As eurozone nations continue to struggle with debt, many predict that emerging markets will continue to outperform developed markets in 2013. Brazil, Mexico, Russia and Thailand will likely see 3.5% to 4% growth; India, 5% to 6%; and China, 8%, according to Warren Jestin, chief economist with Scotiabank, speaking at the Economic Club of Canada’s annual outlook event in January.
Since the financial crisis of 2008, pension plans have struggled for additional returns. Unable to meet their liabilities with the typical equities and fixed income portfolio, a lot of plans have been moving into alternative investments, specifically, hedge funds.
In an informal poll of investors in attendance at a recent CIBC Mellon event in Toronto, 38% of respondents indicated they were invested in hedge funds and 38% said they were undecided. When asked if they were invested in or plan to be invested in alternatives, hedge funds drew the most interest.
Plan sponsors are coming to grips with the realities of a challenging global marketplace as they face severe market volatility on one side, and major global economic imbalances on the other.
As Europe's banks balance the books, there will be global winners and losers.
High-grade corporate bonds are better investments than government securities, argues John Braive, vice chairman of CIBC Global Asset Management.
Coverage of the Benefits Canada Benefits and Pensions Summit.
In a world where markets turn on a dime, the underlying economic fundamentals are often shoved to the side. “Diamonds are forever,” noted Avery Shenfeld, senior economist with CIBC World Markets, in an economist panel at the Benefits Canada Benefits & Pension Summit. “But when it comes to global economies, nothing else is really forever.”
First and foremost, custodians keep an investor’s assets safe and secure. But as pension plans continue to invest in more sophisticated assets—private equity, derivatives and hedge funds—custodians are no longer simply dealing with traditional stocks and bonds.
The uneven global economic recovery will continue to create a two-speed world where emerging economies will persistently outpace those in the developed world.