Liability hedging investments

Liability Hedging investments are used to hedge the inflation and interest rate sensitivity of our liabilities. They include investments such as nominal and real return bonds, infrastructure and real estate.

Bonds
Bonds generally pay a predictable stream of interest and generate income that does not vary over the life of the investment. They are normally issued in the form of government and corporate bonds.

Infrastructure
Infrastructure investments help hedge the inflation-sensitive nature of the Plan's liabilities. Investments consist of stable long-term infrastructure assets such as highways, water, electricity, bridges, tunnels and pipelines.

Real Estate
Real estate investments are held for long terms and help hedge the long-term nature of the Plan's liabilities. They provide diversification both within the liability hedging assets and for the fund as a whole.

Commodities
Commodities help to hedge the inflation sensitive nature of the Plan’s liabilities and to diversify the overall assets in the Fund. The Plan invests in a mix of commodities that are related to energy, materials, agriculture and food.

Our ultimate goal is to enhance returns while remaining consistent with our governing policies. The Plan's asset mix policy is fundamental to the strategic decisions made by the Plan's investment team and external investment managers.

The goal of the CAAT Plan fund is to earn a net real return rate of 4.5% over long term periods of at least 10 years. Investment results are reported annually, providing a clear picture of long-term performance. For pension funds, long-term performance is more significant than short term numbers.