Thirty-six percent of Canadian public and corporate defined benefit plans, endowments and foundations plan to increase their infrastructure investments over the next three years, while 39% plan to cut their active Canadian equity allocations, said a Greenwich Associates study.
Other asset classes expected to see sizable increases in Canadian plan investments are real estate, with 31% saying they'll add to the investments by 2019; and private equity, at 21%.
Active foreign equities and active fixed income will also see large decreases in allocations over the next three years, at 26% and 21%, respectively.
Overall, assets among the 235 Canadian pension funds, endowments and foundations studied totaled C$1.829 trillion ($1.319 trillion) as of Dec. 31, up 9.5% from the end of 2014.
Public plans had C$971 billion as of Dec. 31, up 10.2% from 12 months earlier; Canada-based corporate plans, C$713 billion, also up 10.2%; plans of Canadian subsidiaries of U.S.-based corporations, C$81 billion, unchanged from the end of 2014; and endowments and foundations, C$64 billion, up 3.2%.
Corporate funded status in Canada held at an average 97% from the previous year, while public plan funding rose to 98% from 91% in 2014.
Liability management was the top issue in 2016 for the investment professionals at the pension funds, endowments and foundations, each with at least C$100 million in assets, that were interviewed by Greenwich. In 2015, risk management was the top issue.
Liability management is a concern among Canadian plans because more DB plans remain open there than in the U.S., particularly among corporate pension funds, and thus liabilities among Canadian plans will grow faster than in the U.S., said study author Davis Walmsley, Greenwich principal, investment management, in an interview.
Also, some Canadian plans are not looking at all of their alternative investments as alpha generators, specifically with infrastructure, Mr. Walmsley said. In addition, the large swing away from Canadian equities continues a trend that began when the Canadian government dropped its 30% limit on foreign investment in 2005.