Annual General Meeting
November 10, 2011
Prepared by Aon Hewitt Consulting
Presentation to U of S Non-Academic Pension Plan
Aon Hewitt and the University of Saskatchewan
 Two decade relationship
 Services provided for the Non-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!
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2011
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Aon Hewitt Performance Monitoring
 Goal—to meet your investment monitoring objectives
– Provide the numbers you need to see
– More importantly, going beyond to address the whys
 Our approach differentiates us
– Knowledge of managers
• Updates and rating changes
• Interpreting results—style, markets, peers
– Client meetings
• Interactive discussion
• Managers and policies always under review
 Set the stage to take action where necessary
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Investment Policy Reviews
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Investment Policy Reviews—Investment Strategy Development
Declining Financial Significance
Determine Return Objectives
and Risk Profile
Consider Investment Philosophy
Liability Focused vs Total Return
Determine Equity/Bond split with
an acceptable level of downside
Seek to diversity unrewarded risks via asset
class diversification and hedging strategies
Bond Strategies
Short Term
Universe
Long Term
Real Return
High Yield
Global
Equity Strategies
Canadian
U.S.
Non North
American
Global
Emerging
Alternative
Strategies
Real Estate
Hedge Funds
Private Equity
Infrastructure
Commodities
Determine management structure to implement,
considering investment beliefs, costs and administrative ease
Mandate
Balanced
Specialist
Hybrid
Capitalization
Large
Mid
Small
Style
Value
Growth
Core
Philosophy
Active
Passive
Enhanced
Choose managers to implement
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Investment Policy Reviews—Manager Structure
Current Structure
Asset Class
Total
Fund
(%)
PH&N
Balanced
(% of TF)
Canadian equities
U.S. equities
NNA equities
Global equities
20.0
15.0
15.0
10.0
12.0
9.0
9.0
Total Foreign Equities
Total Equities
40.0
60.0
18.0
30.0
Real Estate
Bonds
Short term investments
Total Fixed Income
Total Fund
5.0
33.0
2.0
35.0
100.0
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2011
JF
Balanced
(% of TF)
AB
Global Eq
(% of TF)
Real
Estate
(% of TF)
8.0
6.0
6.0
10.0
12.0
20.0
10.0
10.0
5.0
19.0
1.0
20.0
50.0
14.0
1.0
15.0
35.0
5
10.0
5.0
Investment Policy Reviews—Manager Structure
Pure Specialist Structure
Total
Fund
(%)
Canadian
Equity #1
(% of TF)
Canadian
Equity #2
(% of TF)
10.0
10.0
Global
Equity #1
(% of TF)
Global
Equity #2
(% of TF)
20.0
20.0
Asset Class
Canadian equities
Global equities
Total Equities
20.0
40.0
60.0
Real Estate
Bonds
Short term investments
Total Fixed Income
5.0
33.0
2.0
35.0
Total Fund
100.0
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2011
PH&N
Fixed
Income
(% of TF)
Real Estate
(% of TF)
5.0
33.0
2.0
35.0
10.0
10.0
20.0
6
20.0
35.0
5.0
General Investment Research
 Committee is committed to ongoing education
 Education can be external
– Conferences, seminars and courses
 Education can be internal
– Aon Hewitt provides targeted education as needed
 Recent Education provided by Aon Hewitt
– Infrastructure
– Liability Driven Investing
– Securities Lending
– Manager Structure
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Total Plan Investment Performance—
Periods Ending September 30
Relative Performance
Total Fund vs. Benchmark
105
Market Capture
4
Quarter %
3
Qtrs
%
Up Markets
25
100.2
Down Markets
15
102.1
Qtr
Benchmark -4.7
Total Fund -5.7
YTD
-2.7
-3.8
Yr
1.2
-0.1
4-Yr
0.2
-0.1
Risk
8.8
9.1
104
103
2
102
1
101
0
100
-1
99
-2
98
-3
97
-4
96
-5
95
3Q01
3Q03
3Q05
Annualized Returns (10 Years):
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3Q07
3Q09
Total Fund 4.6%
Benchmark 4.7%
8
3Q11
Cumulative %
5
Total Plan Investment Performance—Key Drivers
 Year to Date: Total Fund -3.8% to -2.7% Benchmark
 One-Year Performance: Total Fund -0.1% to 1.2% Benchmark
