More good news for TD Bank. From today's Globe and Mail:
Barclays, TD chosen to invest CPP fund
Thursday, February 18, 1999
ANDREW WILLIS
Investment Reporter
Toronto-Dominion Bank and Barclays Global Investors Canada
Ltd. have won the coveted roles of investing the Canada Pension
Plan's multibillion-dollar portfolio.
The CPP was being run by the Department of Finance and
contributions were invested in $35.6-billion of government bonds.
That will change on March 31, when CPP contributions will start
being pooled in a privately run fund that is expected to be worth up to
$80-billion by the year 2006.
The CPP's board of directors, headed by Gail Cook-Bennett,
appointed the managers for this money after screening a number of
candidates.
The entire fund is headed for the equity market, with 80 per cent of
assets earmarked for an index fund that matches the performance of
the Toronto Stock Exchange 300-stock index. TD Quantitative
Capital, an arm of TD Bank, is responsible for this portion of the
fund.
Toronto-based Barclays will take care of the fund's foreign
investments by duplicating the Morgan Stanley Capital International
Index, which sweeps in the U.S. market, Europe, Australia and the
Far East.
"We're delighted to be named a manager on the CPP fund, and for
the opportunity to work with the board and on behalf of all
Canadians," said Kathy Taylor, Toronto-based managing director of
Barclays.
Choosing these two institutions means the CPP is opting for so-called
passive managers, who buy an index of stocks rather than actively
picking companies they believe will outperform.
Ms. Cook-Bennett and the board are still searching for a chief
executive officer at the Toronto-based CPP fund. When this person is
hired, an appointment expected within six months, the passive
investment policy will be reviewed.
While this mandate is a high-profile win for TD Bank and Barclays,
running a passive portfolio is not as lucrative as actively picking
stocks.
Industry experts say fees on the CPP assignment are likely less than
five basis points of the assets under management. (A basis point is
1/100th of a percentage point.) In contrast, active fund managers may
charge 100 basis points to run a pension fund portfolio.
Executives at the CPP and the companies would not comment on
fees.
Royal Trust, a division of Royal Bank of Canada, was named
custodian on the CPP fund and Deloitte & Touche LLP was named
auditor. Consultants at William M. Mercer Ltd. are giving the CPP
board investment advice.
The $36.5-billion of government bonds now held in the CPP, which
includes a large amount of provincial debt, will stay put for the time
being. As the bonds mature, the various levels of government that
issued the debt can opt to move the money into the new CPP equity
fund. |
