Canada’s largest public pension plans are more heavily invested in private equity than other global public pension plans, according to a new report by British think tank the Official Monetary and Financial Institutions Forum.
“What really distinguishes the Canadian model is this large exposure to private equity, which stands out from across the sample, . . .” wrote Pierre Ortlieb, head of policy analysis at the OMFIF. “The average Canadian fund in the sample holds almost 16 per cent of assets in private equity and almost 20 per cent of its portfolio in real assets, far higher than the averages across the rest of the sample (5.5 per cent and 7.2 per cent, respectively).
“Excluding the three large treasury-only funds, the average U.S. public plan holds roughly nine per cent and eight per cent in private equity and real assets, respectively, lower than their Canadian peers but still above the sample’s average.”
The report examined financial disclosures from the world’s 101 largest public pension plans and investment organizations. The list included 10 Canadian pension plans: the Canada Pension Plan Investment Board (seventh), the Caisse de dépôt et placement du Québec (11th), the Ontario Teachers’ Pension Plan (16th), the PSP Investments (20th), the British Columbia Investment Management Corp. (24th), the Healthcare of Ontario Pension Plan (26th), the Ontario Municipal Employees Retirement System (38th), the Investment Management Corp. of Ontario (57th), the Ontario Pension Board (98th) and the OPSEU Pension Trust (100th).
In terms of private equity exposure, the CPPIB placed first, with a 23 per cent allocation to the asset class. This compares to 19.5 per cent in 2020.
For all 101 plans in the report, their assets’ combined value reached $145 trillion, up from about $131.5 trillion in 2020. About $2.32 trillion, or 1.6 per cent, was held by the Canadian plans, up from $2.03 trillion last year.
Overall, the report found all of the pension plans grew by 10 per cent, on average, in 2020. Canadian plans grew by 13.5 per cent, higher than any other nation’s average growth.
“More than any other jurisdiction, Canadian funds have embraced a model of financial globalization that has withstood both the 2008 financial crisis and, so far, the Covid-19 pandemic,” wrote Ortlieb.