Nearly eight years ago, Canada did away with the Foreign Property Rule (FPR) that forced tax-deferred retirement plans to invest primarily in Canada. Today, many plans still hold mostly Canadian investments. One reason: significant interest in liability-driven investing (LDI).
The removal of the foreign property rule (FPR) in 2005 was big news among tax-deferred retirement plans. No longer were these plans shackled to the Canadian market—which represents a small percentage of the world’s economy—for 70% of their assets. They could stop paying additional fees to gain foreign equity returns through derivative products. And they would no longer have to closely monitor the 30% limit and rebalance assets to avoid penalties.