The return of risk management
With long-term bond yields near 3.5% and equities plateauing, Canadian pension funds face structural challenges to meet obligations exceeding $2.2 trillion in liabilities.
| Asset Class | 10-Year Avg. Return | 2024 Return | Allocation % | Source |
|---|---|---|---|---|
| Public equities | 7.1 % | 6.3 % | 42 % | AIMCo 2025 |
| Fixed income | 2.8 % | 3.6 % | 28 % | OTPP |
| Alternatives (infra, PE, RE) | 9.4 % | 8.1 % | 30 % | CPP Investments |
Strategic shift
- Funds are moving from passive indexation to active private markets and green infrastructure.
- ESG-linked debt and digital infrastructure funds show growing allocations.
- Currency risk management is now central to cross-border investment strategy.
What leaders can do
- Integrate scenario-based stress tests across asset classes.
- Expand co-investment models with corporate and municipal partners.
- Increase exposure to domestic infrastructure. Long-dated assets hedge inflation.
- Adopt responsible AI for risk management. Predictive analytics enhance actuarial resilience.
Arcus Insight: Pension strength is national strength. Canada’s investment institutions must blend innovation with intergenerational prudence.