An old adage claims that there are three kinds of people: those who make things happen, those who watch things happen and those who say, “What happened?” After surviving 2008, many pension fund sponsors must feel like they belong in the third group. Regardless of asset mix or strategy, just about every pension fund has […]
The Olympic ceremonies and games in Beijing serve as a colourful reminder of the diverse opportunities available by taking a more global view to investing. Apparently the audience has been instructed to cheer for all contestants equally. If only investing were that egalitarian! Many years ago, on a visit to Hong Kong, I came across […]
Should pension plans maintain a high allocation to public market equities? In the rush to the LDI exit doors, many pension plans are reducing their allocation to public market equities, some by a material amount. Is this a prudent strategy? The answer, of course, is—“it depends”—on the plan’s benefit design, funded status, investment horizon and […]
Pension funds may be about to experience the second perfect hundred year storm in this decade. With Canadian stock markets already down this year and central banks reducing interest rates to support a soft economy, the conditions experienced in 1999-2001 appear poised to re-occur. (This combination hurts pension funds since asset values fall while discounted […]
In the aftermath of the subprime mortgage meltdown in the U.S. came the news that certain fixed-income based hedge funds had sustained significant losses or in some cases collapsed. Now it seems that many pension funds are revisiting their allocation to this “asset class”—eager perhaps to “buy high, sell low” or fearing that the attraction […]
The last column in this series asked the rhetorical question: “Credit Risk—is it time to panic?”(Have you ever noticed that investment columnists rarely answer their own questions?)The header was challenged by a couple of readers, who wondered what would constitute an appropriate level of panic and what, in fact, a plan sponsor who was currently […]
History has not dealt kindly with the aftermath of protracted periods of low risk premium,” said Alan Greenspan back in August 2005 while he was Chairman of the Federal Reserve. Two years later a storm is brewing—will it result in a hurricane or merely a small craft warning? The warning signals are present in the […]
Life always has a fat tail, according to American economist Eugene F. Fama. When the hedge fund Amaranth lost more than $6 billion due to natural gas bets, it was reported that their risk models had not predicted such a loss. More recently, the Bank of Montreal also reported losses of $680 million from its […]
It’s spring and a young man’s fancy turns to joining a private equity consortium to take over one of Canada’s most blue chip public market institutions. It seems that just about every pension fund in the country is salivating at the thought of the potential returns(and fees)associated with the possible privatization of BCE. The potential […]