CANADA - Pension funds are pushing the country's move into foreign bond markets, according to a Greenwich Associates' fixed income survey.
Figures quoted by the research agency showed 46% of Canadian pension funds said they had either bought or intended to purchase maple bonds, which give exposure to foreign corporate bonds without currency risk, in the next twelve months.
This was a marked increase from the 33% which said the same in 2006.
Lea Hansen, consultant, Greenwich Associates, said: “The movement into foreign bonds is not overwhelming, but it is noticeable and it is being driven in large part by Canadian pension funds looking to improve investment performance amid relatively low expected rates of return on domestic fixed income products.”
The survey showed the most active fixed income investors, those with over $5bn in trading volume, were even more keen on the product. Over 50% of these major players said they used maple bonds, up from 38% in 2006.
Maple bonds are Canadian dollar denominated bonds sold in Canada by foreign financial institutions and companies. They offer domestic investors the opportunity to invest in foreign companies without the effects of currency exchange fluctuations.
In this week's Pensions Buzz, we want to know whether you think a contract-based, trust-based or a master trust arrangement would be best for a new defined contribution scheme.
The £28bn Brunel Pension Partnership has opened a tender for active equity managers to oversee around £1.8bn of the pool's assets.
RPMI Railpen has injected £7m of new equity into full-fibre internet service provider, Community Fibre.
The Pensions Regulator (TPR) is to prosecute Samuel Smith Old Brewery and chairman Humphrey Smith for failing to provide information and documents for an ongoing investigation.