– Global equity markets fell dramatically in third quarter quarter
– PH&N trailed in Canadian – weak stock selection
– Sky/PH&N international equities – weak stock picks and emerging markets exposure
– AllianceBernstein trailed in global equities – weak stock selection in U.S stocks and
Financials
– Overweight real estate – protected value when equities fell
 Four-Year Performance: Total Fund -0.1% to 0.2% Benchmark
– Benchmark flat – all major equity market were negative over four years
– Bonds up 7.6% (annualized) over period
– Real Estate up 7.3% (annualized) over period
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Summary Returns—Periods Ending September 30
Quarter
Return %
Quartile
YTD
Return %
Quartile
Year
Return %
Quartile
4-Year
Return %
Quartile
Total Fund
Benchmark
-5.7
-4.7
2
1
-3.8
-2.7
2
1
-0.1
1.2
2
1
-0.1
0.2
4
4
PH&N - Balanced Fund
Benchmark
-6.4
-4.5
3
1
-5.3
-2.7
3
1
-1.7
1.0
3
2
0.4
0.5
3
3
JF - Balanced Fund
Benchmark
-5.1
-4.5
1
1
-1.7
-2.7
1
1
1.6
1.0
1
2
0.9
0.5
M
3
-14.6
-15.5
-13.0
3
3
2
-13.0
-14.7
-11.5
2
3
2
-5.8
-6.6
-4.6
3
3
2
-3.1
-4.6
-1.4
3
4
1
S&P/TSX Cap. Composite
-12.0
1
-11.9
2
-3.6
2
-1.9
2
Canadian Small Cap Equities
PH&N
Jarislowsky Fraser
-14.6
-16.7
-7.4
3
4
1
-9.7
-11.4
-4.2
1
2
1
1.7
0.3
5.8
3
3
1
-1.9
-3.5
2.3
4
4
2
-14.9
3
-18.4
4
-2.3
3
0.3
2
-8.1
-8.4
-7.7
2
2
2
-6.2
-7.2
-4.6
2
3
1
0.6
-0.4
2.1
2
3
2
-4.2
-4.7
-3.3
3
3
2
-7.0
1
-4.2
1
2.7
1
-4.0
M
Canadian Equities
PH&N
Jarislowsky Fraser
BMO SC
U.S. Equities
PH&N
Jarislowsky Fraser
S&P 500
Blue
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numbers indicate manager equaled or exceeded the index.
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Summary Returns—Periods Ending September 30
Quarter
Return %
Quartile
NNA Equities
PH&N
Jarislowsky Fraser
YTD
Return %
Quartile
Year
Return %
Quartile
4-Year
Return %
Quartile
-13.3
-15.1
-10.3
2
4
1
-12.0
-16.8
-3.5
3
4
1
-9.3
-14.4
-0.3
3
4
1
-5.8
-6.8
-4.3
2
2
1
MSCI EAFE
-12.6
2
-10.8
2
-7.9
3
-8.4
3
Global Equities
Sceptre
-11.7
M
-11.8
3
-7.3
3
-11.8
4
-9.8
2
-7.6
2
-2.6
2
-6.3
3
4.3
4.1
4.5
M
3
2
6.7
10.4
7.0
3
1
2
6.3
6.3
6.4
M
M
2
7.6
7.9
7.2
1
1
3
5.1
1
7.4
1
6.7
1
7.2
3
2.9
na
7.8
na
12.0
na
7.3
na
2.0
na
8.3
na
13.5
na
7.0
na
3.5
na
6.2
na
5.8
na
6.7
na
0.8
na
3.1
na
4.0
na
7.4
na
MSCI World (ex-Canada)
Bonds
PH&N
Jarislowsky Fraser
DEX Universe Bonds
Real Estate
Greystone
Invest. Property Datab ank
Mortgages
PH&N
DEX Mortgages
Blue
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2011
numbers indicate manager equaled or exceeded the index.
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Plan Structure By Asset Class
Asset Class
Equities
Canadian equities
U.S. equities
NNA equities
Global equities
Total Foreign Equities
Total Equities
Real Estate
Fixed Income
Bonds
Mortgages
Short-term investments
Total Fixed Income
Total Fund
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2011
December 31, 2010
Market Value
$000s
Percent
September 30, 2011
Market Value
$000s
Percent
Policy Asset Mix %
Min Benchmark Max
44,890
37,365
35,362
16,754
89,481
134,371
15,515
20.2
16.8
15.9
7.5
40.3
60.5
7.0
38,072
35,984
32,915
14,776
83,675
121,746
16,731
17.9
16.9
15.4
6.9
39.3
57.1
7.8
10.0
65,779
5,186
1,078
72,043
221,929
29.6
2.3
0.5
32.5
100.0
64,125
5,278
5,294
74,697
213,175
30.1
2.5
2.5
35.0
100.0
12
30.0
20.0
40.0
0.0
20.0
15.0
15.0
10.0
40.0
60.0
5.0
25.0
33.0
50.0
0.0
2.0
35.0
100.0
15.0
60.0
70.0
10.0
Plan Structure By Manager
Manager
December 31, 2010
Market Value
$000s
Percent
Balanced Managers
PH&N
Jarislowsky Fraser
September 30, 2011
Market Value
$000s
Percent
Policy Asset Mix %
Min
Target
Max
120,428
69,208
189,636
54.3
31.2
85.4
113,897
67,745
181,642
53.4
31.8
85.2
45.0
30.0
50.0
35.0
85.0
55.0
40.0
Global Equities
Sceptre
16,754
7.5
14,776
6.9
5.0
10.0
15.0
Real Estate
Greystone
15,515
7.0
16,731
7.8
0.0
5.0
10.0
25
0.0
25
0.0
221,929
100.0
213,175
100.0
Operating Fund
Total Fund
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100.0
Non-Academic Pension Plan AGM
Questions ?
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