2012 Pension plan return hits 5.53%

The investment return for the Queen’s Pension Plan for the 12 months ending August 31, 2012, was 5.5286%. The third consecutive positive return was welcome after back-to-back negative years and relied primarily on strong global equity markets: while the S&P/TSX Composite Index was down -3.6% for the 12 months ending August 31, 2012, US and global equity markets posted double-digit returns (19.1% and 10.6% respectively). The Plan’s fixed-income holdings, which returned 7.54 %, supported the return for the entire portfolio.

Unlike 2011, the Fund’s relative performance overall for the plan year was decidedly positive (about 159 basis points), reflecting above benchmark returns from its Canadian equity, fixed-income, and global balanced fund managers. Global equity managers, however, continued to underperform relative to benchmark returns by 115 basis points. Looking ahead to 2013, the Committee has authorized an asset/liability study to explore whether investment opportunities should be consisdered in infrastructure and real estate.

The Fund continues its historical pattern of being invested on a relatively conservative basis, with due regard to the fact that active, long-service Plan members shoulder considerable investment risk, especially as they approach retirement. Our largest manager is Letko Brosseau and Associates, which has a balanced mandate – Canadian and foreign equities as well as Canadian fixed income.

We also have a number of specialist managers:

• Canadian equities: Burgundy Asset Management, Connor Clark & Lunn, Guardian Capital, and TD Quantitative Capital (on a passive basis);
• Canadian bonds: Beutel Goodman and PIMCO;
• Foreign equities: Manning & Napier Advisors, Orbis Investment Management, and State Street (on a passive basis); and
• An investment in a pooled fixed income fund with Integrated Asset Management Corp.

Assets at the end of August were approximately $1.358 billion. The return of 5.5286% will be reflected in the account balances and projected pensions of all plan members. This information is included in the individual pension statements which will be distributed in January 2013.