Investment objectives and philosophy
Our mission is to protect the long term vitality of the Plan and to maintain relatively stable contributions and benefits.
At OPB, our strategic approach to investing is shaped by the following key objectives:
- To provide security for the promised benefits;
- To invest within an acceptable level of risk; and
- To allow for relatively stable and reasonable contribution rates.
We seek to achieve these objectives by investing in global investment opportunities that generate good cash flow while avoiding unrewarded risk.
Our investment philosophy is based on:
- Placing a greater emphasis on capital preservation, which reduces the tendency to take on excess risk. We have designed the Investment Portfolio with a view to moderating the impact of significant market downturns on the funded status of the Plan. This belief translates into real strategic and implementation differences versus the more common benchmark-based performance reference and, in general, implies a lower risk profile for the Investment Portfolio. We recognize that this may result in relative underperformance during periods of rising markets and believe that this trade off is in the long term interests of all the stakeholders of the Plan.
- Focusing on fundamental research-based investing. We work with investment managers who conduct fundamental research on companies. This includes evaluating management, balance sheet and earnings, as well as cash flow generating potential. Our focus on fundamental research maintains a longer term perspective and avoids the tendency to "chase" the market.
- Managing absolute volatility. We reduce absolute volatility by diversifying our investments across asset classes. Our focus on reducing absolute volatility reduces the tendency to take unrewarded risks.