As the second-largest pool of capital in the Canadian financial system, the degree of attachment of employer- sponsored pension funds to these four capital markets is an important consideration. As outlined in the previous section, fast-growing pension fund sizes have over time led to moderately enhanced exposure to the alternative/non-traditional asset classes that, in most instances, reflect this participation. This development is rooted primarily in the attractions of above-average, risk-adjusted returns of some of these categories of assets that can be well in excess of traditional public stock and bond yields.
In the next sections, a brief overview of nature, scope and dimensions of these four capital markets is provided that includes mention of their essential function in supporting Canadian economic and job changes. In addition, historical and current pension investment activity in them is described and discussed. In some cases, plentiful data exist to highlight this participation, in others, little or no data is available for this purpose. As a consequence, details of current participatory models are also provided in individual case profiles. The extent to which pension investment reaches community and regional economic development is also briefly examined. Some early thoughts about the prospects of a heightened capital market presence by pension funds in future, as well as some of the framework terms and conditions under which this may occur, concludes each section.