‘People For Pensions’ Launched

OPTrust has launched an initiative intended to raise awareness about the overall value of defined benefit pension plans. The ‘People for Pensions’ program asks members and retirees of the plan to share information with their peers, friends, and families about the value of DB plans like the OPSEU pension plan and how the defined benefit model supports the economy. Research has shown OPTrust members and retirees place a high value on their pensions, but sometimes plan members are not aware of all of the benefits of their pension plan and, in particular, the benefits of having a defined benefit plan versus other kinds of retirement savings vehicles. The program is at People For Pensions

Solvency At Highest Level

As the global equity rally continued in the first quarter of 2017, the median solvency ratio of Canadian defined benefit (DB) pension plans – a key measure of their financial health – hit its highest level since before the 2007 financial crisis, says a quarterly pension plan solvency survey from Aon Hewitt. Driven by continuing positive returns across risk-seeking asset classes and supported by relative stability in bond markets, median solvency on April 1 stood at 96.7 per cent, up nearly two percentage points from the beginning of the year. Meanwhile, almost 40 per cent of plans were fully funded at quarter’s end, up four percentage points from the fourth quarter of 2016. “With solvency ratios at their best levels in a decade, conditions may not get much better to take meaningful steps in optimizing risks within pension plans,” says William da Silva, a senior partner and retirement practice director at Aon Hewitt. “Many plans that have been on the sidelines waiting for the ‘right’ time to take action should realize that time may be now.”

Lescure Stepping Down

The Caisse de dépôt et placement du Québec’s chief investment officer has stepped down to enter public and political life. Roland Lescure has spent the past seven years working at the Caisse. On the eve of the French elections, he has decided to enter public and political life because he wants to play an active role at a crucial time for France and for Europe.

Bottom-up Approach Has Inefficiency Risk

The risks and shortcomings of the bottom-up approach are shown to be inefficiency, instability and the inability to control factor exposure and non-factor risks, says the ERI Scientific Beta paper, ‘Accounting for Cross-Factor Interactions in Multifactor Portfolios without Sacrificing Diversification and Risk Control.’ It compares different approaches for constructing multi-factor equity portfolios: bottom-up score-weighting approaches that target high factor intensity and top-down approaches that also consider diversification objectives. Focusing solely on increasing factor intensity leads to inefficiency in capturing factor premia, as exposure to unrewarded risks more than offsets the benefits of increased factor scores. High factor scores in bottom-up approaches also come with high instability in factor exposure and high turnover. The report introduces a new approach that considers cross-factor interactions in top-down portfolios through an adjustment at the stock selection level. This approach leads to higher levels of diversification and produces higher returns per unit of factor intensity, it says.

Canadian ETF Assets Rise

The Canadian ETF Industry assets rose an additional $2.7 billion in the month of March, bringing the total assets to $123 billion as at the end of the first quarter, says the Canadian ETF Association. This underpins the ongoing strong net issuances and favourable contributions from the markets. Assets under management (AUM) are 29.1 per cent higher than year ago and 2.5 per cent higher than at the end of February. The estimated aggregate creations for March are $3.75 billion, offset by total redemptions of $1.6 billion. While markets remained supportive, the relative contribution made by net new inflows into ETFs rose strongly relative to February.

Viswanathan Now Lead Manager

Vijay Viswanathan (CFA) has been named lead manager of Mawer Investment Management Ltd.’s Canadian equity strategy, effective July 1. He joined the firm in 2007 and has been co-manager of the Canadian equity strategy since 2011.

Panel Looks At Recent Events

Julie Cays, chief investment officer at the CAAT Pension Plan; Kevin Hebner, managing director at Epoch Investment Partners; and Eric Lascelles, chief economist at RBC Global Asset Management Inc.; will discuss the implication of recent events such as Brexit and the election of Donald Trump in the U.S. on financial markets in 2017 and beyond at the CPBI Ontario ‘Investment Trends Seminar.’ It takes place May 3 in Toronto, ON. For information, visit Investment Trends