The most important aspect of the Provident10 investment portfolio is selecting the appropriate strategic asset mix to provide investment returns that, over time, exceed the Funding Policy’s discount rate of 6%. This rate is critical to the Plan. It is the percentage used to value the current cost of future pension obligations, improve the Plan’s funded status, increase the probability of reaching full funding by 2045, and enhance downside protection.
During the past year, the strategic asset mix saw limited changes. Focus was on enhanced monitoring and scrutiny of investments in all asset classes considering COVID-19 impacts. That said, the Plan’s new strategic asset mix implementation continued to progress. A search for both a Private Debt and Hedge Fund advisor was completed, and additional investment was made in low volatility equity with the intention to provide greater downside protection to the Fund.
In 2021, Provident10 expects the investments in the new asset classes to commence and continue over several years. The implementation will emphasize higher expected return asset classes, albeit within a rigorous risk control framework.
The chart presented as the Current Asset Mix reflects the asset mix of the Plan as of March 31, 2021. Canadian Plus includes core-plus fixed income and commercial mortgages. Growth Oriented includes emerging market debt and multi-asset credit strategies. Global Equity includes emerging market equity, global low volatility, and global small cap.