Overseeing the investment of more than $20 billion in plan assets is a major responsibility for the Teachers’ Pension Board of Trustees. The most important issue for any pension plan is long-term results, and the board’s goal is to achieve consistent and steady performance over the longer term based on a disciplined approach and prudent decision making.
The board’s Statement of Investment Policies and Procedures (SIPP) sets out the investment strategy and overall framework for managing the plan’s assets. The board reviews the SIPP annually and approves the long-term asset mix policy for investing assets. For an overview of how the plan’s investments work, read Investment Matters.
Diversification of investments is a key principle in our investment policy. Through bcIMC’s pooled funds, the plan has exposure to a range of asset types (e.g., bonds, equities, real estate, infrastructure and private placements), across industry sectors and global markets. With the support of the board, British Columbia Investment Management Corporation (bcIMC) integrates environmental, social and governance factors into the investment analysis, decisions and processes.
A fresh mix
In September 2013, the board adopted a new strategic asset allocation, effective January 1, 2014, that will continue the shift to a greater emphasis on real assets. Real assets, including real estate, infrastructure, and renewable resources, are tangible, physical investments ideally suited for the long-term financial objectives of pension plans. These types of investments provide reliable cash flows, appreciate in value and protect against inflation and the short-term volatility experienced in public markets. These investments also allow for more direct asset management, which enables bcIMC to influence the strategic direction of these companies and create long-term value for the plan. Given that investing in real assets is opportunistic in nature, the shift in the long-term policy target may take a few years to achieve.
A sample of the plan’s investment porfolio
bcIMC has held an equity interest in Puget Energy since 2009 along with two other large Canadian institutional investors and an infrastructure fund investor. Puget Energy’s core business is Puget Sound Energy (PSE), a regulated utility that provides electric and natural gas service to the Puget Sound region of Western Washington. As Washington State’s largest utility, PSE serves more than 1.1 million electric and 760,000 natural gas customers in a service area spanning more than 6,000 square miles. PSE is also the Pacific Northwest’s largest utility producer of renewable energy as an owner and operator of three wind farms. Source: Puget Sound Energy