Notes From Montreal Pension Conference
Spent the last couple of days at a pension conference here in Montreal, Sommet Avantages & Retraite. There were numerous excellent presentations covering all sorts of pension issues. Here are some brief bullet notes:
- Bernard Morency, Executive Vice-President, Depositors and Strategic Initiatives at the Caisse de dépôt et placement du Québec, kick-started the conference with an excellent presentation on the future of pension plans. Mr. Morency made a forceful argument that if defined-benefit plans are going to survive, then all stakeholders will need to make concessions. During the question period, I asked him if he sees a role for the private sector and he said "yes because if we leave pensions all up to the government, chances are they will understate the true cost."
- I assisted most of the investment workshops. Ron Chesire of Triasima spoke on integrating lessons on behavioral finance in risk management.
- Bernard Augustin of Addenda Capital focused on liability-driven investments (LDI) arguing that the low interest rate environment requires a better understanding of how to separate out the alphas and betas in a portfolio.
- There was an excellent presentation by Emmanuel Matte of Standard Life on how to properly assess a fund's risk across all investment portfolios. Importantly, instead of dollar allocations, risk budgeting should be implemented based on economic scenarios. Mr. matte demonstrated that this approach adds significantly to returns while minimizing downside risk.
- Rene Martel of PIMCO gave a good technical overview of LDI, explaining bond leverage using repos and total return swaps into various equity indexes.
- My former boss at PSP, Pierre Malo, now at Perseus Capital, explained how to manage the hidden bomb of currency risk. I have already referred to this topic on my blog. And I thank Pierre for inviting me to this conference as his guest.
- Finally, the most fascinating and inspiring presentation came from Martin Lafontaine of GSK who worked at Project Hope in Munsieville, South Africa. Martin discussed the five factors of success and how they united rival factions in Munsieville to hold World Cup mock games for the children of Munsieville. You can follow Martin's blog but please donate generously to Project Hope.