Canadian Pension Plans Increasing Allocations to Alternatives

According to research by pension consultant Mercer “more Canadian pension plans have been investing in alternatives. Preliminary figures from an ongoing Mercer survey reveal that in 2013, 38% of Canadian pension funds are investing in alternatives, compared to 25% of funds in 2010. Also, the percentage of pension funds’ allocations to alternatives has increased to 18% in 2013 from 15% in 2010, according to the survey. However, despite the growth, this percentage to alternative allocations—which is skewed largely towards bigger Canadian plans—trails other countries such as the United States and Australia. Additionally, the figures reveal that there isn’t much diversification within the plans’ alternative allocations. Canadian pension funds limit themselves mainly to real estate and infrastructure…” Mercer viewed this as a weakness suggesting that Canadian plans “would benefit from venturing into hedge funds and private equity.”

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