The increase of foreign equity investments by Canadian pension funds is continuing, according to Lea Hansen, principal with Greenwich Associates.
“That trend started many, many years ago and it’s now exaggerated with the elimination of foreign investing constraints,” she said at yesterday’s CPBI pension investment forecast 2007 seminar in Toronto.
There’s expected growth on behalf of plan sponsors in fixed income and not just international—which is the obvious area because of the elimination of the foreign property rule—but also domestically.
“Allocations to hedge funds and private equity are up modestly, but significantly lower than what plan sponsors planned to do last year,” Hansen said. “And this has been the case for the last five years since we’ve enquired about plans for investment in hedge funds and private equity.”
She also noted that plan sponsors in Canada are more likely to be looking at portable alpha strategies than those in the United States.
Unlike the U.S., Canadian plan sponsors are maintaining their commitments to their defined benefit(DB)plans, “which clearly is a wonderful opportunity for investment consultants and investment managers.”
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