[Originally published on April 1, 2020]
As the coronavirus pandemic continues to unfold and impact every aspect of our lives, the UBC Faculty Pension Plan (FPP) Board of Trustees would like to assure you that we are monitoring the crisis closely and have taken all the necessary steps to ensure the continuity of services that you have come to expect from the FPP.
Update on the investment markets
From a capital markets perspective, many of you will be aware of the steep equity markets losses in March, as investors re-value securities in light of the significant downgrades to economic growth brought about by the global response to the pandemic. From stock market highs, this has been the fastest move into “bear market territory” in history, and to many, this feels different than the bursting of the “dot-com bubble” in 2000 or the “Great Financial Crisis” of 2008. In addition to the health concerns we all share, and the shuttering of businesses and schools across the world, this crisis comes at a time when global economic participants have never been more indebted, and investors never more tied to index-replicated investment strategies that amplify market volatility.
However, we must remember that throughout recent history, all market turmoil seems unique during the time in which it unfolds, and fear is pervasive among market participants each time. In addition to the two most recent market routs noted above, there have been scores of sharp market corrections since the Great Depression of the 1930s, and many previously (for the history buff, Wikipedia has a list, which can be found here). Each time, albeit at different paces, the equity markets have recovered and reached new highs in the months and years that follow.
The current crisis serves as a reminder as to why fixed income investments are included as a fund option and as an allocation within the FPP Balanced Fund. Government bonds in particular serve to dampen losses when equity markets sell off. We encourage all plan members to regularly review their risk tolerance and time horizons, and to set asset allocations accordingly.
Focused on the long-term: Our approach to managing the FPP investment funds
From an operational perspective, the FPP Board of Trustees and management continue to focus on the ongoing due diligence of the investment funds available to you, both in terms of their long-term strategies and recent performance. Constant dialogue with the FPP’s fund managers has given us confidence that their actions during this volatile period are in line with their mandates, and that they are taking measures to ensure business continuity.
We do not plan on making near-term adjustments to the fund options or the asset mix of the FPP Balanced and the FPP Fossil Fuel Free Equity and Bond funds, as we believe that it is prudent to stay disciplined and follow our long-term investment policy.
The market environment is very fluid, mirroring news flow on the spread of the virus, the lock-down measures taken by governments globally to “flatten the curve,” and the historic stimulus provided by central banks and fiscal authorities. We had planned to discontinue publication of a regular market update due to a lack of readership, but in light of the dramatic change in the economic and investment landscape, we expect to provide periodic updates on the Plan for the foreseeable future. These market updates are available on our website under the Market Commentary section.
Member services are available online and through email and phone
At this time, our utmost priority is the health, well-being, and safety of our staff and members. In accordance with the guidelines of the provincial health authority, the management and staff of the Pension Administration Office are operating through email and phone only. In-person operations are temporarily suspended until further notice. Member tools and resources continue to be available on our website at faculty.pensions.ubc.ca and through mysunlife.ca/ubcfpp.
We thank you for your patience and understanding as we navigate these unprecedented times, and we hope that you stay safe and healthy.