Canadian pension assets are in a healthy place right now. In 2006, pension funds’ assets under management reached $1 trillion for the first time. According to Greenwich Associates’ 2006 Canadian Investment Management Research Study, the reason for this landmark number has been strong investment returns. These returns have helped plan sponsors keep their funding ratios at a steady 97% for the past two years.
But in order to gain these significant returns, Canadian pension funds did a little asset reshuffling and made changes to their asset allocations. While total domestic equities decreased just over 1% and domestic bonds decreased just over 0.5% from 2005 to 2006, foreign stocks and bonds increased. Foreign equities were 29.1% of total assets in 2006, compared with only 25.6% in 2005.
Certainly the interest in foreign investment is far from waning thanks, in part, to the elimination of the foreign property rule in Canada. In fact, more than one-third of plan sponsors say they intend to increase investment in foreign equities. Of that one-third, 37% plan to do so in six months and 28% in 12 months.
To comment on this story email brooke.smith@rci.rogers.com.