President & CEO of Fiera Canada expounds on what he sees pensions & institutions demanding from firms like his now
Maxime Menard sees a shift away from product and towards service in the pension asset management space. The President & CEO of Fiera Canada explains that as pensions have become more sophisticated and targeted in their need, they are coming to expect that any asset management partner they work with is capable of building out the specific solutions they need. It’s an approach that Menard sees his own firm taking regarding their institutional clients.
“When you look at traditional asset investment shops, they come with more of a product approach,” Menard says. “Fiera has really developed an organization that I would say is a 2.0 evolution of what pensions are looking for from an investment standpoint. When we do talk about the need in the market and what pension assets are looking for, they’re asking for what’s the next way to create returns across your whole asset base.”
Menard says there is no single asset class that overrides the demand he sees from pensions. Rather, the demand is for tailored solutions that can incorporate the wide array of risks, liabilities, and other non-financial factors that pension funds need to consider when they build their asset mixes.
That includes Responsible Investing (RI) or Environmental, Social, and Governance (ESG) compliant strategies. Some pension funds, as well as large endowments and other institutions come to Fiera with some form of RI or ESG need in their portfolios. As we see in today’s protest movements, the call to divest from certain countries or industries can be loud. Menard says that Fiera tends to take a different approach to these issues and conversations.
Pensions can, Menard says, use an investment policy statement (IPS) geared towards their own definition of responsible investing when they work with an asset manager like Fiera. Menard notes that this firm will offer a more customized solution that could align with a specific fund’s definition, but they also have their own ESG overlay which can be embedded into what they provide. In most cases, he says, Fiera opts to be less exclusionary in their approach to RI and ESG. They prefer to engage directly with the companies they hold and advocate for better ESG and RI policies as investors.
When working with specific endowment funds and foundations with strong beliefs opposed to certain investments, Menard says he and his firm will offer an exclusionary solution. He says that this is not the norm, however, as an exclusionary approach may deter total returns. Menard says he views an inclusionary approach as “the better way to move the dial.”
Beyond ESG and RI overlays, Menard notes that pension funds and institutions are still demanding private asset solutions, largely in private credit and real estate with some exposure to private equity. There is also a growing demand for Canadian equity solutions among pension funds, which may reflect some of the pressure for Canadian pension funds to act as a stimulator in the Canadian economy.
While Menard sees demand for solutions across asset classes, he notes that beyond consideration of liquidity and appropriate asset mixes there is not a strong aversion to any major asset class from pension funds at this current moment. Macro themes like the place of interest rates and their potential outlook for cuts feature in his conversations with pension fund managers, but do not seem to dictate any shifts in the long-term strategies pensions turn to Fiera to help with.
Menard acknowledges that Fiera Capital itself is in something of a moment of change. Under the global leadership of Jean Guy Desjardins, the firm is creating a regionalized model for its global business with CEOs and management teams for Canada, the US, Europe, and Asia. Menard believes this model has been beneficial for Fiera’s Canadian institutional clients. Not only has he been more dedicated to the Canadian space, but his firm has been able to act as direct consultants to their pension fund clients.
“By being able to focus on very specific markets and have the entire global platform that I think we have a bit more time,” Menard says. “So it's an additional investment in the market, we spend more dollars that more people to have the bigger presence, the increased the touch points and increase the number of discussions we're having. When you compare Canada, the US and the UK, they're very different markets. There's a lot of noise. There's a lot of markets, there are a lot of specialty managers in the different segments. [Segmenting] allows us to be a bit more nimble and flexible and how we operate here in Canada and also in other markets.”
