The University has developed policies to ensure the prudent investment of funds and outline practices for the distribution of investment income and endowment spending.
The Fixed Income Investment Pool (FIP) and Long Term Investment Pool (LTP) are similar to mutual funds as investors purchase units in the pools. Funds held in the FIP or LTP are allocated investment earnings on a pro-rata share of actual earnings based on the number of units owned.
Funds that are held on a short-term basis and which are eligible for investment earnings under university policy are allocated investment earnings based on the Government of Canada 30 day Treasury bill rate.
A university administration fee of 0.25% (0.5% prior to May 2012) is charged on all investment assets other than those where the terms of reference specifically disallow administration fees or if the fee has been waived by the university.
The Internal Investment Committee annually reviews the asset mix policy which will provide, over the long term, the best balance between investment returns and an acceptable level of risk for each pool. The asset allocation for the Investment Pools as at June 2010 is:
| ASSET CLASS | INVESTMENT MANAGER | LONG TERM POOL ASSET BENCHMARK % | FIXED INCOME POOL ASSET BENCHMARK % |
| Equities |
|
|
|
| Canadian equities | Jarislowsky Fraser | 15.0% |
|
| Small cap Canadian equities | Hillsdale | 5.0% |
|
| Global (ex-Canada) equities | Franklin Templeton | 20.0% |
|
| Global equities | Pier 21 | 20.0% |
|
| Total Equities |
|
60.0% |
|
| Real Estate |
La Salle & Bentall Kennedy |
5.0% |
|
| Fixed Income |
|
|
|
| Bonds (Universe Index) | Barclays Global Investors | 35.0% |
|
| Bonds (Universe Index) | Baker Gilmore |
|
20.0% |
| Short Term Bonds & Cash | Baker Gilmore |
|
80.0% |
| Total Fixed Income |
|
35.0% | 100.0% |
|
Total |
100.0% |
100.0% |
Following are the Net Rates of Return for the Investment Pools for the fiscal period May 1 to April 30:
|
FISCAL YEAR |
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 | 2011 | 2012 |
|
Mid Term/Fixed Income Pool* |
5.6% |
6.9% |
5.2% |
6.0% |
6.4% |
3.8% |
1.5% |
4.8% |
5.7% |
6.5% |
4.7% | 4.8% | 4.2% |
|
Long Term Investment Pool* |
6.6% |
9.1% |
5.9% |
-7.9% |
16.3% |
8.6% |
8.8% |
12.6% |
-3.7% |
-17.3% |
12.7% | 9.2% | 1.3% |
* Rates of return: net of investment management fees; exclude university administration fee of 0.5%.
Annual returns for the fiscal years from 2002 to 2012 for the long-term pool are summarized below. University investment and spending policies are aligned to ensure that investment returns, measured over the long term, support annual spending policies and are sufficient to grow the endowments by inflation. As indicated in the chart below, the ten year annualized return for period ending March 2012 was 4.7 per cent, which falls short of the goals established in both the university spending and investment policies.
The spending rate for endowed funds is set annually by Financial Services Division based on the University Spending Policy approved in 2005. The policy allows the spending rate to be adjusted annually by inflation (CPI at December 31) at the discretion of the Board of Governors.
Beginning in May 2006, endowed funds receive a monthly allocation to their spendable fund based on 1/12th of the annual spending rate and the fund’s number of units at the beginning of each month. The spending rates for fiscal years and unit values at May 1 are noted in the table below.
The spending allocation has been impacted by Due to the recession in 2008, the spending rate per unit was de-indexed to 4.50 on May 1, 2009. Effective May 1, 2012 the annual spending rate was reduced to 4.25 in response to continued global economic uncertainty.
|
|
SPENDING RATE PER UNIT |
MARKET VALUE PER UNIT AT MAY 1 |
|
2005-2006 |
4.500 |
100.000 |
|
2006-2007 |
4.617 |
109.500 |
|
2007-2008 |
4.719 |
117.532 |
|
2008-2009 |
4.855 |
107.842 |
|
2009-2010 |
4.500 |
86.140 |
| 2010-2011 | 4.500 |
93.525 |
|
2011-2012 |
4.500 |
97.327 |
|
2012-2013 |
4.250 |
93.574 |
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