Prior to 2010, these assets were held in our former inflation-sensitive investments category, along with real-return bonds and commodities. Real-return bonds are now included in the fixed-income asset class and commodities became a separate asset class. Infrastructure and timberland, previously one portfolio, are now reported as separate portfolios.
Over the past decade, these investments have played an increasingly important role in helping us to meet our performance objectives and minimize risk.
The pension plan pays inflation-protected pensions to its members and makes annual pension payments that exceed the amount collected in contributions from plan members, the Ontario government and designated employers each year.
This creates two investment requirements: the need for stable, reliable cash flows that are not correlated to equity and bond market movements, and the need to capture inflation in the fund’s returns.