Annual General Meeting

Transcription

1 Annual General Meeting November 1, 2012 Prepared by Aon Hewitt Consulting Presentation to U of S Non-Academic Pension Plan

2 Aon Hewitt and the University of Saskatchewan Two decade relationship Services provided for the Non-Academic Plan Performance Measurement Performance Reporting How are we doing? Investment Manager Reporting and Evaluation How are our Managers doing? Investment Policy Reviews What should we invest in? General Investment Research What should we know? Anything the Committee asks for! 1

3 Market Update Globally investors were largely risk-averse early in the year. The tepid GDP growth in the United States weighed heavily on investors, as did the poor growth in the Eurozone and slowing growth in China. The U.S. Fed announced QE3 and the Euro Bank announced a bond buying program. Both programs are intended to keep borrowing rates low, restore investors confidence and help alleviate the unemployment situations in the U.S. and the Eurozone. Contribution to Global GDP Growth* Billions of international $ Euro Zone China United States *Nominal GDP (based on PPP exchange rates). Estimates Start After Source : International Monetary Fund, Aon Hewitt. 2

4 Market Update The chart below shows the uncertainty created by the sovereign debt of countries such as Greece, Portugal and Spain. For the past several quarters, the borrowing rates of Greece and Portugal have exceeded even those of Brazil s. The uncertainty of some countries had a positive impact on the bonds of more stable countries such as Canada. When paired with an expansionist monetary policy, the desire for stability creates an environment with low short- and long-term interest rates. 10-year bonds yields 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Dec-05 Apr-06 Jul-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 D ec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Brazil China US Germany France Italy Canada Portugal Spain Greece Source: Bloomberg, Aon Hewitt. 3

5 Market Update Stock markets generated strong returns in the third quarter, despite economic news that cast some doubt on the sustainability of the recovery. Overall in the first nine months of 2012 markets were positive The problems in Europe continued to slowly spread, with the Euro Bank s actions buying more time to address the issues. Financial Markets Performance Review 3-Month Period Ending September 30, 2012 Financial Markets Performance Review 9-Month Period Ending September 30, 2012 DEX 91-Day T-Bill DEX Universe Bond DEX Long Term Bond S&P/TSX Composite 0.2% 1.2% 1.9% 7.0% Day T-Bill rse Bond erm Bond omposite 0.7% 3.3% 5.0% 5.4% S&P 500 (CAD) 2.6% 00 (CAD) 12.5% MSCI EAFE (CAD) (Net dividend) 3.2% dividend) 6.4% MSCI World (CAD) (Net dividend) 3.0% dividend) 9.2% MSCI Emerging Markets (CAD) (Net dividend) 4.0% dividend) 8.2% FTSE EPRA/NAREIT Developed (CAD) 1.8% ed (CAD) 17.5% S&P GSCI Light Energy (CAD) 6.2% gy (CAD) 3.1% HFR Funds of Funds Composite (USD) 2.3% ite (USD) 3.3% 0% 5% 10% 15% 0% 5% 10% 15% 20% 4

6 Current Plan Structure Pure Specialist Structure Total Burgundy CC&L Harding Sprucegrove PH&N Greystone Fund Canadian Canadian Global Global Fixed Real Equity Equity Equity Equity Income Estate Asset Class (%) (% of TF) (% of TF) (% of TF) (% of TF) (% of TF) (% of TF) Canadian Equities Global Equities Total Equities Real Estate Bonds Short-Term Investments Total Fixed Income Total Fund

7 Plan Structure By Asset Class December 31, 2011 September 30, 2012 Market Value Market Value Policy Asset Mix % Asset Class $000s Percent $000s Percent Min Benchmark Max Equities Canadian equities 39, , U.S. equities 39, Non-North American equitie 32, Global equities 15, , Total Foreign Equities 87, , Total Equities 127, , Real Estate 18, , Fixed Income Bonds 65, , Mortgages 5, , Short-term investments 6, , Total Fixed Income 76, , Total Fund 222, ,

