The northern lights of pension fund management
May 31st, 2009 | Filed under: Institutional Investing, Today's Post
While government organizations are not generally known for their innovation, in the world of pension management, public plans – particularly national pension plans – have a record of innovation that would make most corporate plans envious. Regular readers of this website will know that we have a soft spot for two national pension funds in particular, the ones managed by the Swedes and the Canadians (see an excellent case study on the innovative elements of the Swedish plan, for example).
Both plans view portfolio construction as a matter of combining betas, not simply combining different physical securities. And in both cases, this approach has informed the organizational structure and business processes in the pension management organization itself.
Unlike its Swedish counterpart, the Canadian Pension Plan has been relatively mum about its approach over the past few years (disclosure: I am a member of this plan just in case I don’t get rich by blogging). But now one of its visionaries has penned this interesting case study for the Rotman International Journal of Pension Management.
In it, Don Raymond is Senior Vice-President, Public Market Investments at the Canada Pension Plan Investment Board (CPPIB) explains the $100 billion fund’s rather unique approach.
All About Alpha (and beta and “better beta”)
As you might guess, Raymond et al view the world as either passive (beta), active (alpha) or as something in between they call “better beta” (or what is often referred to on these pages as “exotic” or “alternative” beta). Writes Raymond: More…
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