We design our asset mix to provide stability and growth to the Plan’s asset base. We aim to balance the need to generate returns on our capital versus the risks we take. Our diversified portfolio benefits from our participation in a wide range of public and private market investments. We continue to search for these opportunities as we strive to achieve returns that exceed our benchmark and long-term return objective.
The Plan’s policy mix is the long-term asset mix target for the Plan. Deviations from the policy mix are permitted in order to participate in attractive investment opportunities. We monitor these deviations on an ongoing basis and rebalance the portfolio towards the policy mix when deemed necessary.
Public Investments
The Plan’s public portfolio represents approximately 54% of the fund’s total assets and consists of public equity and public debt (also referred to as 'fixed income').
Public equity represents ownership in public companies. Often referred to as 'stocks', these investments have higher expected rates of return relative to fixed-income securities but generally have a higher degree of risk. They are an important part of our Plan’s asset mix that provide diversification and add to the Plan’s expected rate of return. Public equities currently represent approximately 35% of the Plan’s total assets. The chart below breaks our public equity portfolio down geographically.
Fixed Income
Fixed income securities are investments that are typically issued by government entities or large corporations. They provide contractual payments at regular intervals as well as a repayment of the initial investment. Exposure to fixed income provides the Plan with stable cash flows to pay for member benefits and can reduce the Plan’s exposure to interest rate risk. Currently, public fixed income represents approximately 19% of the Plan’s total assets.
As demonstrated by the chart below, roughly 46% of our fixed income portfolio is invested in government securities with the other 54% invested in the debt of corporations.
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Private Investments
Our private portfolio includes investments in real estate, infrastructure, private debt and private equity. Our approach to private markets is to build close, long-term relationships with a carefully selected group of like-minded investment partners. In all four asset classes, we seek to build global, diversified investment portfolios through primary funds, secondary transactions and co-investments alongside our partners. We have the ability to back both well-established managers as well as newer teams.
Currently, our private assets represent approximately 41% of our total portfolio. The chart below demonstrates the proportion of our private portfolio that is invested in each of the private asset classes mentioned above.
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