DB plan sponsors are looking to soften ties between their long-term returns and public equity markets. In doing so, more plan sponsors are turning to alternative investments with 48% saying real estate, infrastructure and private investments are gaining their interest, a new survey from RBC Investor Services found.
“Canadian pension plans are increasingly looking to the alternatives asset class for long-term assets that are better matched to their liabilities, and less tied to the swings of the stock markets,” said Scott MacDonald, head, pensions, insurance, and sovereign wealth strategy for RBC Investor Services. “With many governments seeking investors to renew ailing infrastructures, there are deals to be made and pension plans are looking to gain exposure to these assets in their portfolios.”
Real estate is attractive
Real estate is the preferred choice with 45% of respondents planning to add these assets to their portfolio (even if they are already invested in this area). Thirty-four percent plan to invest in infrastructure assets.
DB in the future?
Respondents were also asked to comment on the status and future of their DB plans. Sixty-one percent of plan sponsors said they have no intentions to close their plans, 39% have already closed their plan to new members and 12% plan to do so within the next two to five years.