[ypzhang2]

There is a big difference in Canadian pension funds and US pension funds.

Canadian pension funds are run more akin to a private equity firm. They invest directly in growth stage deals and therefore take commensurate risks like any other private equity firm.

That means that they make bets with more asymmetric risks and balance their entire portfolio rather than staying at a specific risk band with all of their investments. They pay for professional staff commensurate with that model. A canadian pension fund's employees earn salary and bonuses comparable to a investment bank or private equity firm.

You can't necessarily look at one off investments and have to look at return over time which is generally healthy and their funding ratio, which is generally much healthier than US pension counterparts.

There is a reason the "Canadian Model" is held up as one of the ideal pension management models.

[stouset]

This sounds roughly equivalent to an actively-managed mutual fund. To anyone paying attention the past few decades, these have been widely discredited in favor of passive index funds.

Why would this model be held up as the ideal, and by whom? Why would pensioners be better served by expensive and underperforming active management rather than more cheaply balancing risk through a pension manager picking a balance of index funds and periodically rebalancing?

Perhaps I’m missing a crucial detail unique to pensions, but it just sounds like yet more expensive financial industry snake oil to me.

[ypzhang2]

https://documents1.worldbank.org/curated/en/7807215106396985...

FTA:

"Canada is home to some of the world’s most admired and successful public pension organizations" and "The core characteristics of the Canadian pension model, articulated in more detail in the next section, have been demonstrated to improve performance. Strong, independent governance is often cited by experts as a driver of outperformance. Inhouse investment management tends to result in improved returns after taking costs into account."

The pension funds all take a much more broadly diversified AND deeper approach than actively managed mutual funds. They are more akin to a Blackstone or Apollo.

Almost all of the top Canadian pension funds have better performance to benchmark over a 3 decade horizon including during the financial crisis, so arguably the proof is in the pudding so to speak.

[dralley]

I question whether the supremacy of index funds is a self-fulfilling prophecy. When vast quantities of your stock is demanded not because people think it's a good opportunity but because it was on a list, that demand will itself drive prices up, inflating the performance of the index fund over non-index peers.

[whiplash451]

You don’t even need to rebalance with a worldwide distributing index like VWCE.