Reference Portfolio
The University’s long-term target rate of return for the Endowment portfolio is 4% real (i.e., 4% after inflation). The Reference Portfolio is intended to meet this target return over the long term with an acceptable level of risk.
The Reference Portfolio is developed jointly by UTAM management and the University’s Investment Committee. It is then recommended to the University administration, which must approve it for the Endowment portfolio. The Reference Portfolio is reviewed every one to two years, but significant changes are expected to be less frequent.
The Reference Portfolio must have the following characteristics:
- Risk and return attributes consistent with the long-term objectives of the Endowment portfolio
- Simple asset mix – public market asset classes only
- Passive investing approach – no active strategies
- Easy to implement – no need for a large investment team
- Low cost – can be deployed without significant expense
The current Reference Portfolio consists of 60% equity exposure and 40% fixed income exposure. The Reference Portfolio weights for each category along with benchmarks are shown below.
Asset Mix Compared to the Reference Portfolio at December 31, 2023
| Reference Portfolio Asset Class | Benchmark | Reference Portfolio Weight | Actual Endowment Weight |
|---|---|---|---|
| Equity | 60.0 | 60.1 | |
| Global Equity* | MSCI ACWI Net Total Return Index (25%) MSCI ACWI Net ex Fossil Fuels Total Return Index (75%) † | 60.0 | 60.1 |
| Fixed Income | 40.0 | 39.9 | |
| Canadian Corporate Bonds | FTSE Canada All Corporate ex Fossil Fuels Enhanced Bond Total Return Index | 20.0 | 20.3 |
| Canadian Government Bonds | FTSE Canada All Government ex Fossil Fuels Bond Total Return Index | 20.0 | 19.6 |
* The Global Equity benchmark is 50% hedged to Canadian dollars for the developed markets component and unhedged for the emerging markets component.
† The Global Equity benchmark is scheduled to fully transition to the MSCI ACWI Net ex Fossil Fuels index by October 1, 2024.