Last year was a dream come true for pension funds, and 2014 may be another good year.
Global equities had great returns, alternatives performed well, and the value of long and real return bonds fell, reducing pensions obligations, said Hari Pushparaj, senior associate, investments, with Mercer, speaking Thursday at Mercer’s 22nd annual Fearless Forecast in Toronto.
While 2013 was a very good year for pension funds’ investments, what do investment managers expect this year?
“There was less pessimism in the forecast, with fewer managers predicting low or negative equity returns,” said Pushparaj.
Surveyed managers expect strong equity returns, with domestic and global markets producing returns somewhere between 8% and 9%. They expect investment returns of 9.5% in private equity and between 5% and 6% for alternatives (real estate, hedge funds and infrastructure).
As for bonds, managers were more bearish in their expectations. Those returns are forecast to be 1.5% for the DEX Universe Bond Index and 0.5% (DEX Long Bond Index).
Managers forecast Canadian GDP growth at 2.0% and global GDP growth at 3.5%.
But in case strong equity returns aren’t enough to keep pension investors happy, 85% of managers think Canada will win gold in men’s hockey at the Sochi Olympics.
That would make another dream come true.
Mercer surveyed 47 Canadian and global institutional investment managers for the 2014 Fearless Forecast.
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