Fund Performance Annual Pension Meeting

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  • Diversification reduces risk many ways to diversify
  • Explain active & passive Explain value, growth
  • Asset mix - no changes in 2003 – 60 / 40 Manager Structure – no changes in 2003 Our diversified investment policy helps to reduce risk Bonds - 2 managers, active & passive Cdn Eq - 3 specialists that complement each other 1 value, 1 growth, 1 core Int’l - 2 active managers US - 1 passive manager
  • In addition, we achieved this return with less volatility than comparators Median Industry average benchmark
  • In addition, we achieved this return with less volatility than comparators Median Industry average benchmark
  • Fund Performance Annual Pension Meeting

    1. 1. York University Pension Fund Leona Fields Manager, Pension Fund Annual Pension Information Session April 21, 2006
    2. 2. York’s Pension Governance - Internal <ul><li>Plan/Benefits side </li></ul><ul><ul><li>Board of Governors </li></ul></ul><ul><ul><li>Vice President, Finance & Administration </li></ul></ul><ul><ul><li>Pension & Benefits Office </li></ul></ul><ul><ul><li>All University Committee on Pensions </li></ul></ul><ul><li>Fund/Investments side </li></ul><ul><ul><li>Pension Fund Board of Trustees </li></ul></ul><ul><ul><li>Sub-Committee on Investment Performance </li></ul></ul><ul><ul><li>Manager, Pension Fund </li></ul></ul>
    3. 3. York’s Pension Governance - External <ul><li>Investment Managers </li></ul><ul><li>Custodian - CIBC Mellon </li></ul><ul><li>Auditor - Ernst & Young </li></ul><ul><li>Investment Consultant - Towers Perrin </li></ul><ul><li>Manager Search Consultant - Brockhouse Cooper </li></ul><ul><li>Actuary - William M. Mercer </li></ul><ul><li>Third Party Administrator – Seclon Logic </li></ul>
    4. 4. Key Differentiating Factors for York Pension Fund <ul><li>Primarily a Defined Contribution Plan </li></ul><ul><ul><li>But members do NOT have investment options </li></ul></ul><ul><li>Benefits depend on investment returns </li></ul><ul><ul><li>Adjustments after retirement continue to depend on investment returns – not inflation </li></ul></ul><ul><li>Investment policy decisions must consider multiple risk profiles </li></ul><ul><ul><li>Plan Sponsor </li></ul></ul><ul><ul><li>New plan members </li></ul></ul><ul><ul><li>Members close to retirement </li></ul></ul><ul><ul><li>Retirees </li></ul></ul>
    5. 5. York’s Pension Investment Objectives <ul><li>The Fund shall be managed with the primary objective of providing high rates of return and moderate levels of risk </li></ul><ul><ul><li>Securing minimum guarantee pensions for all active members while providing potential for growth </li></ul></ul><ul><ul><li>Managing volatility of money purchase balances </li></ul></ul><ul><ul><li>Providing a reasonable level of inflation adjustment for pensioners </li></ul></ul>
    6. 6. Diversification Reduces Risk <ul><li>“Don’t put all your eggs in one basket” </li></ul><ul><li>Various parts of the Fund have different characteristics and risk levels </li></ul><ul><li>Overall risk level of the Fund can be reduced by diversifying across </li></ul><ul><ul><li>Security holdings </li></ul></ul><ul><ul><li>Asset classes </li></ul></ul><ul><ul><li>Investment strategies and styles </li></ul></ul><ul><ul><li>Investment managers </li></ul></ul>
    7. 7. The York U Pension Fund is Well Diversified <ul><li>5 Asset Classes </li></ul><ul><ul><li>40% Canadian bonds </li></ul></ul><ul><ul><li>30% Canadian equity </li></ul></ul><ul><ul><li>15% U.S. equity </li></ul></ul><ul><ul><li>15% International equity </li></ul></ul><ul><ul><li>Up to 10% Cash </li></ul></ul><ul><li>10 Investment Portfolios </li></ul><ul><ul><li>2 Canadian bonds (active & passive) </li></ul></ul><ul><ul><li>3 Canadian equity (active, complementary styles) </li></ul></ul><ul><ul><li>2 U.S. equity (active & passive) </li></ul></ul><ul><ul><li>3 International equity (active, complementary styles) </li></ul></ul>
    8. 8. Current Pension Investment Policy
    9. 9. Investment Results 4-Years ending Dec. 31, 2005
    10. 10. Investment Return Summary for 2005 <ul><li>Returns Benchmark </li></ul><ul><li>Canadian Equity 26.0% 24.1% </li></ul><ul><li>Bonds 6.2% 6.5% </li></ul><ul><li>U.S. Equity 3.3% 3.5% </li></ul><ul><li>Int’l Equity 10.9% 10.0% </li></ul><ul><li>Total Fund return (gross) 12.1% 11.8% </li></ul><ul><li>Total Fund return (net) 11.7% </li></ul><ul><li>4 year Fund return (net) 7.6% </li></ul><ul><li>Pension Adjustment 1.5% </li></ul>
    11. 11. Cash Flow Summary
    12. 12. Issues for 2006 <ul><li>Review, research and explore alternative sources of investment returns </li></ul><ul><ul><li>Currency management </li></ul></ul><ul><ul><li>Long / short market neutral strategies </li></ul></ul><ul><ul><li>Hedge funds </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><ul><li>Private equity </li></ul></ul><ul><ul><li>Global investing </li></ul></ul>

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