Canadian Pension Funds investing in alternative assets

Jan 17, 2020 | Aultrust Financial

Canadian Pension Plans have increased their investments in alternative assets from 10% to 39% since 1990.

Today alternative assets are a larger portion of the Pension Funds’ asset mix than stocks. Similar trend is also observed in the US endowment funds and Pension funds.

Percentage of Assets in Alternative Investments

Over the past 30 years, there has been a noticeable increase in assets in Alternative Investments in Canadian Pension Funds.

 

Growth of Alternative Assets

Proportion of each asset in the Canadian Pension Fund, moving from stocks and bonds to alternative assets.

 

What are alternative assets?

Broadly speaking, an alternative asset is any asset that is not in traditional stocks, bonds or cash. There are a variety of different vehicles and instruments to invest in alternative assets classes and they each carry varying degrees of risk.

Some of the major categories of alternative investments are:

1. Commodities
2. Real Estate – by far the largest
3. Hedge Funds
4. Private Equity

Alternative investments provide an avenue to boost return and create diversity in the portfolio. In the case of Real Estate, it can also be one of the only vehicles for hedging against inflation.

Related Publications
Supply Chain and Rising Interest

Supply Chain and Rising Interest

Real estate markets are subject to cyclical ebbs and flows. Additional black swan events such as the invasion of Ukraine by Russia and the...