Annual General Meeting - University of Saskatchewan · PDF file1...

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!


*Nominal GDP (based on PPP exchange rates). Estimates Start After 2011.Source : International Monetary Fund, Aon Hewitt.

Contribution to Global GDP Growth*

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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.


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.

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B razil China US Germa ny France

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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%

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ite (USD)

gy (CAD)

ed (CAD)

dividend)

dividend)

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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%

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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


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


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


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


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


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


Portfolio Analysis – JF Canadian Equities


Portfolio Analysis – JF U.S. Equities


Portfolio Analysis – JF NNA Equities


Portfolio Analysis – Tweedy NNA Equities


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.


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.


1999 Academic Pension Plan AGM

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