Pension Pulse

Professors R. Kent Weaver and Daniel Béland wrote an excellent comment for Policy Options, Fork in the road for Canada and Quebec pension plans : Canada’s public pension system and the changes to it over the years make a fascinating case through which to explore the impact of federalism on public policy. When the Pearson government proposed the Canada Pension Plan (CPP) in the mid-1960s, Quebec opted out and set up a nearly identical pension scheme, the Quebec Pension Plan (QPP) . Successive Quebec governments used pension surpluses to feed the newly created Caisse de dépôt et placement du Québec, an institutional asset manager that served as a key tool for provincial economic development in pursuit of the statist project of the Quiet Revolution. Since then, CPP and QPP have mostly developed in parallel, but signs of policy divergence have emerged in recent decades. The unique dynamics of federalism have shaped the evolution of the two programs as they have been adapted to deal ...

Matt Scuffham of Reuters reports, Top Canadian investor says U.S. behind in race for infrastructure capital : The United States is lagging behind Canada in the race to attract capital for infrastructure projects despite launching a charm offensive to global investors and reaching out to officials north-of-the-border for advice, a top Canadian investor said. Canada is setting up an infrastructure bank to facilitate private investment in projects such as new roads, bridges and tunnels but faces competition from the United States, where President Donald Trump is planning $1 trillion of infrastructure spending, funded mostly by the private sector. Bjarne Graven Larsen, chief investment officer at Ontario Teachers' Pension Plan, said Canada has an advantage in already being home to a number of the world's biggest infrastructure investors and having an established track record in utilizing public and private funding to build infrastructure . "I think Canada is actual...

James Mackintosh of the Wall Street Journal reports,  World’s Biggest Pension Fund Wants to Stop Index Trackers Eating the Economy : If investors continue to pile their money into passive index-tracking, at some point markets will stop doing their job of allocating resources efficiently in the economy. Perhaps they already have. The threat is big enough that the world’s largest pension fund is preparing to put more of its money with active managers—who charge more and on average underperform—in an attempt to keep markets functioning properly . Hiromichi Mizuno, chief investment officer of Japan’s $1.4 trillion Government Pension Investment Fund, worries that market efficiency will be damaged by the rise of passive funds, which rely on trading by active investors to set the price of stocks. Since the signals from market prices are vital to determining the movement of capital around the economy, less efficient signals would hurt growth and lead stock indexes to rise by less ...

David Randall of Reuters reports, Billionaire hedge-fund manager Tepper adds contrarian energy stocks : Hedge-fund manager David Tepper, known for taking positions in out-of-favor companies in his Appaloosa Management hedge fund, added stakes in embattled Wells Fargo Co and several energy companies in the second quarter as the price of oil fell, according to quarterly filings released Monday. Among the six new energy companies Tepper added to his fund were Antero Resources Corp, Southwestern Energy Co, and Chesapeake Energy Corp . Shares of each company are down by 20 percent or more year-to-date as part of a broad sell-off in energy companies. The price of oil hit a 9-month low in June due to concerns about a glut of supply. Overall, energy companies in the S&P 500 are down 12.7 percent for the year through Friday, compared with a 9.3 percent gain in the broad index . Tepper, who manages roughly $17 billion overall, bought approximately 681,000 shares of Wells Fargo dur...