Canadian Pension Plans Return 2.16% in Q2

Canadian pension plan returns picked up the pace in the second quarter, rising 2.16%, after edging only 0.37% higher during the first quarter, according to BNY Mellon Global Risk Solutions.

It was the ninth straight quarter of positive results for the BNY Mellon Canadian Master Trust Universe, which also reported a one-year median return of 7.59%, and a 10-year annualized return of 7.14%.

The BNY Mellon Canadian Master Trust Universe results are based on C$242.9 billion ($186.9 billion) worth of investment assets in Canadian investment plans, with an average plan size of C$2.9 billion. The universe is intended to provide comparisons by plan type and size, and it comprises 83 Canadian corporate, public, and university pension plans.

Canadian universities posted a median return of 2.05% for the quarter, and a 2.45% return for the year to date, while Canadian foundations and endowments posted a median return of 2.61% for the quarter, and 2.46% since the start of 2018.

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Canadian and US equities were the top-performing asset classes for the quarter, with median returns of 5.48% and 5.24%, respectively, while non-Canadian and international equity medians returned 2.31% and 0.44%, respectively. Fixed income produced a median return of 0.74%, while emerging markets was the only asset class that posted a negative median return with a loss of 6.2%.

Although all but one equity segment had positive returns, nearly all trailed their benchmark index. Canadian equity’s 5.48% fell short of the S&P/TSX Composite Index return of 6.77%, while the US equity median quarterly return of 5.24% lagged behind the S&P 500 Index result of 5.54%. Non-Canadian equity’s 2.31% was well short of the MSCI World Index’s 4.00%, while international equity’s 0.44% was less than half the MSCI EAFE Index’s 1.05% return. And the loss of 6.2% from emerging markets equity was wider than the MSCI Emerging Markets index’s loss of 5.98%.

The fixed income asset class was the only one to beat its benchmark as the median return of 0.74% outperformed the FTSE TMX Canada Bond Universe Index return of 0.51%.

Tags: BNY Mellon Global Risk Solutions, Canada, Pension, Returns

Swiss asset management firm GAM has suspended one of its top portfolio managers after an internal investigation raised issues of his risk management procedures and record keeping.

The company said it suspended London-based Tim Haywood, the business unit head for its absolute return bond fund, over the issues; however, it also said the investigation hadn’t raised concerns over Haywood’s honesty, nor had it established any material client detriment as a result of the issues. However, it added that the latter is still under review.

GAM didn’t specify the risk management or record keeping issues involved, nor did it say what initiated the investigation. It also didn’t say how long Haywood would be suspended.

In Haywood’s absence, investment directors Jack Flaherty and Alex McKnight have assumed joint responsibility for the absolute return bond fund and other associated portfolios. Flaherty has been one of the co-managers of the fund for more than six years, while Alex McKnight has been a senior member of the team for the past 11 years, according to GAM.

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The total assets in the absolute return bond portfolios as of the end of June were CHF11 billion ($11.1 billion). Haywood is also a named manager of CHF2.9 billion in trade finance funds, and of CHF653 million in other fixed-income portfolios.

“Having conducted the investigation with external counsel, we now intend to follow our usual internal processes and will take any further action that may be appropriate,” Group CEO Alexander Friedman said in a release.

The news of Haywood’s suspension sent the company’s shares down as much as 20% and overshadowed its recent announcement that it has been granted registration as a discretionary investment management and investment advisory and agency business by the Financial Services Agency in Japan.

The approval permits GAM to directly engage with institutions in Japan, such as pension funds, for the purpose of managing their assets through a discretionary investment management plan. The company has had an office in Tokyo since 1997, and already holds a securities license that permits direct marketing of its funds in Japan.

Last year, the firm lured Shizu Kishimoto away from Schroder Investment Management Japan to lead its sales and oversee business operations in the country.

“Being granted this license by the regulator is an important milestone for us,” Kishimoto said in a release. “We look forward to engaging directly with institutions, including pension funds.”

Tags: GAM, Risk Management, Tim Haywood