Canada’s second largest pension fund, OMERS, made some big moves in its equities portfolio, according to a 13F filing with the Securities and Exchange Commission (SEC). While OMERS dumped shares in a host of well-known companies, it bulked up some of its exchange-traded fund (ETF) holdings, a sign that these products are playing a bigger role in their equity portfolios.
According to the filing, OMERS shed its entire position in big-name companies such as Bank of Montreal, Bank of Nova Scotia, Barrick and Blackberry, and added positions in firms such as CBRE Group, Lazard and McDonald’s. It also boosted holdings of three big companies: Bank of America, Echostar and General Motors.
As the fund shifted its equity holdings in response to changing economic conditions (note the shift out of Canadian banks and into Bank of America as the U.S. continues to show signs of recovery), it also bulked up its ETF holdings in a couple of key areas—OMERS bought more shares of the iShares MSCI EAFE ETF (up 14.9% to 180,925 shares) and of the SPDR S&P 500 ETF (up 18.1% to 137,185 shares).
The SEC finding tells us one thing about ETFs—as one of Canada’s largest pension plans increases its ETF holdings, we can see in plain numbers what a recent Greenwich survey indicated. ETFs are on the rise in pension portfolios—in fact, they are fast becoming part of core/satellite portfolios, with 62% of institutional funds using them in the core.