Annual General Meeting
November 18, 2013
Prepared by Aon Hewitt Consulting
Presentation to U of S 1999 Academic Pension Plan
Aon Hewitt and the University of Saskatchewan
 Aon Hewitt
– Investment Consultants
– Investment Team based on out of Regina leads relationship
– Supported globally; professionals located across Canada, U.S. and U.K.
 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!
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1999 Academic Pension Plan AGM - Agenda
What is our Investment Objectives?
Have we met our Objectives?
What is our Asset Mix?
Why do we have this Asset Mix?
What is our Manager Structure?
Why do we have this Manager Structure?
How has our Plan performed?
How have our managers performed?
What are our fees?
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What is our Investment Objectives?
1. Accumulate assets to provide members with retirement benefits as promised
2. Earn a long term return of 4.15% over inflation
3. Earn a rate of return, net of fees, in excess of a Total Fund benchmark portfolio
4. Earn a rate of return, net of fees, in excess of individual asset class benchmarks
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Have met our Objectives?
1. Accumulate assets to provide members with retirement benefits as promised*
- As of December 31, 2012, Plan assets were $151 million; liabilities were $160 million
(going-concern)
2. Earn a long term return of 4.15% over inflation*
- Four-year return is 6.4% over inflation
- Ten-year returns is 5.0% over inflation
3. Earn a rate of return, net of fees, in excess of a Total Fund benchmark portfolio*
- Total Fund Benchmark – Four-years =7.0% + 0.36% fees
- Total Fund Return – Four-years =8.2%
- Total Fund Benchmark – Ten-years =6.0% + 0.36% fees
- Total Fund Return – Ten-years =6.8%
4. Earn a rate of return, net of fees, in excess of the individual asset class benchmarks*
- Canadian Equities** – 7.9% vs. 5.9% S&P/TSX Index + (0.31% fees)
- U.S. Equities** – 9.4% vs. 9.3% S&P 500 Index + (0.23% fees)
- International Equities** – 11.4% vs. 6.0% MSCI EAFE Index + (0.79% fees)
- Bonds** – 4.5% vs. 4.5% DEX UB Index + (0.15% fees)
* Returns are as of September 30, 2013
** Four-Years Returns
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What is our Asset Mix?
Total Fund Benchmark and Asset Component Ranges
Equities
Canadian equities
U.S. equities
Non-North American equities
Foreign equities
Total Equities
Fixed Income
Bonds
Short-term investments
Total Fund
Minimum
%
Benchmark
%
Maximum
%
15
15
15
30
50
20
20
20
40
60
26
26
26
52
70
30
0
39
1
100
45
5
Effective date: September 1, 2001
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Why do we have this Asset Mix?
Asset mix Designed to Achieve our Primary Investment Objectives
- Accumulate assets to provide members with retirement benefits as promised
- Earn a long term return of 4.15% over inflation
Why do we have Canadian Equities ?
- Utilize long term investment horizon to invest in higher risk/higher returning asset
classes
Why do we have Global Equities ?
- Utilize long term investment horizon to invest in higher risk/higher returning asset
classes
- Diversify our exposure to the Canadian market
- Access investment opportunities globally
Why do we have Bonds ?
- Stable asset class to counter balance to riskier/higher returning equities
- Consistent income
- Matching properties relative to liabilities (promised pension payments)
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What is our Manager Structure?
Manager
(% of Market Value)
Balanced Fund Manager – Jarislowsky Fraser
International Equity Manager – Tweedy Browne
Passive U.S. Equity Manager - BlackRock
Passive Bond Manager - BlackRock
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Minimum
%
Target
%
Maximum
%
35
7
7
30
41
10
10
39
50
13
13
45
Why do we have this Manager Structure?
 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
– Provides manager diversification in international 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
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How has our Plan performed?
Periods Ending September 30
Benchmark consists of:
-20% S&P/TSX Capped Composite
-20% S&P 500
-20% MSCI EAFE
- 39% DEX UBI
-1% DEX 91-Day T-Bills
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Plan Performance — Key Drivers
 Year to Date: Total Fund 10.3% to 8.8% Benchmark
 One-Year Performance: Total Fund 13.0% to 11.2% Benchmark
– U.S. and international equity markets were strong in the year
– Tweedy trailed modestly in international equities;13% in cash and underweight Japan
– JF outperformed notably in Canadian equities; absent gold names
 Four-Year Performance: Total Fund 8.2% to 7.0% Benchmark
– Modest returns in Canadian equities and bonds, U.S. equities up 13.5% (annualized)
– Tweedy outperformed in NNA equities; deep value style consistent performer during
turbulent period
– JF outperformed in Canadian equities; bias against cycle industries like Materials and
gold stocks drove performance
– Asset mix detracted; overweight bonds heading into the market strength of 2012 and
2013 hurt performance
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How have our managers performed?
Periods Ending September 30
Parentheses contain percentile rankings
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What are our Fees?
Account
Fee Schedule
Total
Jarislowsky Fraser*
0.500%
0.200%
0.180%
0.170%
0.160%
0.150%
0.050%
and
0.700%
of the first $5 Million
of the next $5 Million
of the next $15 Million
of the next $25 Million
of the next $50 Million
of the next $100 Million
of the balance
Market Value
(ex-Accruals)
Percentage of
Portfolio
Estimated
Annual Fee (%)
Average Retial
Mutual Fund Fee
(%)
$162,012,303
100.0%
0.362%
1.750%
$57,175,231
35.3%
0.311%
2.000%
on International Equities
BlackRock
0.150% on the balance
$82,431,344
50.9%
0.150%
0.600%
Tweedy Browne
1.500% on all assets (ex-Cash)
$22,354,264
13.8%
1.275%
2.600%
$51,465
0.0%
Operating Account
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.
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1999 Academic Pension Plan AGM
Questions ?
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