8 Plan Structure By Manager December 31, 2011 September 30, 2012 Market Value Market Value Policy Asset Mix % Manager $000s Percent $000s Percent Min Target Max Canadian Equities Burgundy , CC&L , , Global Equities Harding , Sprucegrove , Sceptre 15, , , Balanced / Fixed Income Jarislowsky Frase 70, PH&N 117, , , , Real Estate Greystone 17, , Operating Fund Total Fund 222, ,

9 Total Plan Investment Performance Periods Ending September 30 Annual Returns % 4-Year Annualized Returns % 4-Year Quarter Years Std Dev % Benchmark Total Fund Total Value Added Total Fund Real Return Blue numbers indicate positive value added. Benchmark consists of: 20% S&P/TSX, 40% MSCI World ex-cda, 5% IPD, 33% DEX UBI, 2% 91-Day T-Bills from February 2012; 8

10 Total Plan Investment Performance Key Drivers Year to Date: Total Fund 6.9% to 6.4% Benchmark One-Year Performance: Total Fund 11.1% to 10.5% Benchmark All markets strong over the year Above index results in all asset classes over the last 12 months In Canadian equities Recent value added by Burgundy & CC&L offset earlier JF and PH&N underperformance In Global equities Recent value added by Harding & Sprucegrove offset AllianceBernstein underperformance earlier in the year Four-Year Performance: Total Fund 5.5% to 5.3% Benchmark Benchmark positive due to most recent year all major equity markets were positive over four years, although EAFE was just above zero (0.4%) Bonds up 8.4% (annualized) over period Real Estate up 7.9% (annualized) over period 9

11 Summary Returns Periods Ending September 30 Year-to-Date Year 4-Year Return % Quartile Return % Quartile Return % Quartile Total Fund Benchmark 6.4 M PH&N - Balanced Fund / Fixed Income Benchmark Canadian Equities Burgundy na na na na na na CC&L na na na na na na S&P/TSX Capped Composite M Global Equities Harding Lovener na na na na na na Sprucegrove na na na na na na MSCI World (ex-canada) Bonds 3.8 M PH&N DEX Universe Bonds Real Estate Greystone 9.5 na 15.5 na 7.9 na Investment Property Databank 7.4 na 14.8 na 7.5 na Mortgages PH&N 2.7 na 3.3 na 6.3 na DEX Mortgages 3.5 na 5.4 na 6.8 na Blue numbers indicate manager equaled or exceeded the index. 10

12 Fee Summary Account Fee Schedule Market Value Percentage of Portfolio Estimated Annual Fee (%) Average Retail Mutal Fund Fee (%) Total $236,477, % 0.506% 1.750% PH&N 0.500% of the first $5 Million $82,021, % 0.237% 1.500% 0.300% of the next $15 Million 0.200% of the next $100 Million 0.150% of the next $380 Million 0.100% of the balance Greystone 1.000% of the first $10 Million $19,322, % 0.904% N/A 0.800% of the next $25 Million 0.600% of the next $65 Million 0.500% of the balance Burgundy 1.250% of the first $2 Million $22,661, % 0.599% 2.000% 0.750% of the next $3 Million 0.500% of the balance CC&L 0.500% of the first $5 Million $22,497, % 0.422% 2.000% 0.400% of the next $20 Million 0.300% of the balance Harding 1.000% of the first $20 Million $44,276, % 0.726% 2.600% 0.500% of the next $80 Million 0.450% of the balance Sprucegrove 0.900% of the first $5 Million $45,671, % 0.604% 2.600% 0.650% of the next $10 Million 0.550% of the next $25 Million 0.500% of the next $35 Million 0.250% of the next $225 Million 0.200% of the balance Operating Account $26,153 11

13 Non-Academic Pension Plan AGM Questions? 12