And, what I am talking about is not having another Labatt’s brew. I recently read a post about many Canadian pension plans becoming more involved with investing with “non-traditional or alternative assets”….basically, any investment outside of stocks bonds and mutual funds. While I usually write my own posts, I am riding a bit of their wave as I have been waiting for more pension plans to actually acknowledge what they see as potential benefits associated with investing in such assets.
Why do these Canadian pension plans believe that investing in non-traditional assets is of value to them? For the same reasons that you do:
Their (and yours) inability to make any meaningful and needed returns based on the low international interest rates. Gosh, and you thought it was just you that couldn’t get any decent returns, right
In a study by RBC Investor Services, Ltd., pension plan administrators were concerned about their fiduciary responsibilities in meeting the long-term interests of their clients based on current paltry interest returns. A whopping 71% of the plans confirmed that they were very concerned over the low interest rates currently available (in a similar study done the previous year, 28% said they were concerned about low interest rates) and, as a result, nearly 50% (48% to be exact) of these pension plans were planning on increasing their investments into such alternative assets. By the way, last year as part of a similar study, only 21% indicated such an inclination or plan.
Did the study find reasons why smaller pension fund managers may not be as successful as larger funds with investments into non-traditional assets? Yes, the study showed that smaller-sized funds may not have the expertise to administer such assets within their plans but, as a general rule, that was not stopping them from making investments into alternative assets….which is why right now is a good time to stop with this post:
You see, whether you invest in alternative or non-traditional is your decision. As these pension plans have readily admitted, their strengths (historically) have not been in alternative assets, but they are more frequently making such types of investments. So, maybe you should make that consideration yourself. As an individual investor, you MAY have the knowledge and gumption believing that you can make a better return with your retirement funds than your broker. Are you right or wrong…only you can make that decision. But, isn’t it nice knowing that you can actually have one self-directed retirement account where you can invest in both traditional and non-traditional (e.g., alternative assets) assets all from one account, leaving you the freedom and flexibility to invest as you see fit.