annual general meeting - university of saskatchewan · pdf file1...
TRANSCRIPT
Annual General MeetingNovember 1, 2012
Prepared by Aon Hewitt Consulting
Presentation to U of S 1999 Academic Pension Plan
108700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Aon Hewitt and the University of Saskatchewan
Two decade relationship Services provided for the 1999 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!
208700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
*Nominal GDP (based on PPP exchange rates). Estimates Start After 2011.Source : International Monetary Fund, Aon Hewitt.
Contribution to Global GDP Growth*
-600
-400
-200
0
200
400
600
800
1000
1200
1400
1600
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Billi
ons
of in
tern
atio
nal $
Euro Zone China United States
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.
308700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
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.
So urc e: Blo om berg, Aon Hewi tt.
10 -y ea r b on ds yields
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Dec
-05
Apr
-06
Jul-
06
Sep
-06
Dec
-06
Mar
-07
Jun
-07
Sep
-07
Dec
-07
Ma
r-08
Jun
-08
Se
p-08
De
c-08
Ma
r-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
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
B razil China US Germa ny France
I taly Canad a Po rtu gal Sp ain Greece
408700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
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 Review9-Month Period Ending September 30, 2012
3.1%
17.5%
9.2%
6.4%
5.0%
0.7%
3.3%
12.5%
8.2%
5.4%
3.3%
0% 5% 10% 15% 20%
ite (USD)
gy (CAD)
ed (CAD)
dividend)
dividend)
dividend)
00 (CAD)
omposite
erm Bond
rse Bond
Day T-Bill
Financial Markets Performance Review3-Month Period Ending September 30, 2012
2.3%
1.8%
3.0%
3.2%
2.6%
7.0%
1.9%
1.2%
0.2%
6.2%
4.0%
0% 5% 10% 15%
HFR Funds of Funds Composite (USD)
S&P GSCI Light Energy (CAD)
FTSE EPRA/NAREIT Developed (CAD)
MSCI Emerging Markets (CAD) (Net dividend)
MSCI World (CAD) (Net dividend)
MSCI EAFE (CAD) (Net dividend)
S&P 500 (CAD)
S&P/TSX Composite
DEX Long Term Bond
DEX Universe Bond
DEX 91-Day T-Bill
508700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Plan Structure By Asset Class
December 31, 2011 September 30, 2012Market Value Market Value Policy Asset Mix %
Asset Class $000s Percent $000s Percent Min Benchmark Max
EquitiesCanadian equities 23,407 16.3 23,510 15.8 15.0 20.0 26.0U.S. equities 30,043 20.9 32,725 22.0 15.0 20.0 26.0Non-North American equities 26,378 18.3 27,817 18.7 15.0 20.0 26.0Total Foreign Equities 56,421 39.2 60,543 40.6 30.0 40.0 52.0Total Equities 79,828 55.5 84,053 56.4 50.0 60.0 70.0Fixed IncomeBonds 61,360 42.7 62,454 41.9 30.0 39.0 45.0Short-term investments 2,679 1.9 2,583 1.7 0.0 1.0 5.0Total Fixed Income 64,039 44.5 65,037 43.6 40.0Total Fund 143,867 100.0 149,089 100.0 100.0
608700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Plan Structure By Manager
December 31, 2011 September 30, 2012Market Value Market Value Policy Asset Mix %
Manager $000s Percent $000s Percent Min Target Max Balanced Manager
Jarislowsky Fraser 49,523 34.4 49,890 33.5 35.0 41.0 50.0
Non-North American ManagerTweedy Browne 15,904 11.1 17,541 11.8 7.0 10.0 13.0
Index ManagerBlackRock - U.S. 17,050 11.9 19,185 12.9 7.0 10.0 13.0BlackRock - Bonds 61,360 42.7 62,454 41.9 30.0 39.0 45.0
Operating AccountOperating Account 29 0.0 19 0.0
Total Fund 143,867 100.0 149,089 100.0 100.0
708700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Plan Structure By Manager
Plan Structure Balanced plus Specialty managers Three managers engaged by Plan Jarislowsky Fraser – Canadian, U.S. and NNA equities
