2019 proved to be another great year for the Plan’s portfolio. Our assets returned 10.69% net of fees, exceeding both our benchmark’s return as well as our long-term return objective. We take pride in the fact that our asset returns have historically exceeded those of our benchmark.
Net Investment Return - 2019 (Net Return)
Since pension plans invest for the long-term, it is important to consider our asset performance over an extended period of time. Over the last 21 years, our Plan’s assets have generated a since inception net rate of return of over 7%, outpacing our benchmark’s over that same period by just over 1.5% per annum. This represents the value-add from our bias towards active investment.
Breaking our returns down into the various sub-portfolios allows us to determine which asset classes are performing well relative to our expectations. Although it may seem appealing to invest a large portion of a portfolio in a single asset class based on historical performance, it is important to note that doing so can add undue risk and compromise long-term sustainability.
Going Concern Funded Ratio
The Plan is currently estimated to be 92% funded. The Plan's funded ratio is a measure of its financial health and is a key driver of the level of contributions that are required to go into the Plan. It is determined by dividing the Plan's assets by its liabilities. Special contributions, over and above the cost of annual benefit accruals, are being made to bring the Plan to a fully funded position.