The pension fund for federal government workers and the RCMP has hired an outsider as its chief investment officer, extending a string of shakeups at the highest echelons of Canadian pension managers.
The Public Sector Pension Investment Board, which is primarily run out of Montreal and is better known as PSP Investments, has brought on Eduard van Gelderen as its CIO, luring him away from the office of the CIO of the University of California.
Mr. van Gelderen joins PSP a few months after the pension fund named a new chief executive officer. Chief executive officer Neil Cunningham was appointed to his position in February after former head Andre Bourbonnais left for BlackRock Alternative Investors in New York, after running PSP for three years. PSP has $153-billion in assets under management.
PSP’s CIO change also comes as a number of Canada’s largest pension funds shuffle their senior ranks. Just last month, Ontario Teachers' Pension Plan named a new CIO, appointing Ziad Hindo to the role, and in 2017 the CIO of the Caisse de dépôt et placement du Québec left to enter politics in France.
Canada Pension Plan Investment Board, the country’s largest pension fund with $356-billion in assets under management, has also seen a number of senior executives depart in 2018, including its former head of public market investments, the division with the most assets. A number of new executives have been appointed in the months as CEO Mark Machin reshapes the fund’s leadership.
The new executives are taking over at a complex time in financial markets. Nearly a decade into a bull market, there are signs that investors are getting nervous about future economic growth. In the U.S. bond market, the difference between the yields on two-year and 10-year bonds have historically been a strong predictor of future recessions, and this month the U.S. yield curve came close to being perfectly flat. If the pessimists are right, it means a recession could be on its way.
Canada’s pension funds have also earned strong returns throughout this bull market, putting pressure on the newest leaders to extend the gains the public has gotten used to. However, that task can prove tough to do this deep into a bull run when there is so much cash sloshing around, meaning scores of large asset managers are chasing the same assets and deals.
At the start of 2018, there was US$1-trillion in capital ready to be put to work by private equity investors around the world.
“There are some ingredients of 2007,” Simon Marc, PSP’s London-based head of private equity, said in an interview this year, referencing the period right before the Great Recession. “We’re going to be very cautious, very selective about what we do ... but we can’t be sitting on the side doing nothing, either."