Pension Pulse

The Responsible Asset Allocator Initiative (RAAI) released its 2019 ranking of the most responsible asset allocators : The study, developed in partnership with the Fletcher School at Tufts, analyzed 197 funds comprising $21 trillion in assets to identify 25 institutions that set a global standard for leadership in responsible, sustainable investing. This year’s ranking builds on the groundbreaking first release of the report under the auspices of The Bretton Woods II program at New America in 2017. "The Responsible Asset Allocator Initiative provides a barometer of how the world’s largest financial actors are changing their behavior to address the planet's greatest challenges. The intense competition for inclusion on the 2019 RAAI Leaders List demonstrates that sophisticated investors are embracing a broader definition of fiduciary duty and, increasingly, adopting environmental, social and governance considerations into their portfolio decision-making," said Dr....

In a recent article published in the Globe and Mail, Leverage is the key to meeting Canada’s pension promise , Alex LaPlante and Serguei Zernov of the Global Risk Institute note the following: Investors have been operating in a chronic low-interest rate environment since the financial crisis and have had to look for opportunities to generate higher yield, and pension funds are no exception. While using leverage requires advanced knowledge of the theory and practice of investments, pension plans with investment management sophistication can benefit from leverage in strategic asset allocation. Indeed, sophisticated Canadian pensions have been using leverage for years to add to their returns and the authors note that even though leverage isn't a free lunch, it gives pension fund managers the ability to expand the set of possible portfolios to meet the objectives with a better risk/return trade-off: As pension funds have targets expressed as return expectations, rather th...

Yaelle Gang of the Canadian Investment Review reports, The Building Blocks of the Investment Management Corporation of Ontario : In 2016, when Bert Clark became the Investment Management Corp. of Ontario’s first president and chief executive officer, he was tasked with building the organiza­tion from scratch. Like a startup, he had the oppor­tunity to begin from square one, free of legacy systems. “I think one of the advantages we have is that we’re 25 years behind all of our peers,” he says. In 2017, IMCO began managing assets of about $60 billion on behalf of the Ontario Pension Board and the Workplace Safety and Insurance Board. Both organizations came with separate asset mixes and investment strategies, says Clark, noting IMCO’s approach so far has been managing the assets of both organizations as segregated portfolios. “And frankly, the reason we decided to do that is you can only do so many things at once and our priority, in the first instance, was to transfer the s...

The Canadian Institute of Actuaries put out a press release, Canada’s Actuaries Call for Discussions on Retirement Age : It’s time for governments and Canadian workers to talk about updating retirement ages in Canada’s social security safety net, say members of the Canadian Institute of Actuaries (CIA) in a statement released today. “Canadians are living longer than ever, and many are choosing to work beyond age 65,” says John Dark, FCIA, President of the CIA. “It makes sense to update our country’s retirement income programs to reflect this fact.” Full Canada Pension Plan/Quebec Pension Plan (CPP/QPP) retirement benefits are currently paid at 65 years, with early retirement and reduced benefits possible at age 60, and deferred retirement with increased benefits as late as age 70. The CIA’s proposal recommends deferring these ages to 67, 62, and 75, respectively, giving Canadians the opportunity to accrue more savings and ultimately receive higher benefits at a deferred age....

Preqin recently released a press release, Investors Prepare for a Market Shift in 2019 : The Preqin Investor Outlook: Alternative Assets H1 2019 finds that 61% of institutions now think that equity markets are at a peak at the start of 2019. This proportion has been rising over the past 18 months, and the sentiment has raised concerns that equity markets are due for a correction in the near future. For some institutions, this is impacting their approach to their alternative assets portfolios: key reasons investors give for investing in the industry include portfolio diversification, inflation hedging, high risk-adjusted returns and non-correlation to other asset classes. The roles that alternative assets perform for investors are becoming more pivotal in the face of a potential downturn. Increasingly, investors are beginning to act accordingly – a quarter are looking to commit more to private capital as a result of their market outlook, while 40% of hedge fund investors are pos...

Hugh Son of CNBC reports, Jamie Dimon says the US economic expansion ‘could go on for years’ : “If you look at the American economy, the consumer is in good shape, balance sheets are in good shape, people are going back to the workforce, companies have plenty of capital,” Dimon told analysts during a conference call. “It could go on for years,” he added. “There’s no law that says it has to stop. We do make lists, and look at all the other things: geopolitical issues, lower liquidity. There may be a confluence of events that somehow causes a recession, but it may not be in 2019, 2020, 2021.” When the CEO of the biggest and most powerful bank in the United States says the "expansion could go on for years," it's definitely worth noting. After crushing expectations , posting record first-quarter profit and revenue, Dimon has every right to feel very good about the prospects of the US economy going forward. In fact, should the US economy continue to grow until Ju...

During my recent trip to Toronto, I met Mike Murray, a former Managing Director at Ontario Teachers’ Pension Plan and founder of Peloton Capital Management , a new Canadian private equity firm with a long-term approach to middle-market buyouts in North America. This morning I had a chance to speak with Mike about Peloton but before I get to that, a little background on the fund (November 2018): Peloton Capital Management, a Canadian private equity (PE) firm with a long-term approach to middle-market buyouts in the North American market, launched today. Unlike many middle-market PE firms that take a short-term (3 to 5 years), generalist approach to investing, Peloton aims to differentiate itself through its long-term capital and orientation (8 to 12-year investment horizon); deep sector expertise and focus on financial services, health care, and consumer markets; and relationships-first philosophy. Founding Managing Partners Steve Faraone and Mike Murray have extensive PE expe...