– Provides a diversified equity mandate– Can tactically shift between markets– Growth at a Reasonable Price focus– Counter cyclical due to a cap on resources stocks– Good in down markets
Tweedy Browne – NNA equities– Deep value manager– Will invest in small companies and emerging markets (Croatia, Brazil, etc.)– Terrific in down markets,
BlackRock – U.S. equities and bonds– Passive manager, objective is to match the mandate’s benchmark– Used where opportunity for value added is low– Cheap fees
808700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Total Plan Investment Performance—Periods Ending September 30
Benchmark Consists of:
Benchmark consists of:
-20% S&P/TSX Capped Composite
-20% S&P 500,
-20% MSCI EAFE
- 39% DEX UBI
-1% 91-Day T-Bills
908700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Total Plan Investment Performance—Key Drivers
Year to Date: Total Fund 7.2% to 6.3% Benchmark One-Year Performance: Total Fund 11.6% to 10.1% Benchmark
– Global equity markets were strong in the year– Tweedy outperformed in NNA equities – stock selection, sector selection, country
allocation all contributed– JF outperformed in all equity classes
Four-Year Performance: Total Fund 6.6% to 5.4% 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 7.4% (annualized) over period – the strongest asset class – Tweedy outperformed in NNA equities – deep value style during turbulent four-year
period– JF outperformed in NNA equities – bias to mega cap names and global industry
leaders– Asset mix: overweight bonds during the market crash of 2008
1008700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Portfolio Analysis – JF Canadian Equities
1108700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Portfolio Analysis – JF U.S. Equities
1208700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Portfolio Analysis – JF NNA Equities
1308700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Portfolio Analysis – Tweedy NNA Equities
1408700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Summary Returns—Periods Ending September 30Yr-To-Date Year 4-Year
Return % Quartile Return % Quartile Return % Quartile
Total Fund 7.2 1 11.6 1 6.6 1Benchmark 6.3 3 10.1 2 5.4 3
Jarislowsky Fraser - Balanced Fund 9.1 1 15.3 1 5.2 4Benchmark 7.3 1 11.8 1 3.9 4
Canadian EquitiesJarislowsky Fraser 5.6 3 11.5 2 4.7 2
S&P/TSX Capped Composite 5.4 3 9.2 4 4.3 2
U.S. EquitiesJarislowsky Fraser 13.2 2 23.7 2 5.9 2BlackRock (passive) 12.5 2 23.0 2 5.8 2
S&P 500 12.5 2 22.9 2 5.7 2
Non-North American EquitiesJarislowsky Fraser 12.4 1 15.2 1 4.6 1Tweedy Browne 10.6 1 12.6 1 6.7 1
MSCI EAFE 6.4 4 7.4 4 0.4 3
BondsBlackRock (passive) 3.4 3 5.5 3 7.4 4
DEX Universe Bonds 3.3 4 5.5 3 7.4 4
Blue numbers indicate manager equaled or exceeded the index.
1508700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Fee Summary
Account Market Value (ex-Accruals)
Percentage of Portfolio
Estimated Annual Fee (%)
Average Retail Mutual Fund Fee (%)
Total $149,089,173 100.0% 0.337% 1.750%
Jarislowsky Fraser* 0.500% of the first $5 Million $49,890,206 33.5% 0.312% 2.000%0.200% of the next $5 Million0.180% of the next $15 Million0.170% of the next $25 Million0.160% of the next $50 Million0.150% of the next $100 Million0.050% of the balanceand 0.700% on International Equities
BlackRock 0.150% on the balance $81,638,800 54.8% 0.150% 0.600%
Tweedy Browne 1.500% on all assets (ex-Cash) $17,541,030 11.8% 1.299% 2.600%
Operating Account $19,137 0.0%
*
Fee Schedule
Jarislowsky Fraser's fees are calculated based on the above fee schedule and the total market value of all University of Saskatchewan accounts. Fees for the U o fS 1999 account are estimated based on a portion of the total.
1608700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
1999 Academic Pension Plan AGM
Questions ?