A change was recently approved to the allocation amongst three of the Fund’s current bond managers as shown below. This change provides a larger allocation to the two bond managers that employ a Core Plus mandate (ie. PIMCO and Alliance Bernstein). This Core Plus mandate allows a broader range of the type of bonds they may invest in, including bonds issued outside of Canada. State Street’s weighting, whose mandate is to match the performance of the FTSE TMX Canada Bond Universe Index performance, will be reduced in size.
Both of the two Core Plus managers have been with the FPP for over seven years and have demonstrated their ability to add significant value over their bond index benchmark while having a similar level of risk. The two Core Plus manager’s investment management fees are a little higher than SSgA’s (by roughly 0.23%) however these are anticipated to be more than offset by the higher expected returns from these two managers.
There will be no change to the allocation to BlackRock’s Real Return Bond mandate. The investment management fees for the Fund are expected to increase by only 0.01% to approximately 0.42% from this change in allocations.
| Old Allocation | New Allocation | |
|---|---|---|
| State Street | 16% | 10.8% |
| PIMCO | 9.6% | 10.6% |
| A. Bernstein | 6.4% | 10.6% |
| BlackRock | 8% | 8% |
| Total | 40% | 40% |
| Old Allocation | New Allocation | |
|---|---|---|
| State Street | 40% | 26.8% |
| PIMCO | 24% | 26.6% |
| A. Bernstein | 16% | 26.6% |
| BlackRock | 20% | 20% |
| Total | 100% | 100% |