It’s an exceptionally successful blueprint for investing, but advisors say their clients are getting in the way of their efforts to duplicate it.
The Ontario Teachers’ Pension Plan announced
Tuesday that it achieved an 11.8 per cent return in 2014, 170 basis points greater than its investment benchmark of 10.1 percent. In early March the Healthcare of Ontario Pension Plan delivered news of a 17.7 per cent return in 2014 and in late February the Caisse de dépôt et placement du Québec announced a 2014 return of 12 percent.
The largest Canadian pension funds are delivering above-average returns, some of the best anywhere, yet it’s extremely difficult for front-line advisors to easily replicate the portfolio construction of some of these same institutions.
WP spoke to Brent Vandermeer, an advisor and portfolio manager in Ottawa, about this very subject. What he had to say is interesting food for thought.
“I have that opportunistic bucket [about 18 per cent of portfolio] that tries to replicate more of these hard assets and these things that the pension plans are typically able to buy like the 407 Highway or a port,” says Vandermeer, “so in there what I’m trying to create is an overweight to infrastructure, real estate, real assets, food and agriculture. Those are the main areas that you see them able to invest in.”
So, in many ways Vandermeer feels that the big problem isn’t the lack of ETFs and other investment products being made available to small retail clients but rather a much shorter time horizon making it difficult to replicate what pension plans are able to do.