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PIAC composite Asset Allocation – updated.


PIAC is the Pension Investment Association of Canada. It is the representative body for over 130 Canadian pension funds that manage total assets in excess of $1 trillion on behalf of millions of Canadians.

Yesterday, PIAC updated it’s members’ composite Asset Allocation for the year ended December 31, 2010. It looks like this:

PIAC composite asset allocation as at December 31, 2010

 

 

 

 

 

Points of learning:

  • The asset mix has changed minimally. See my June 25, 2010 post.
  • Bonds are mostly Canada bonds with 5% real bonds and under 2% foreign bonds with a smidge of mortgages.
  • Real assets include Real Estate, Infrastructure and Private Equity. Hedge funds are only 1.7%.
  • Note the balanced allocation. See previous blogs on the benefits of a balanced fund.
  • Note the diversification fo the stock allocation across Canadian and non-Canadian geographies.

If you’re investment portfolio looks ‘similar’ (not exact, but similar) to the PIAC composite average, then it’s, well, average. And that’s likely to be your experience. You will miss both the highs and lows. Returns will be middle of the pack … average. For many investors, a nice, comfortable place to be. Congratulations, you are taking advantage of lot of Institutional expertise, technology, resources, time and money spent.

 

Next time?

Valuations.

Doug Cronk CFA is Manager, Investments for a Canadian Pension Plan

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8 Comments Post a comment
  1. JTN #

    Hi Doug, first time at your site (via Rob Carrick). Will definitely bookmark it. Looking at the asset mix graph, what does “global stocks” mean? My understanding is that Canada, US, EAFE and EM make up global. Thanks and regards.

    JTN

    Like

    June 3, 2011
    • Good question.
      A lot of Institutional folks are asking themselves that same question.
      First, MSCI World is the traditional ‘global’ benchmark. That’s the 24 developed market country indices. But more and more the MSCI ACWI (All Country World index) benchmark whose components are 24 developed and 21 emerging markets is being used to represent ‘global’.
      Second, the more ‘traditional’ players can grant EM tactical access through their EAFE mandate (10% or maybe 15% say).
      Third, the industry will need some new tools as it is increasingly difficult to ‘domicile’ an HSBC Bank, say … do we really know how much of their revenue/profit comes from? How does one know his/her exposure to China, say, from HSBC? Many (about 1/2) of the U.S. companies on the S&P 500 get … about 1/2 of their revenue from non-U.S. sources. Does that mean your exposure is U.S.? Many Institutional players are starting to think not.

      Like

      June 3, 2011
  2. diversifyme #

    Hi Doug.

    I’ve noticed that most institutional pension funds have significant investments in infrastructure (on average totalling clost to 5%, according to the PIAC composite numbers). Are infrastructure based ETFs (e.g, CIF from Claymore) an analagous strategy for individual investors? I believe most institutions are invested in these assets directly (not through ETFs) and I’m not sure if that is a meaningful difference from the invidual investor perspectve.

    Appreciate your thoughts.

    Sean G.

    Like

    May 17, 2011
    • Hi, Sean.
      Yup, many Institutional investors do have infrastructure investments … but, no, not thru ETFs … they would invest in Institutional Pools … like a big ETF … likely with lower fees but with limited liquidity (maybe a 10 year committment period). So, in some ways the ETF route is better for the Individual Investor.

      I looked at them, felt they were expensive, lots of overlap and had moved already … but one of them will be on my buy list in the event of a correction.

      Some ideas:
      Check ishares Global Infrastructure
      Check SPDR FTSE/Macquarie Global
      Claymore Global Infrastrucure (as you say)
      PowerShares has an Emerging Market Infrastrucure ETF
      Also check out Brookfield Infrastructure (BIP.un)

      Cheers.

      Doug.

      Like

      May 18, 2011
  3. diversifyme #

    Hi Doug,

    Is there any organization or publication that annually ranks pension funds on the basis of their investment returns? Would be interesting to get a sense of whether any pension funds regularly outperform and, if so, why.

    Thanks,
    Sean G.

    Like

    May 10, 2011

Trackbacks & Pingbacks

  1. PIAC average asset allocation updated. | Institutional Investing for Individual Investors
  2. What is a Global Stock? « Institutional Investing for Individual Investors

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