Tue, Jul 29, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Greenwich Associates: Canadian institutions adjust portfolio strategies after asset decline, more to invest in alternatives

Monday, April 05, 2010
Opalesque Industry Update – Canadian institutional investors are said to be shifting portfolio strategies after a 17% year-to-year decline in asset values from 2008-2009. A report by Greenwich Associates, a Stamford, Connecticut-based consulting firm, showed that funding ratios among Canada’s largest pension funds declined to 82% from 94%, while Corporate funds saw their reported funding levels decline from 102% in 2008 to 89% in 2009, and funding levels for public sector/provincial plans fell to 90% from 95%.

According to the report, Canada’s pension funds adopted an increasingly conservative strategy amid the turbulent markets in 2008 and 2009. A combination of declining equity valuations and proactive shifts in portfolio asset mixes brought down institutional allocations to domestic equity to 16.7% of total assets in 2009 from 18.7% in 2008.

It added that at least 40% of Canadian plan sponsors disclosed in 2009 they would make substantive changes in their asset mixes in the coming 12 months, up from 31% in 2008. If the plan pushes through, the changes will result in additional reductions to domestic equity allocations. Some 17% of Canadian funds said they would significantly reduce allocations to local stocks; only 5% plan to increase them. It appears much of the cash moved out of domestic equities will be invested in alternative asset classes, the report said.

However, Greenwich noted that the proportion of Canadian institutions using a manager for EAFE/international equities increased to 76% in 2009 from 68% in 2008, and the share of funds using U.S. equities increased to 72% from 69%.

There is also a growing trend among Canadian institutions to invest in alternative assets, including private equity, hedge funds and infrastructure. 4% of funds plan to hire in each of hedge funds and private equity, the latter share representing a decrease from the 6% of funds that reported plans to hire a private equity manager in 2008.

Source.

Other news from Canada
Meanwhile, a report from Financialpost.com showed that several cash-strapped states in the U.S. have relaxed rules on casino operations and Canadian hedge funds are ready to cash in. Toronto-based Clairevest Group Inc and its U.S. development partner, Lakes Entertainment Inc. of Minneapolis, Minnesotta, are planning to take over a state-owned casino resort in Mulvane, Kansas, after Harrah Entertainment Inc., which originally won the $500m project, backed out.

Last month, Toreigh Stuart, CEO of Man Investments Canada Corp., told Nationalpost.com that the investment landscape in Canada had changed as hedge funds were being repackaged, repurposed and sold in a format accessible to Canadian retail investors. As part of this shift, hedge funds are becoming subject to the same stringent regulations required of mainstream products, such as mutual funds.

And a recent research paper entitled “The Great White North,” which concluded that Canadian hedge funds outperformed their global peers, has been awarded the 2009 AIMA Canada – Hillside Research Award in early March.

– Precy Dumlao

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Hedge fund manager Winton Capital making headway with long-only strategy[more]

    From PIonline.com: North American investors are helping Winton Capital Management Ltd. make progress — albeit slowly — toward its founder's goal of becoming a $100 billion company. The firm's ticket to quadrupling its assets under management is unlikely to be one of its scientifically designed manag

  2. Opalesque Roundtable: Success in hedge fund marketing not linked to performance, but investor appetite[more]

    Komfie Manalo, Opalesque Asia: Success in marketing a fund is not linked to the performance, but to investor appetite, to the way you can market the fund, and to how much time you can spend to raise assets, said Antoine Rolland, the CEO of incubator and seeding firm

  3. Opalesque Radio: Now is a good time to buy protection cheaply in the options market[more]

    Benedicte Gravrand, Opalesque Geneva: Investors are showing an increased interest in risk parity funds and strategies, Opalesque reported last year. Risk parity strategies have the

  4. The Big Picture: Charlemagne Capital smoothes risk out of frontier market investing with portfolio approach[more]

    Benedicte Gravrand, Opalesque Geneva: Opalesque recently talked to one of the portfolio managers of the Oaks funds, which are emerging and frontier market hedge funds focusing on equity long/short with a directional approach. They are run by

  5. Winton’s low-cost equities fund tops $1bn for first time[more]

    From FT.com: Winton, the London-based hedge fund, has increased the assets in its low-cost equities fund to more than $1bn for the first time in a sign that traditional stock managers may come under increasing pressure from computer-driven rivals. Winton, which manages about $25bn in total ass