U.S. stock and bond markets rallied on comments by Federal Reserve Chairman Alan Greenspan before Congress today, as market participants discounted the likelihood that an interest rate rise is coming.
``As the testimony unfolded, the markets reacted very favorably,'' said Thomas J. Marthaler, vice president and portfolio manager for Chicago Trust. He said Mr. Greenspan did his usual good job of reassuring people that markets move for a reason.
In his testimony, Mr. Greenspan said it is ``quite conceivable that a few years hence we will look back at this episode, as we now look back at the 1987 crash, as a salutary event in terms of its implications for the macroeconomy.''
Canadian pension funds posted a median balanced return of 26.5% for the year ended Sept. 30, up from 15.1% a year earlier, according to SEI Financial Services.
For the year, active managers of Canadian equities had a median 41.1% return, up from 19.7% a year earlier. By contrast, the TSE Index returned 35.4%.
The median active bond manager in Canada tied the 13.6% return of the Scotia Capital Markets Universe Bond Index for the 12 months, while the median showing by foreign equity managers came to 28.5%, vs. 26% for the MSCI World Index, SEI's data showed.
Northern Trust Global Advisors and Caisse de Depot et Placement du Quebec have collaborated to fund four global macro hedge investment funds. Initial funding is $200 million.
Caisse is the initial investor in each of the funds, which will invest worldwide in equities, fixed income, currencies, commodities and other asset classes.
Northern Trust has established a subsidiary in Montreal to act as investment consultant to the funds.
Caisse also will be investment manager of one of the funds. Other investment managers include Opportunity Asset Management of Rio de Janeiro, Omnia Asset Management of London and Regent Fund Management of Hong Kong.
Some 97% of 401(k) plans of any significant size now offer at least one type of equity investment fund, according to the 1997 401(k) plan survey by Buck Consultants.
The survey also found that while mutual fund windows and self-directed brokerage options are offered by relatively few plans, 3.7% and 1.6%, respectively, the average asset allocation to these options is becoming significant, 36.3% and 16%, respectively.
Meridian Investment Management introduced two institutional portfolios. One is a domestic core equity portfolio that offers exposure to 11 economic sectors and rotates among 115 industries as defined by the S&P SuperComposite 1500. An international equity strategy invests in 31 country indexes. The active country rotation strategy is coupled with passive stock selection.
Both are bottom-up and value-oriented.