Members of the Pension Investment Association of Canada saw their managed assets grow by 7.4 per cent in 2020, according to a new report.
In its defined benefit asset mix report covering 2020, the PIAC found its members’ DB pensions grew by 7.4 per cent, from $2.286 trillion to $2.454 trillion, over the course of the year. The report also revealed a significant amount of variance in the membership’s approach to investing.
The average pension plan had about 40 per cent of its assets invested in fixed income exposure. The top quartile of fixed income investments was an exposure of about 47 per cent, while the bottom quartile was about 27 per cent exposure. In comparison, the bottom quartile of fixed income exposures also hovered around 27 per cent in the PIAC’s 2019 report; while it’s higher exposures reached about 43 per cent of total portfolios, the average was 37 per cent.
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The highest fixed income position taken by one of the PIAC’s members was an exposure of about 75 per cent of its total portfolio, while at least one member reported having no fixed income exposure at all.
As a percentage of total fixed income exposure, the defined benefit plans were, on average, most invested in long-term bonds, which accounted for 25 per cent of all fixed income investments. Canadian universal bonds made up 17 per cent of the fixed income portfolios.
On the equities side, the PIAC report showed its average member had about 41 per cent exposure, with half of all members registering equity exposures between 33 per cent and 53 per cent. One member had an equity exposure of about 81 per cent of its total portfolio, while another sat at just nine per cent.
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On average, global all-cap equities were the largest category of equity exposure in member portfolios, representing about 25 per cent. Global large-cap equities, at about 17 per cent, was the second largest category.
There was far more consensus around DB plan sponsors’ strategies on alternative asset exposure, according to the report. Half of members had exposures between 11 per cent and 29 per cent, with the average exposure sitting just above 21 per cent. This is almost identical to the figures found in the 2019 report, which noted the middle half of members had an average alternative asset exposure between about 12 per cent and 29 per cent.
In addition, at least one plan registered no alternative equity exposure and one had an exposure above 50 per cent.
In terms of the average percentage of alternative asset exposure, real estate equity — at about eight per cent — was the most popular category in the PIAC members’ portfolios, followed by infrastructure equity at about seven per cent.