Taking Control: Canadian Asset Owners Transform to Face Uncertainty

Changing Investor Strategies and Evolving Asset Allocations

November 2022

Canadian asset owners face an array of daunting challenges and remarkable opportunities amid today’s evolving market and business landscape. Rising expectations, longstanding challenges and still-emerging unknowns continue to increase the demands on asset owners, even as innovative solutions and new strategies have the potential to better equip asset owners to rise to meet the current moment as well as better address the long term future outcomes for which they are ultimately accountable.

Like many organizations, Canadian asset owners are being stretched between the need to address pressing challenges of today while also making critical choices about where to invest for the future. Asset owners must navigate — or in some cases spearhead — a path through the lingering disruption of the Covid-19 pandemic and ongoing global economic volatility. As they do so, they also face strategic and operational choices with long term implications. Roles, objectives, investment strategies and operating models are all changing, and asset owners are now reimagining their roadmaps. Innovation has redefined its role in this space insofar as it demands the support of cutting-edge technology.

Questions that once were looming on the horizon are now increasingly at the forefront of the minds of Canadian asset owners: How should they balance in-house and outsourced asset management? What do modern and future asset allocations look like, and how should asset owners plan to sustain, oversee and manage these choices? How do they meet rising ESG imperatives, which are simultaneously urgent and ambiguous? Where and how should they invest in innovative technology solutions? What is the right talent strategy today, and what types of talent will organizations need to recruit, retain and motivate in the future? Some are even redefining these business and stakeholder scopes to transform into direct client service organizations.

To find out how the industry is approaching these many issues, we surveyed 50 of Canada’s leading asset owners. Our research explores the wide ranging concerns that are top of mind for Canadian asset owners, how they plan to rise to these challenges, meet demands and expectations from stakeholders, and accelerate on the path forward.

The CIBC Mellon team will continue to collect insights through client and industry conversations with asset owners and their industry peers. To learn more, to request an individual consultation for your organization, or to share comments with our research stakeholders, please reach out to your CIBC Mellon relationship management contact or email us directly at research@cibcmellon.com.

The first chapter addresses how respondents currently distribute their allocations and expect those distributions to evolve in the near term. For more information, read Chapter One: Adversity, Uncertainty, Opportunity.

In the second chapter, we present insights, opportunities and challenges with which Canadian asset owners are grappling as they seek to position their organizations for the future. In particular, we explore the split between asset owners who are advancing their in-house teams and capabilities, and those who look to strategically outsource key functions to achieve scale and capture opportunity. For more information, read “Transforming Operational Models.”

There are a range of different routes to achieving scale, each bringing its own challenges. In chapter three of our research, we cover how asset owners are considering their options very carefully, mulling the pros and cons of different forms of consolidation. For more information, read “The New Consolidators.”

In the fourth and final chapter, we review some of the longer-term implications across research dimensions such as asset management outlooks, outsourcing strategy, industry consolidation and technology. We also look to the long-term implications as Canadian asset owners look to the future. For more information, read “The Road Ahead.”

This article is provided for general information purposes only and CIBC Mellon and its affiliates make no representations or warranties as to its accuracy or completeness, nor do any of them take any responsibility for third parties to which reference may be made. This article should not be regarded as legal, accounting, investment, financial or other professional advice nor is it intended for such use.

About CIBC Mellon

CIBC Mellon is a Canadian company exclusively focused on the investment servicing needs of Canadian institutional investors and international institutional investors into Canada. Founded in 1996, CIBC Mellon is 50-50 jointly owned by The Bank of New York Mellon (BNY Mellon) and Canadian Imperial Bank of Commerce (CIBC). CIBC Mellon's investment servicing solutions for institutions and corporations are provided in close collaboration with our parent companies, and include custody, multicurrency accounting, fund administration, recordkeeping, pension services, exchange-traded fund services, securities lending services, foreign exchange processing and settlement, and treasury services.

As at March 29, 2024, CIBC Mellon had more than C$2.8 trillion of assets under administration on behalf of banks, pension funds, investment funds, corporations, governments, insurance companies, foreign insurance trusts, foundations and global financial institutions whose clients invest in Canada. CIBC Mellon is part of the BNY Mellon network, which as at March 29, 2024 had US$48.8 trillion in assets under custody and/or administration. CIBC Mellon is a licensed user of the CIBC trade-mark and certain BNY Mellon trade-marks, is the corporate brand of CIBC Mellon Global Securities Services Company and CIBC Mellon Trust Company, and may be used as a generic term to refer to either or both companies.

For more information – including CIBC Mellon's latest knowledge leadership on issues relevant to institutional investors active in Canada – visit www.cibcmellon.com