Reference Portfolio

The Reference Portfolio represents the benchmark asset allocation for the Pension and Endowment. Given that the University and the Pension Committee have set the same risk and return objectives for the Endowment and the Pension, the Reference Portfolio is the same for both portfolios.

The Reference Portfolio is an objective measure of risk and return against which UTAM's active management approach should be assessed. It is meant to represent a portfolio that reflects the risk and return objectives of the Pension Plan and Endowment and that the University could implement on its own. The Reference Portfolio is jointly developed by UTAM and the Investment Committee and proposed by the Investment Committee to the University administration for approval. Once approved by the University administration it is brought forward to the Pension Committee for its approval. Both the University administration and the Pension Committee must approve the Reference Portfolio before it is adopted by the Pension Plan.

Characteristics of the Reference Portfolio

By design it has the following characteristics:

  1. Reflects the risk and return objectives of the Pension Plan and Endowment
  2. Simple (i.e. public market asset classes only)
  3. Passive (i.e. no active strategies)
  4. Easy to implement (i.e. no need for a large investment team to implement)
  5. Low cost to implement

The table below shows the composition of the Reference Portfolio along with the actual weights of Pension and Endowment as of December 31, 2016. The table illustrates that the Reference Portfolio consists of a mix of 60% equities and 40% fixed income.

Reference Portfolio Asset ClassBenchmarkReference
Portfolio
Weight
Equity60.0%
Canadian EquityS&P TSX Composite Total Return Index10.0%
US EquityS&P 500 Total Return Index
(50% hedged to Canadian dollars)
20.0%
International Developed Markets EquityMSCI EAFE Net Total Return Index
(50% hedged to Canadian dollars)
15.0%
Emerging Markets Equity MSCI Emerging Markets Net
Total Return Index
10.0%
Global EquityMSCI ACWI Net Total Return Index5.0%
Fixed Income40.0%
Canadian Corporate BondsFTSE TMX Canada All Corporate Bond
Total Return Index
20.0%
Canadian Government BondsFTSE TMX Canada All Government Bond
Total Return Index
20.0%