The deputy chairman of a London pension fund says Britain should pay attention to what Canada is doing.
The deputy chairman of the London Pension Fund Authority (LPFA) thinks Britain could learn a thing from Canadian pension funds’ infrastructure investment.
“We need to learn from those pension funds that are leading the way in infrastructure investing,” said Sir Merrick Cockell, deputy chairman of the London Pension Fund Authority (LPFA), in a speech last week. “Take Canada’s largest public pension funds for example. They manage around $740 billion between them. Their investment strategy is geared heavily towards infrastructure and property, as opposed to publicly traded stocks and bonds.”
Historically, primarily Canadian and Australian pension funds have dominated investment in infrastructure assets, accounting for 40 per cent of historical allocations despite representing only 7 per cent of total potential available capital.
In 2013, Canadian pension assets totalled US$1.6 trillion, while infrastructure allocations by Canadian plans totalled US$47.2 billion. U.S. pension assets, by comparison, were in excess of US$18 trillion, but their infrastructure allocation was only US$25.4 billion.
Canadian pension funds, on average, allocated 4 per cent of their pension fund assets to infrastructure, up from 2 per cent in 2009.
“They also act as ‘co-sponsors’ on bigger transactions with leading private equity firms, said Cockell. “This allows them to have more control over their investment and to save on fees. They are not just investing in projects, but making them happen. This is something that UK funds should also have the opportunity to do.”
The life insurance industry has also indicated they’d like to get involved.
Donald Guloien, CLHIA chairman, and president and CEO of Manulife Insurance, suggested in a speech to parliamentarians and officials last year, the industry would like to be more heavily involved in infrastructure investment. Estimates suggest Canada currently has an infrastructure deficit of more than $350 billion.
“Sustained long-term growth needs predictable long-term investment,” said Guloien. “The long-term nature of the insurance business is well suited to this type of investing as our obligations to policyholders often span several decades.”
“We need to learn from those pension funds that are leading the way in infrastructure investing,” said Sir Merrick Cockell, deputy chairman of the London Pension Fund Authority (LPFA), in a speech last week. “Take Canada’s largest public pension funds for example. They manage around $740 billion between them. Their investment strategy is geared heavily towards infrastructure and property, as opposed to publicly traded stocks and bonds.”
Historically, primarily Canadian and Australian pension funds have dominated investment in infrastructure assets, accounting for 40 per cent of historical allocations despite representing only 7 per cent of total potential available capital.
In 2013, Canadian pension assets totalled US$1.6 trillion, while infrastructure allocations by Canadian plans totalled US$47.2 billion. U.S. pension assets, by comparison, were in excess of US$18 trillion, but their infrastructure allocation was only US$25.4 billion.
Canadian pension funds, on average, allocated 4 per cent of their pension fund assets to infrastructure, up from 2 per cent in 2009.
“They also act as ‘co-sponsors’ on bigger transactions with leading private equity firms, said Cockell. “This allows them to have more control over their investment and to save on fees. They are not just investing in projects, but making them happen. This is something that UK funds should also have the opportunity to do.”
The life insurance industry has also indicated they’d like to get involved.
Donald Guloien, CLHIA chairman, and president and CEO of Manulife Insurance, suggested in a speech to parliamentarians and officials last year, the industry would like to be more heavily involved in infrastructure investment. Estimates suggest Canada currently has an infrastructure deficit of more than $350 billion.
“Sustained long-term growth needs predictable long-term investment,” said Guloien. “The long-term nature of the insurance business is well suited to this type of investing as our obligations to policyholders often span several decades.”
