New Brunswick Investment Management Corp., with CAD6.2 billion ($4 billion) under management, is considering using equity derivatives to boost its foreign investments following the Canadian government's decision to raise the cap on foreign investments by 5% to 30%.
John Sinclair, v.p. of research, marketing and private equity in Fredericton, New Brunswick, said the company uses swaps, futures and options to meet its current 20% allocation to foreign investments, and is considering stepping this up to 22-25%. The money manager wants to diversify its holdings and, since the company is only five years old, Sinclair added, the move towards foreign investments is a natural evolution. New Brunswick's investments were originally 100% fixed income.
The plan has not yet decided whether to increase its foreign investments via derivatives or direct investment in foreign equity markets, Sinclair explained. He added that the increase in foreign investment will take place over the next year.
New Brunswick Investment Management is the trustee and investment manager for the pension assets of 27,524 employed and 13,438 retired members of the Public Service Superannuation Plan,Teachers' Plan, and Judges' Superannuation Plan. Approximately one-half of the three pension plans' assets are invested in equities, almost one-half in bonds, and the remainder in short-term securities.
