Head of Canada’s biggest pension fund warns on rush to illiquid assets
Mark Machin said the huge shift of assets from public to private markets could trigger steeper selloffs and exacerbate a crisis
Mark Machin, president and chief executive officer of the Canada Pension Plan Investment Board, poses for a photograph following a Bloomberg Television interview ahead of the World Economic Forum (WEF) in Davos, Switzerland, on Monday, Jan. 20, 2020.Simon Dawson/Bloomberg
The biggest global funds should all be monitoring their investments in illiquid assets, according to the head of Canada’s largest pension fund.
“I do ring the alarm bell on not to be too invested in illiquid assets,” Mark Machin, chief executive officer of the Canada Pension Plan Investment Board, said in a Bloomberg Television interview Monday at the World Economic Forum in Davos. “We are very comfortable with our risk models and what we would do in various lurches down markets, but I do worry about the expansion of a lot of funds like us around the world into private illiquid assets.”
Lower-for-longer interest rates have pushed pension funds and asset managers to cast their nets far and wide in search for returns amid a slew of geopolitical risks and trade tensions. Investors looking to diversify their portfolios are seeking shelter in low volatility assets that tend to be illiquid like infrastructure investments
SOURCE : FINANCIAL POST