Pension managers cry foul as Ottawa moves to end bond that tracks inflation

A bond that helps hedge against inflation is perfect for pensions, so why is Ottawa moving to end it just when it\u0027s most needed? Read on.

In a surprise move, the Canadian government said earlier this month that it had decided to cease issuance of real return bonds , citing low demand.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300A welcome email is on its way.

“Inflation is high and a lot of plans were thinking about getting more into this asset class, and now the asset class has been removed,” said Ashwin Gopwani, managing director, client solutions at SLC Management, which manages investments for pension plans.Article content In an email to Reuters, the Canadian government said it undertook extensive consultations in 2019 which showed poor demand for RRBs and this was reinforced in recent consultations with market participants.With roughly $49 billion of RRBs outstanding, the market is too small for the largest pension funds to adequately hedge their inflation risk.

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