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A Long-term Reason to Overweight Equities (Stocks)

The rising number of senior citizens worldwide is already leading retirement plans to seek higher returns. Many national retirement plans, for example, have limitations on the amount of equities (AKA Stocks) and foreign assets they may hold. However, pressure to achieve higher returns forces policymakers to relax these requirements over time.

Canada Pension Plan (CPP) is regarded as an international success story. Since being given more autonomy for investment decisions, the CPP investment portfolio has performed very well, and CPP's more liberal investment policy has become a model for other national pension plans.

This, along with other trends will likely increase the amount of capital flowing into equities and equity valuations over time.

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