CANADA - Public plans in Canada now possess the S factor: growing scale, imposing sophistication and the ability to attract smart professionals, according to Franklin Templeton Institutional.
Harry Marmer, senior vice president of Franklin Templeton Institutional, said the continued increase in professionalism and vertical integration of the institutional investment business would eventually lead some public plans to compete head-to-head with money managers.
However, he warned these large public plans would face a number of risks going forward in time.
Marmer said: “Highly respected pension adviser Keith Ambachtsheer recommends that this challenge can be met by applying three principles: clarity in pension deals and legislation; balanced consideration of stakeholder interest and good governance and administration.”
He added that the division of alpha from beta would become mainstream as investors attempt to both improve the management of their systematic risks and further harness the alpha frontier.
Marmer said: “For pension plans the natural consequence of attempting to better manage systematic risks is to enhance the link between their fixed income portfolios and the liabilities.”
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