Municipal Pension Retirees Association (MPRA)

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1 Municipal Pension Retirees Association (MPRA) May 13, 2015 Harlan Enns Senior Client Service Consultant Consulting and Client Services

2 About your Pension Fund Municipal Pension Fund Fund size Importance of investment returns bcimc Update Who are we? Strategic direction Securing the Promise Diversification Responsible investing

3 Growth of the Municipal Pension Fund Municipal Pension Fund is the 6 th Largest in Canada Millions $ Market Value of Assets 45,000 40,000 $40.1B 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 2

4 MPP Investment Returns Annual rates of return (%) as at December year annualized return = 7.7%

5 Importance of Investment Returns Source of each pension dollar paid to retirees 4

6 Who is bcimc? Fourth largest pension fund manager in Canada Based in Victoria, BC Our Vision: The responsible fund manager of choice for the British Columbia public sector, at the forefront of the industry, and consistently exceeding the performance and service expectations of our clients. 5

7 bcimc Overview Full service manager comprehensive client servicing ( single contact point ) Strong relationships with clients, receiving consistently high marks in client satisfaction Diverse range of investment products, combined with a disciplined investment approach Breadth and depth of investment team 25+ years of servicing large complex clients, focused on the public sector Value-added performance consistently above client benchmarks on a long-term basis Competitive fees due to bcimc s large asset base, economies of scale, and not-for-profit status 6

8 bcimc Update December 31, 2014 EMERGING MARKETS 7.1% REAL ESTATE 15.0% RENEWABLE RESOURCES 1.2% INFRASTRUCTURE 4.8% PRIVATE PLACEMENTS 5.0% Assets Under Management OTHER STRATEGIES 1.1% SHORT TERM 6.4% BONDS 16.0% MORTGAGES 2.3% CDN EQUITY 12.3% Client Profile PENSIONS 83.6% SINKING FUNDS 0.4% TRUSTS 2.4% WCB ACCIDENT 12.6% CRF 0.3% GOVT BODIES 0.8% GLOBAL 28.8% $116.5 billion AUM 7

9 bcimc Update New CEO (Gordon Fyfe) started September 2, 2014 Gordon is a Victoria native with extensive work experience both in Canada and abroad. Past work experience includes: CEO, PSP Investments President (liquid assets), Caisse de depot President, TAL International Vice President, JP Morgan Moved into new building next door to old building Introduced three year business plan Increasing internal management capacity Improved alignment of interests and reducing external management fees Enhancing our risk management capabilities Replacing our investment accounting system Adding 125 new staff over three years 8

10 Securing the Promise: Investment Philosophy

11 Investment Philosophy - Diversification Municipal Pension Plan Investments Policy Asset Allocation December 31, 2014 $40.1 Billion SHORT TERM 2% BONDS 17% Don t put all your eggs in one basket CDN EQUITY 13% EMERGING MARKETS 10% GLOBAL EQUITY 17% 10

12 Private Market Investments Left to right - Top: Illum Department Store Copenhagen, Denmark; Retail Strip Center Rendsburg, Germany; Asia Square Marina Bay, Singapore; Canary Wharf London, U.K.. Bottom Thames Water (UK),TimberWest Forest Corp.(BC) Open Grid Europe (Germany), Puget Sound Energy (US) 11

13 Investment Philosophy: Responsible Investing Both the MPP Board and bcimc are recognized as leaders Both are signatories to the Principles for Responsible Investing With the support of the Board, bcimc works to protect and improve the Plan s asset value through engagement with company leaders about their business strategies, including environmental, social and governance ( ESG ) practices Governance and Ethics Environment Social and Reputation 12

14 What is Responsible Investing? Responsible Investing at bcimc means protecting and growing the financial value of your pension funds by taking ESG factors into account when we select assets and manage them Governance and Ethics Environment Social and Reputation 13

15 History of Responsible Investing at bcimc Expanding bcimc s Investment Responsibility Becoming Part of bcimc s Daily Activities A Focus on Policies & Frameworks Recognizing a Strategic Priority Proxy Voting Energy Cost Saving Measures Responsible Building Design A Corporate Governance Focus LOW IMPACT THE EVOLUTION OF bcimc S RESPONSIBLE INVESTING ACTIVITIES HIGHER IMPACT 14

16 bcimc s Responsible Investing Approach 15

17 Being an Active Owner Being an active owner 16

18 Proxy Voting Description Activities Proxy voting is our annual opportunity to have input and influence on almost every company we own Institutional Shareholder Services (ISS) is our primary service provider for research and voting platform Vote all North American companies and the top 75% by market value of our international holdings (381 companies in 38 countries in 2014) 2013/14, voted at 1,826 meetings Voted against management in 23% proposals Voted against 61.6% compensation programs We updated our Proxy Voting Guidelines in advance of the current 2015 voting season Outcomes Expected Influence board composition Influence accountability of board to shareholders Influence risk management 17

19 Website Resources mpp.pensionsbc.ca MPP s quarterly investment performance results MPP s Statement of Investment Policies and Procedures 18

20 Questions? bcimc takes pride in serving the Municipal Pension Plan and its members. 19