By Angela Marion Lee
OTTAWA — Canadian institutional investors can now glean returns from anywhere in the world, thanks to the surprise lifting of a 34-year-old policy limiting foreign holdings.
On Feb. 23, the government released its proposed 2005 budget, unexpectedly blowing the 30% ceiling on foreign investment, much to the surprise of investment professionals. The proposed budget must be passed in the House of Commons for its provisions to become law %BE; a move anticipated around March 9.
"The elimination of the foreign content rule is a great step forward," said Paul Pugh, senior vice president, public investment at the Ontario Municipal Employees Retirement System, Toronto. The rule "has restricted pension funds for a long time. Pension funds have used various methodologies to ‘Canadianize' products to have exposure to foreign markets but still beat the content rules."
OMERS is the fourth largest pension fund in Canada with C$35.7 billion (US$28.7 billion) in assets.
"The big windfall for us is in terms of saving time and money, resources in order to manage the plan properly," said Lee Fullerton, director of communications for the C$80 billion Ontario Teachers Pension Plan, Toronto.
"It's a great opportunity to have weighting in the international markets," said David Feather, president of Mackenzie Financial Services, Toronto, which manages C$43 billion.