Pension Pulse

Stella Dawson of Reuters reports in ekathimerini, What would a Greek exit mean for US economy? : Uncertainty over the fate of the euro currency is already dampening US economic growth and any significant worsening of the crisis would deal a blow to a recovery that is gradually gathering steam. Economists estimate that volatile markets and business uncertainty over the fate of Greece and the policy course in Europe is already shaving anywhere from one tenth to one half a percentage point from US 2012 gross domestic product growth. In a Reuters poll last week, US GDP was forecast on average at 2.3 percent for 2012 and 2.4 percent for 2013. The direct hit to growth comes through trade. US exports to the European Union account for 19 percent of total exports, and those to the euro zone represent 13 percent of the total. But when calculated in terms of GDP, the share is tiny - only 1.3 percent of total output. The indirect effects are another matter. Europe in 2010 accounted for ...

Doug Steiner of the Globe and Mail reports, Inside the Canada Pension Plan's $153-billion portfolio : Nobody likes losing every cent they have invested in something. And $288 million is a lot to lose on one investment. Especially when it’s money that Canadians are expecting to retire on. It was early 2011 when André Bourbonnais, the head of the private investing group at Canada Pension Plan Investment Board, got the news that Citibank, EMI Group’s secured creditor, had just seized the music publishing company that CPPIB had started buying an interest in back in 2007. But Bourbonnais wasn’t at all shocked. CPPIB had already written down the investment. The $288 million that had gone poof represented $17 from every one of the 17 million Canadians whom Bourbonnais was investing for. But in this game, as in so many others, it’s lose some, win some—tomorrow would be another day. Even Bourbonnais’s boss, Mark Wiseman, who is executive vice-president, investments at the Bo...

Martin de Sa'Pinto at Reuters reports, Swiss pension funds buy emerging market bonds : Swiss pension funds have been dumping sovereign bonds from troubled euro zone issuers and snapping up those of corporate and emerging markets issuers as they strive for the returns they need to maintain funding ratios, a survey found on Tuesday. A survey of 326 Swiss public and private pension funds managing 426 billion Swiss francs ($453 billion) found most had failed to achieve the yields needed to meet future liabilities, and would need to take on more risk to do so. "About 20 billion francs has gone into emerging market bond funds in both hard and local currencies, and a good portion has been switched from (developed market) foreign government bonds," said Peter Baenziger of Swisscanto, which manages $56 billion of assets, and which conducted the annual survey. "There is also plenty of evidence that funds have been dumping PIIGS (Portuguese, Italian, Irish, Greek and Span...

Last week, the Canada Pension Plan Investment Board ( CPPIB ) reported its fiscal 2012 results : The CPP Fund ended its fiscal year on March 31, 2012 with net assets of $161.6 billion, compared to $148.2 billion at the end of fiscal 2011, which marks a new all-time high for the Fund. The $13.4 billion increase in assets after operating expenses resulted from $9.9 billion in investment income and $3.9 billion in net CPP contributions. The portfolio returned 6.6% for fiscal 2012. “Overall our investment programs delivered a strong performance in fiscal 2012 despite the challenging global equity markets over the past year,” said David Denison, President and CEO, CPP Investment Board (CPPIB). “While we witnessed dramatic fluctuations in global capital markets, our diversification of assets and growing number of global investments contributed to the Fund’s resilience.” While Canadian equity markets suffered declines in the past year, CPPIB saw gains in its investments in U.S. and foreign eq...

Fen Osler Hampson, Chancellor’s Professor and director of the Norman Paterson School of International Affairs, Carleton University, wrote an op-ed for the Ottawa Citizen, Waiting for Grexit : Europe suffers from a new dilemma. It’s called “Grexit.” Coined by Citigroup’s Ebrahim Rahbari, the term of course combines “Greece” with “exit” to describe the prospect of Greece’s exit from the eurozone. The problem is we don’t know when this will happen. We don’t know how. And, we don’t know what consequences would follow. The suspense is literally killing us. Markets hate uncertainty. So too do investors. Alas, like Samuel Beckett’s play Endgame, we are witnessing the last moves of a chess game where only a few pieces are left on the board and the outcome seems inevitable. Greek’s government is Beckett’s character Hamm, unable to stand and totally blind (politically that is). The eurozone is Nell, seemingly without legs and in real danger of being relegated to the dustbin. Germany...

Before I get started, Ian Shaffer, portfolio manager and the president & CEO of Galliant Capital Management, wrote an excellent comment on several ways to profit from first Facebook share sales . I'm anti-Facebook, think it's the most overhyped tech company in the world, but traders, hedge funds and mutual funds will all be going gaga over FB, suckering in retail investors. My advice: unless you are a damn good trader, tread carefully. Now, back to a more important topic, namely, the endgame for Greece and Eurozone. It seems everyone has an opinion on how to get Greece out of its economic quagmire, and save the Eurozone, but let me go over some important points below. First, Paul Carrel of Reuters reports, Greek exit could cost eurozone 100s of billions of euros : A Greek exit from the euro zone could expose the European Central Bank and the currency bloc it seeks to protect to hundreds of billions of euros in losses, landing Germany and its partners with a crippling ...