Central to CAAT’s investment strategy is the selection of its asset mix, based on Asset-Liability Modelling studies that test the future potential outcomes of various asset mixes on the Plan’s funded status and a range of economic and demographic scenarios.
Diversified portfolioThe Plan’s investment portfolio is well-diversified, with exposure to a broad range of asset classes that fall into three broad categories: Interest-rate-sensitive, Inflation-sensitive, and Return-enhancing.
Interest-rate-sensitive and Inflation-sensitive assets help to offset the effects of changing interest rates and inflation on the valuation of the Plan’s pension payments. Interest-rate-sensitive asset classes comprise long and universe bonds while Inflation-sensitive asset classes comprise real assets (real estate and infrastructure), real-return bonds, and commodities.
Return-enhancing assets, comprising public and private equities, help the Plan meet its expected rate of return.
The CAAT Plan investment team oversees the implementation and monitoring of the asset mix that is executed through the activities of more than 50 investment and fund managers in public and private asset classes. In addition, the use of co-investments in private equity and infrastructure assets continues to play an important role in these portfolios.
In selecting investment and fund managers and co-investment partners for recommendation to the Investment Committee of the Board of Trustees, as well as monitoring them on an ongoing basis, the investment team follows disciplined processes for due diligence with the intent of hiring investment and fund managers that:
- are aligned with the interests of the Plan
- have cohesive high-performing teams
- have successful track records based on compelling and sustainable investment strategies, and
- in the case of fund investments, are willing to afford investors reasonable rights and protections.
The processes, which vary for public and private market asset classes and for co-investments, consider a myriad of factors concerning a firm’s organization, staff, investment strategy and process, portfolio characteristics, how environmental, social, and governance factors are considered in the investment process, and fees. Additionally, operational due diligence processes are carried out by the Plan’s finance team to minimize non-investment related risks, such as reporting or operational errors and fraud.