Large Canadian pension funds are rethinking asset-allocation decisions with the onset of the coronavirus pandemic and plan to move more assets in-house, as well as reduce exposure to infrastructure, a report by CIBC Mellon said.
CIBC surveyed senior executives at 50 Canadian pension funds in 2020, half of which had C$600 million ($471 million) to C$1.2 billion ($942 million) under management, while the other half had more than C$1.2 billion under management.
Respondents at the Canadian pension funds said they were preparing over the next year to increase assets managed in-house to 28% from 22%, on average. Additionally, 58% of pension funds said they expected to increase their proportion of real estate assets managed in-house over the next 12 to 24 months, while 48% of respondents said they would increase the proportion of equity assets managed in-house, said the report, released Wednesday.
"This may indicate a desire to bring costs down, with in-house teams often cheaper to manage than external mandates ... but it also reflects the strong record of the Canadian pension fund sector in managing assets in-house," the report said. "Studies have shown that the industry's strong performance compared to international peers is at least partly explained by its greater use of in-house management teams."