Tag: bond allocation

CPPIB Can Invest Like “An 18-Year-Old”, Says CEO As Fund Looks to Cut Bond Allocation

canada

Canada Pension Plan Investment Board (CPPIB) CEO Mark Wiseman told Bloomberg this week that his fund can invest like “an 18-year old” as he looks to cut the fund’s bond allocation and move more money into riskier assets.

CPPIB allocates 28 percent of assets to fixed income. That’s down from 95 percent 15 years ago.

More from the Bloomberg interview:

With years of income and investing ahead, the Canada Pension Plan Investment Board can afford to own more risky assets such as real estate and stocks, according to Chief Executive Officer Mark Wiseman. Pension contributions will continue to grow through 2022, allowing the fund to reduce its 28 percent holdings in fixed income, he said.

“We’re an 18-year-old investor,” Wiseman, who’s 44, said during an interview Tuesday at Bloomberg’s Toronto office. “The portfolio can afford to have less bonds than it has today.”

With yields on fixed-income securities at or close to record lows, Wiseman is joining Canada’s second largest pension plan, the Caisse de Depot et Placement du Quebec, in saying he’s looking to reduce the amount of money invested in debt to seek higher returns elsewhere.

“The low interest environment is a big challenge for institutional investors,” Wiseman said. “We can get higher risk-adjusted returns than we can in the bond market.”

The yield on Canada’s benchmark 10-year bond fell to a record 1.294 percent Friday after government data showed gross domestic product contracted in November. The central bank unexpectedly cut its key interest rate Jan. 21.

CPPIB manages $183 billion in assets.

 

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Thailand’s Biggest Pension Looks to Slash Bond Allocation

Thailand

Thailand’s largest public pension fund is looking to slash its bond allocation (which currently sits at 77 percent of the fund’s assets) and invest a higher percentage of assets in equities and alternatives.

Yields on Thai government debt are at their lowest levels since 2009.

More from Bloomberg:

Thailand’s biggest government pension fund is seeking approval to reduce sovereign debt holdings as it buys local shares amid falling valuations.

The Social Security Office, which manages 1.2 trillion baht ($36.5 billion) in pension contributions from local workers, started boosting holdings of Thai shares last month after correctly predicting in October the market would retreat. The fund, which had about 77 percent of assets in local government bonds as of Sept. 30, is asking its board to approve a greater shift toward equity and alternative assets, said Win Phromphaet, the SSO’s head of investments.

Thailand’s benchmark equity index fell in December by the most in 16 months as oil’s retreat dragged down energy companies, while yields on government bonds sank to the lowest level in five years. The slump in shares has left valuations trading near the cheapest since August versus developing-nation peers, according to data compiled by Bloomberg.

“The SSO has an urgent need to boost investment in other assets than local bonds, whose returns keep falling,” Win said in a telephone interview yesterday. “The current correction in Thai equities makes them more attractive.”

The Social Security Office manages $36 billion in assets for the country’s public workers.

 

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