Historically, equities have offered long-term returns, compared with other assets. This is known as the equity risk premium. The problem for investors nowadays is that equity returns are volatile.
According to a 2011 Greenwich Associates survey of Canadian institutional investors, the most important issue investors face is market volatility (47%), followed by rate of return and funding issues (34%).
Investors tiring of equity volatility can take heart; the markets will stabilize in the second half of this year, marking the beginning of a “modest” recovery, according to a white paper released by Credit Suisse.
How can institutional investors make sense of the structural shifts in the global economy? Eric Lascelles, RBC Global Asset Management’s chief economist, gave pension plan trustees an overview of the shifts—both short and long term—at the Phillips, Hager & North Trustee Education Seminar 2012 last week at the Fairmont Royal York in Toronto.
Funding volatility is the top concern for pension plan sponsors, according to SEI’s most recent Quick Poll.
De-risking has become the holy grail of pension investment management.
With global economic issues, the ongoing European sovereign debt crisis and pension plan funding levels still a concern, who can blame investors for being worried?
While Canadians are more confident about their ability to save for their retirement, pessimism has grown dramatically, according to a report by the BMO Retirement Institute.
In September, more than 100 senior DC plan decision-makers, recordkeepers, academics and money managers gathered at Benefits Canada’s 2011 DC Investment Forum in Toronto to discuss the future of DC investing and how to help plan sponsors address these challenges and opportunities.
DC plan sponsors also need to find innovative ways to communicate investment information as well as new strategies to help members balance risk and reward.