We include a number of different types of investments in this category: absolute return strategies, hedge funds, our currency policy hedge, as well as traditional fixed income investments in government and corporate bonds and money-market securities.
We also seek new opportunities for diversification through our debt portfolios, using such non-traditional investments as derivatives and securitized pools of assets.
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Investments in this category represented 20% of the fund's investments at year end. Our largest holdings are in Canadian government and provincial bonds.
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Bonds and money-market securities
Our bond portfolio holds Government of Canada bonds and provincial debentures, corporate bonds (including convertible bonds and high-yield unsecured notes) and money market securities that provide the fund with a regular stream of income.
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To diversify our bond portfolio, we have credit portfolios that include new emerging market strategies and North American high-yield securities.
These holdings provide the plan with the liquidity it needs to pay pensions each month. We also manage the bond portfolio relative to its benchmark by trading in anticipation of interest rate changes. In the absence of inflation, long-term government and corporate bonds give stability to our asset mix.
