How We Invest

The Real Assets team is responsible for global investments in real estate, infrastructure, timber and commodities through externally managed funds. The team works proactively through the selection and management of its external managers to reduce risk and increase long term returns.

Our real estate program originated in 1971. Today the portfolio is invested globally through over 100 externally managed funds. The real estate program invests in high quality managers that provide superior long-term risk adjusted returns while improving overall portfolio diversification. The allocation is 50 percent core “open ended” funds and 50 percent non-core “closed end” funds. The Fund’s core funds are diversified by geography and property type, and its non-core funds are diversified by vintage year, geography, property type and risk profile.

The Real Assets team also invests in externally managed infrastructure funds. Selection is based on moderate leverage, strong cash flow and a demonstrated record of realizations. Modest allocations to timber and commodities funds, invested on a global basis, are also part of the Real Assets portfolio.

The Global Fixed Income portfolio seeks to achieve an above benchmark return by investing globally in local currency, investment grade securities. The portfolio is traded actively.

The Fixed Income team uses a top-down macro/fundamental research focus to identify investment ideas in local debt markets. Analysis is performed on the economic outlook, valuations and positioning. A bottom-up analysis is used for individual security decisions. This includes an examination of credit quality, sector allocation, maturity profile, liquidity and relative value. The portfolio is constructed with a bias towards low risk securities and with consideration given to diversification and relative value. The portfolio is reviewed actively to adjust to changes in the economic environment and to take advantage of emerging opportunities. Strict compliance with investment guidelines and allocated risk budget is maintained at all times.

In addition to the Global Fixed Income portfolio, the team manages the Operational Cash and Treasury Cash portfolios.

The Alternative Investments team is responsible for investments primarily in private equity through externally managed funds.

The private equity programme began in June 2010. Its charter is to build a private equity portfolio by identifying and investing in top-tier managers that provide superior long-term risk adjusted returns while improving overall portfolio diversification. The Fund’s Private Equity programme currently consists of a select number of externally managed funds diversified by vintage year, private equity sub-sectors and geography. The performance benchmarks for the private equity portfolio are the Morgan Stanley Capital International All Country World Index (MSCI ACWI) Index plus 200 basis points and the Private iQ benchmark.

The Alternative Investment team works closely with the Risk, Compliance and Legal teams to ensure conformity with risk corridors and investment policy considerations.

The Office of Investment Management (OIM) is a long-term investor in high quality companies across the world including emerging and frontier markets. The public equity portfolio is managed internally by four teams: North America, Europe, Asia Pacific, and Global Emerging Markets (GEM). The benchmark is Morgan Stanley Capital International All Country World Index (MSCI ACWI) which is composed of more than 2400 securities across 47 countries/regions, including 24 Emerging Markets.