PIAC 2015 Composite Average Asset Allocation – An Update
The PIAC pension plan composite average asset allocation for 2015 was posted today – with few changes.
One of the arguments this blog has made is that the Pension Investment Association of Canada (PIAC) composite average asset allocation can be a useful benchmark for individual investors who need a starting point to construct and manage their personal investment portfolio. Individual investors looking for a strategy for their own investment portfolio can simply mimic the PIAC asset allocations.
Blog readers will note that the PIAC composite average asset allocation for 2015 changed little from previous years.
“About two-thirds of pension assets are managed by the eight largest public pension funds in Canada.” Because the top eight Canadian pension funds and PIAC are broadly representative of pension funds, Individual investors who seek an investment strategy for their own investment portfolio would do well to piggyback off of institutional pension strategies. The rationale for this strategy is described at length in Why PIAC in the 2013 update and under Details in the 2012 and the 2011 updates.
PIAC does not publish average plan returns but we can use a proxy measuring stick – the RBC Investor and Treasury Services Pooled Fund Survey for the period ended Dec 31, 2015 indicates the average active balanced pooled fund in Canada delivered 5.2% for 2015, ~10% over 3&4 years and ~6% over 10 years. By mimicking the PIAC average asset allocation strategy, one should expect this type of average return. The RBC report is available here and also on this blog site under Tools. Unfortunately, Mercer Investment Consulting has stopped publishing their balanced fund benchmark return.
Doug Cronk CFA PRM is a Pension Investment & Risk Management Officer