Exploring the Question of Whether Canadian Pension Funds Should Invest More Domestically

Описание: In this webinar, pension researcher Sebastien Betermier from McGill University presents findings from a GRI report that he co-authored with Keith Ambachtsheer from the University of Toronto and Chris Flynn from CEM Benchmarking. The focus of the research is to identify trends in how much Canadian pension funds invest in Canada.

The report also looks at pension funds in the U.S. and UK for comparison, and finds that domestic investment has decreased in all three countries over the last ten years. That said, there is still clearly a home bias for the Canadian funds.

The researchers also examined obstacles to domestic investment for the Canadian funds and considered whether more could be done to encourage it. The two main barriers identified were the risk of portfolio concentration that has always deterred more domestic investment, and the more recent phenomenon of increasing global competition for capital investment.

Betermier cited success stories from Australia and India, where public-private partnerships have driven significant investment, both domestic and international. He said that these could serve as a template for Canada.

Chapters:

0:00:00 Welcome with Gerard McDonald, Global Risk Institute
0:00:53 Land Acknowledgement
0:01:24 Housekeeping
0:02:01 Gerard Introduces Sebastien Betermier
0:03:49 Sebastien Betermier Intro - Why a Productivity Gap?
0:04:45 CEOs Ask Pension Funds to Invest in Canada
0:05:38 Working Group to Study the Issue of Domestic Investment
0:05:50 Examples from Other Jurisdictions
0:06:03 Understanding How Canadian Funds Invest Domestically
0:08:49 Domestic Share of Stock Portfolios 2013-2022 (Canada, UK, U.S.)
0:09:32 World Stock Market Capitalization
0:09:51 Domestic Share Has Decreased
0:10:08 Decrease Not Unique to Canadian Funds
0:10:33 Domestic Share of Fixed Income Portfolios 2013-2022 (Canada, UK, U.S.)
0:11:01 Alternative Assets - Domestic Share Higher for Bond-Like Asset Classes
0:12:28 Four Facts
0:13:30 Asset Mix Has Shifted from Listed Equities to Alternative Assets
0:15:32 Ontario Teachers' Pension Plan Buying Cadillac Fairview
0:15:59 Asset Mix Shift Not Unique to Canadian Funds
0:16:16 What Do We Learn? Strategic Benefits of Domestic Investment
0:17:44 What Do We Learn? Limits to Domestic Investment
0:18:51 Example of Concentration Risk From Finland
0:19:19 What Do We Learn? Canadian Firms Have Access to Global Capital
0:20:14 What Do We Learn? More International Competition for Capital
0:20:51 What Do We Learn? Less Capital Means There is Friction
0:21:06 How Do Canadian Pension Funds Work?
0:23:25 Strategic Asset Classes
0:25:09 Friction to Domestic Investment - Strategic Assets Not for Sale in Canada
0:25:34 Friction to Domestic Investment - Strategic Assets for Sale Abroad
0:26:16 Policymakers Dilemma
0:26:45 Solutions - Monetize Strategic Assets
0:27:30 Hurdles to Monetization - Lack of Scale
0:28:14 Hurdles to Monetization - Lack of Public Buy-in
0:30:10 Hurdles to Monetization - Economic Viability Issues
0:30:45 Conclusions
0:32:37 Q&A Intro
0:33:16 Question - Could your suggested changes lead to greater domestic investment?
0:35:00 Question - What is impeding investment in new vs. strategic assets?
0:37:45 Question - How much better is the risk/return ratio on infrastructure?
0:39:30 Questions - What else can government do to attract investment?
0:40:58 Questions - Has global investment in Canada decreased?
0:42:27 Questions - What could Canadian policymakers do to attract global investment?
0:45:10 Questions - Canadian examples of government monetizing strategic assets?
0:47:05 Questions - Should funds partner with government on energy transition projects?
0:48:57 Questions - What can Canada learn from the Australian experience?
0:51:24 Questions - How can funds help decarbonize the oil and gas sector?
0:52:46 Questions - How sustainable is the Canadian pension model?
0:55:32 Questions - How to solve Canada's productivity problem?
0:58:35 Thank You and Closing