CANADA - The C$2.5bn (US$1.7bn) City of Montreal Pension Fund has introduced several new classes to its asset allocation mix, following an asset liability study (ALS) conducted by Watson Wyatt.
Marie-Therese Thomas, controller of the fund, said that the fund will now include high yield bonds, emerging markets bonds, US and EAFE small cap equities. High yield and emerging markets fixed income will take up 3% each of the fund’s total assets, US small cap equities 3%, whilst another 3% will be allocated to international EAFE small cap equities.
Thomas also said that the pension plan had added a 2% cash allocation to the mix, and that the hedge fund allocation had been increased by 3%, bringing the total up to 8%. Funding for the new asset classes will come from reducing existing fixed income and equities portfolios.
As a result of the ALS, the fund now has 29% allocated to fixed income, 61% equities, 2% cash and 8% hedge funds. Before the study, the fund had allocated 35% to fixed income, 60% equities and 5% hedge funds.
Earlier this month, Johnny Quigley, former controller at the fund, said that a search would soon begin for a manager to run a combined Brady bonds and high yield mandate. The brief, worth between C$100m (US$66m) and C$140m (US$92.6m), would be put out to tender in September, he said.
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