CANADA - Plan sponsors in Canada intend to significantly reshuffle their asset portfolio following the elimination of the Foreign Property Rule (FPR), a study by Greenwich associates has found.
Sponsors plan to increase foreign equity allocations by 13%, non-domestic alternatives by 50%, and foreign fixed-income allocations by almost 70%, with both global and US asset managers the likely beneficiaries of this anticipated surge in foreign securities investment. Those participating in the Greenwich study currently had on average 30% of their assets in foreign equities, 3% in foreign fixed income and 2% in non-domestic alternative investments, said Greenwich Associates consultant Lea Hansen (pictured).
“The most significant change to Canadian institutional asset mixes in coming months will almost certainly be a shift out of domestic equities and into foreign investments.” Domestic equities, which represented 30% of institutional assets as recently as 2000, fell from 27% of assets in 2003 to 24% in 2004. More than 35% of Canadian plan sponsors say they will decrease their allocations to active domestic equities by 2007, while less than 15% expect to increase them. For passive domestic equities, 13% expect a decrease and only 4% an increase.
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