Annual General Meeting
November 1, 2012
Prepared by Aon Hewitt Consulting
Presentation to U of S 1999 Academic Pension Plan
Aon Hewitt and the University of Saskatchewan
 Two decade relationship
 Services provided for the 1999 Academic Plan
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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!
08700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
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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.
Contribution to Global GDP Growth*
1600
1400
Billions of international $
1200
1000
800
600
400
200
0
-200
-400
-600
1992
1994
1996
1998
2000
2002
2004
Euro Zone
*Nominal GDP (based on PPP exchange rates). Estimates Start After 2011.
Source : International Monetary Fund, Aon Hewitt.
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China
2006
2008
United States
2010
2012
2014
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.
10 -y ea r b o n d s yiel d s
C hina
US
Ger ma ny
F rance
I taly
C anad a
Po rtu gal
Sp ain
Greece
3
S ep-12
Jun-12
M ar-1 2
D ec-11
S ep-11
Jun -11
M ar-1 1
D ec-10
S ep -1 0
B r azil
So urc e: Blo om berg, Aon H ewi tt.
08700/Academic/003/JAK.ppt-336-J9-29575 Nov 2012
Ju n-1 0
0%
Mar-10
5%
0%
D ec-09
5%
Sep -0 9
10%
Ju n-0 9
10%
Ma r-09
15%
D e c-08
15%
Se p-08
20%
J un-08
20%
Ma r-08
25%
D ec-0 7
25%
Jun -07
30%
S ep-07
30%
M ar-0 7
35%
D ec-06
35%
S ep-06
40%
Jul-06
40%
A pr-06
45%
D ec-05
45%
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 Review
Financial Markets Performance Review
3-Month Period Ending September 30, 2012
9-Month Period Ending September 30, 2012
Day T-Bill
0 .2 %
DEX 91-Day T-Bill
DEX Universe Bond
rse Bond
1 .2 %
DEX Long Term Bond
1.9%
S&P GSCI Light Energy (CAD)
dividend)
17.5%
3.1%
ite (USD)
2 .3 %
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8.2%
gy (CAD)
6.2%
0%
9.2%
ed (CAD)
1 .8 %
HFR Funds of Funds Composite (USD)
6.4%
dividend)
4.0%
FTSE EPRA/NAREIT Developed (CAD)
12.5%
dividend)
3.2%
3.0%
MSCI Emerging Markets (CAD) (Net dividend)
5.4%
00 (CAD)
2.6%
MSCI World (CAD) (Net dividend)
5.0%
omposite
7.0%
MSCI EAFE (CAD) (Net dividend)
3.3%
erm Bond
S&P/TSX Composite
S&P 500 (CAD)
0.7%
5%
10%
15%
4
3.3%
0%
5%
10%
15%
20%
Plan Structure By Asset Class
Asset Class
Equities
Canadian equities
U.S. equities
Non-North American equities
Total Foreign Equities
Total Equities
Fixed Income
Bonds
Short-term investments
Total Fixed Income
Total Fund
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December 31, 2011
Market Value
$000s
Percent
September 30, 2012
Market Value
$000s
Percent
Policy Asset Mix %
Min Benchmark Max
23,407
30,043
26,378
56,421
79,828
16.3
20.9
18.3
39.2
55.5
23,510
32,725
27,817
60,543
84,053
15.8
22.0
18.7
40.6
56.4
15.0
15.0
15.0
30.0
50.0
20.0
20.0
20.0
40.0
60.0
26.0
26.0
26.0
52.0
70.0
61,360
2,679
64,039
42.7
1.9
44.5
62,454
2,583
65,037
41.9
1.7
43.6
30.0
0.0
39.0
1.0
40.0
45.0
5.0
143,867
100.0
149,089
100.0
5
100.0
Plan Structure By Manager
Manager
December 31, 2011
Market Value
$000s
Percent
September 30, 2012
Market Value
$000s
Percent
Policy Asset Mix %
Min
Target
Max
Balanced Manager
Jarislowsky Fraser
49,523
34.4
49,890
33.5
35.0
41.0
50.0
Non-North American Manager
Tweedy Browne
15,904
11.1
17,541
11.8
7.0
10.0
13.0
Index Manager
BlackRock - U.S.
BlackRock - Bonds
17,050
61,360
11.9
42.7
19,185
62,454
12.9
41.9
7.0
30.0
10.0
39.0
13.0
45.0
Operating Account
Operating Account
29
0.0
19
0.0
143,867
100.0
149,089
100.0
Total Fund
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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
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Total Plan Investment Performance—
Periods Ending September 30
Benchmark consists of:
-20% S&P/TSX Capped Composite
-20% S&P 500,
-20% MSCI EAFE
- 39% DEX UBI
-1% 91-Day T-Bills
Benchmark Consists of:
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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
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Portfolio Analysis – JF Canadian Equities
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Portfolio Analysis – JF U.S. Equities
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Portfolio Analysis – JF NNA Equities
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Portfolio Analysis – Tweedy NNA Equities
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Summary Returns—Periods Ending September 30
Yr-To-Date
Quartile
Return %
Year
Return %
Quartile
4-Year
Quartile
Return %
Total Fund
Benchmark
7.2
6.3
1
3
11.6
10.1
1
2
6.6
5.4
1
3
Jarislowsky Fraser - Balanced Fund
Benchmark
9.1
7.3
1
1
15.3
11.8
1
1
5.2
3.9
4
4
Canadian Equities
Jarislowsky Fraser
5.6
3
11.5
2
4.7
2
5.4
3
9.2
4
4.3
2
13.2
12.5
2
2
23.7
23.0
2
2
5.9
5.8
2
2
12.5
2
22.9
2
5.7
2
12.4
10.6
1
1
15.2
12.6
1
1
4.6
6.7
1
1
6.4
4
7.4
4
0.4
3
Bonds
BlackRock (passive)
3.4
3
5.5
3
7.4
4
DEX Universe Bonds
3.3
4
5.5
3
7.4
4
S&P/TSX Capped Composite
U.S. Equities
Jarislowsky Fraser
BlackRock (passive)
S&P 500
Non-North American Equities
Jarislowsky Fraser
Tweedy Browne
MSCI EAFE
Blue numbers indicate manager equaled or exceeded the index.
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Fee Summary
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 Average Retail Mutual
Fee (%)
Fund Fee (%)
$149,089,173
100.0%
0.337%
1.750%
$49,890,206
33.5%
0.312%
2.000%
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%
$19,137
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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