’s won and India’s rupee, the founder of Singapore-based Charlie Chan Capital Partners said. A gauge of the dollar has slumped 0.9 percent in April, halting a nine-month rally that propelled it to the highest on record. U.S. retail sales, manufacturing and jobless claims have all missed estimates, leading traders to push back estimates for when the Federal Reserve will raise inte...