(The Canadian Press distributed the following article on June 24.)
CALGARY — Canadian Pacific Railway Ltd. has hired seven outside firms to manage pension-fund assets worth $2.7 billion.
CPR said Monday that the transfer of responsibility from Canadian Pacific Investment Management Ltd., a wholly owned subsidiary, “reflects CPR’s desire to focus on its core business activity of providing rail service.” The railway divulged no details of its new management contracts, but at a typical management fee for a large pension fund of 0.3 per cent of assets, the business would be worth about $8 million annually.
CPR said its defined-benefit pension fund has about $5 billion in total assets, of which $2.7 billion is in Canadian equities and bonds – one-third in long-term bonds, one-third in medium-term bonds and one-third in stocks.
The Canadian equities will be managed by McLean Budden Limited, Alliance Capital Management Canada and Greystone Managed Investments.
The long-duration bonds will be managed by TD Asset Management and Addenda Capital.
The shorter-term fixed-income portfolio managers will be Addenda Capital, Phillips, Hager & North Investment Management, and Connor, Clark & Lunn Investment Management.
The seven firms “represent a balanced mix of fund management styles and investment strategies,” CPR stated.
The other components of its pension fund – $1.7 billion in foreign equities and $600 million in property and mortgages – continue to be run by Canadian Pacific Investment Management but CPR is “examining alternatives.”
CPR also announced Monday that it is issuing $350 million in 4.9 per cent seven-year notes. The proceeds will be used for general corporate purposes and repayment of other debt.