We include a number of different types of investments in this category: traditional government bonds, treasury bills and corporate bonds, as well as absolute return strategies, hedge funds and money-market securities. This asset class provides funding for investments in other asset classes, similar to a treasury department in a corporation.

 

Our largest holdings are in Government of Canada and provincial bonds. 

 

Our bond portfolio also holds corporate bonds, emerging market and private company debt for the steady income they provide. We own real-return bonds as well, but report these as part of the fund’s inflation-sensitive asset class.

 

Further information is available on the major investments page and in our annual report.

 

We use absolute-return strategies, which are managed internally, and external hedge funds with the goal of generating positive returns regardless of movements in the broad markets. We include them in the fixed income asset class because they normally provide steady income, similar to bonds, although with an additional risk allocation aimed at adding value above the benchmark.

 

We hold treasury bills to meet the plan’s liquidity needs, including monthly payments to pensioners. The plan’s liquidity position is governed by a liquidity policy and reported regularly to the board. We report investment liabilities in the money market category because they share an exposure to short-term interest rates. Liabilities are related to derivative contracts and bond repurchase agreements, which have played a large part in our investment program since the early 1990s. Derivatives give us efficient exposure to global equities and commodities indexes, and bond repurchase agreements are a cost-effective way of funding other investments while allowing us to retain our economic exposure to the bonds.