Investments > Fund Facts > Plan Return 2008

Annual investment return of -21.4% for Plan in 2008

The CAAT Plan's total rate of return was -21.4% for the year 2008.

This compares to the asset mix policy, or benchmark return of -20.6%. Over five years, the Plan's rate of return has been 2.7%.

Assets declined from $5,444 million at the end of 2007 to $4,242 million at the end of 2008.

The financial crisis that began in 2007 affected equity markets globally, resulting in significantly negative returns in 2008 in virtually all global markets. While the CAAT Plan fund is becoming increasingly diversified into non-public asset classes, such as infrastructure and real estate, the negative public equity returns dominated. The Plan avoided exposure to sub-prime mortgage investments owing to the high standards of due diligence displayed by the external investment managers.

Other factors contributing to the Plan's negative returns included:

Long term bonds underperformed their shorter term cousins during the year as investors were reluctant to invest in long term instruments. The Plan benchmarks its bonds to the DEX Long Bond index, as long bonds better match the long term nature of the Plan's pension liabilities.
The Plan has a currency hedge on its non-Canadian equity portfolio. (This is an investment policy in place to reduce the volatility of the Canadian dollar value of the equity portfolio.) The fourth quarter decline in the value of the Canadian dollar caused this hedge to detract from returns.
The relatively small positions in infrastructure and real estate assets, both of which allocations are in the process of being built, did help performance somewhat. However, the impact was not enough to soften the effect of the public market downturn. Over the next few years, these positions will grow and will help to reduce volatility.

May 2009