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Research Department

One Great Investment Idea

February 12, 2014 - 0 comments

In a recent survey of eight large Canadian pension managers, we looked at these leading-edge organizations to identify new trends and find out what works and what doesn’t in the world of sophisticated money managers. One of these managers, the Healthcare of Ontario Pension Plan (HOOPP), stands out.

HOOPP has decided to manage not one, but two portfolios.

First, the “Liability-Hedge Portfolio” is basically a bundle of assets which is dedicated to risk reduction. It is a portfolio composed mostly of high-quality bonds, which provides regular cash receipts that partly cover pension outlays.

The second portfolio is called the “Return-Seeking Portfolio”, which includes exposure to broad market indices and several alternative strategies aimed at generating extra return beyond the rates available from low-risk assets.

This is exactly how we think at PWL: the bond portfolio allocation aims to manage risk; stocks, REITs and other risky asset classes aim to generate excess returns. By separating the missions of asset classes, we can create a mix that matches our clients’ ability and willingness to bear risk and maintain the emotional discipline required to achieve investment success.

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Alberta Investment Management Corp, British Columbia Investment Management Corp, Caisse de Dépôt et Placement du Québec, Canada Pension Plan Investment Board, Healthcare of Ontario Pension Plan, PSP Investments, Ontario Municipal Employee Retirement System, Ontario Teachers’ Pension Plan 

 

By: Raymond Kerzérho with 0 comments.
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