“With retail clients you’re stuck working with ETFs and in the past I’ve dabbled with some Walton land-banking and things like that, which help create more [pension-type assets],” he says. “But you give up liquidity, which is extremely important for people, because as much as they say they have long-term horizons, things happen in their lives; they have cash problems.”
“They don’t have a 20-year time horizon,” says Vandermeer. “That’s as close as we get to it [pension-style allocation].”
At the end of the day, Vandermeer has mixed feelings about getting closer to replicating pension plans because things haven’t always this rosy for OTPP and others.
“It’s not that long ago where pensions were in horrible shape having taken huge losses just like the retail markets in 2007; there was no protection for them back then and people thought they were going to collapse.”
Today, pensions are riding a cyclical train that’s working for them. That’s not going to carry on, forever. Having said that, Vandermeer does see the eloquence of pension plans.
“They do have that beautiful place,” says Vandermeer, “that every investment manager wants where they can quantify what their withdrawals are going to be.”
“I can’t do that. I get these random events with clients… It’s really somewhat impossible for us [advisors] to replicate this exactly.”
It is what it is.