Investment and Financial Management
a) Introduction:
The Hockey Saskatchewan (the "Association") Investment Portfolio (the "Portfolio") was created to provide perpetual financial support to the Association. The purpose of this Investment Policy Statement (the "IPS") is to establish guidelines for the Association's Portfolio. This IPS also incorporates standards that will be used for monitoring the progress of the Portfolio's investment program and for evaluating the contributions of the Portfolio Manager hired on behalf of the Association.
b) Role of the “Investment Committee”:
The Association's Investment Committee (the "Committee") is acting in a fiduciary capacity with respect to the Portfolio and is accountable to the Board of Directors of the Association for overseeing the investment of all assets held within the Portfolio.
i.) This IPS sets forth the investment objectives, distribution policies, and investment guidelines that govern the activities of the Committee and the Portfolio Manager to whom the Committee has delegated investment management responsibility for Portfolio assets.
ii.) The investment policies for the Association contained herein have been formulated consistent with the Association's anticipated financial needs and in consideration of the Association's tolerance for assuming investment and financial risk, as reflected in the majority opinion of the Committee.
iii.) Policies contained in this IPS are intended to provide guidelines, where necessary, for ensuring that the Portfolio's investments are managed consistently with the short-term and longer-term financial goals of the Association. At the same time, they are intended to provide for sufficient investment flexibility in the faces of changes in the financial circumstances of the Association and in capital market conditions.
iv.) The Committee will review this IPS at least once per year. Changes to this IPS can only be made by affirmation of a majority of the Committee. Written confirmation of such changes will be provided to all Committee members, to the Portfolio Manager hired on behalf of the Portfolio, and to the Board of Directors of the Association.
c) Role of the Portfolio Manager:
The Portfolio Manager is accountable to the committee and is responsible for assistance in formulating an asset allocation policy strategy consistent with the IPS' investment objectives, distribution policies, and investment guidelines.
The Portfolio Manager shall be responsible for:
i.) Advice concerning the selection and allocation of asset classes;
ii.) The identification and recommendation of a Model Portfolio for the account;
iii.) Monitoring the performance of the Portfolio selected for the account;
iv.) Periodically reviewing the suitability of the Portfolio's underlying investments;
v.) Scheduling meetings at least twice per annum to review the Portfolio, and being available at other times as required;
vi.) Preparing and presenting appropriate reports
d) Purpose of the Investment Portfolio:
i.) The Association is to invest with the primary objective of preserving the long-term, real purchasing power of assets while providing a relatively predictable stream of annual distributions in support of the Association. A secondary objective is the growth of capital as measured over five-year intervals.
ii.) For the purpose of making distributions, the Association shall make use of a total-return based spending policy, meaning that it will fund distributions from net investment income, net realized capital gains, and proceeds from the sale of investments.
iii.) The Committee will review its spending assumptions annually for the purpose of deciding whether any changes therein necessitate amending the Association's spending policy, its target asset allocation, or both.
iv.) Periodic cash flow, either into or out of the Portfolio, will be used to better align the Portfolio to the target asset allocation outlined in the asset allocation policy outlined below.
e) Portfolio Investment Policy
Asset Allocation
i.) Portfolio assets will be managed as a portfolio composed of two major components: An equity portion, and a structured product/bond portion.
ii.) Cash investments will, under normal circumstances, only be considered as temporary Portfolio holdings, and will be used for Association liquidity needs.
iii.) Outlined below are the long-term strategic asset allocation guidelines, determined by the Committee to be the most appropriate, given the Association's long-term objectives and short-term constraints:
- Money Market and Cash - target 0% (0% minimum to 100% maximum)
- Structured Products/Bonds - target 50% (35% minimum to 65% maximum)
- Canadian Equities - target 17.0% (15% minimum to 35% maximum)
- Global Equities -target 33% (15% minimum to 35% maximum)
f) Diversification
i.) With the exception of fixed-income investments explicitly guaranteed by the Canadian government, and Structured products issued by the six major Canadian chartered banks, no single investment security shall represent more than 5% of total Portfolio assets.
ii.) With respect to bond investments, for individual bonds, the minimum average credit quality of these investments shall be investment grade (Standard & Poor's BBB or Moody's BAA or higher).
g) Rebalancing
i.) The Portfolio Manager will use incoming cash flow (contributions) or outgoing money movements (disbursements) of the Portfolio to realign the current weightings closer to the target weightings for the Portfolio.
ii.) The Portfolio Manager will review the Portfolio semi-annually in the months of March and September to determine the deviation from target weightings. During each semiannual review, the following parameters will be applied: If any asset class is+/- 5 percentage points from its target weighting, it will be recommended that the Portfolio be rebalanced.
iii.) Recommendations for rebalancing will be forwarded by the Portfolio Manager.
iv.) The Portfolio Manager may provide rebalancing recommendations at any time.
h) Investment Vehicles
i.) Cash will be held in high-interest savings accounts, cashable GICs, money-market funds or T-bills.
ii.) Bond/Structured Product holdings may include: Canadian government bonds, Canadian investment grade corporate bonds, GICs issued by Canadian chartered banks, credit unions or trust companies, structured notes issued by the 6 major Canadian chartered banks, and any bond fund mandates from within the ICS program.
iii.) Canadian Equities may include common stocks, Real Estate Investment Trust (REIT) units, or exchange traded fund (ETF) units.
iv.) Global Equities may include common stocks or exchange-traded fund (ETF) units.
i) Monitoring Portfolio Investments and Performance
i.) Return Expectations
This IPS is based on expected 2022 to 2027 inflation-adjusted returns of .25% from cash, 4% from bonds and 4% from equities. A dividend yield of 2% from equities is used as a baseline expectation.
ii.) Benchmarks and Review
A full report of the Portfolio will be prepared at least once per annum for review by the Association's Board of Directors. The Committee may request a review as required, however a quarterly report will be provided in a timely manner on an ongoing basis.
The benchmark for Canadian Equities is the S&P/TSX Composite Dividend Index. The benchmark for Fixed-Income is the DEX Universe Bond Index.
The benchmark for US Equities is the Dow Jones US Select Dividend Index and the benchmark for International Equities is the MSCI World Value Index.
j) Approvals
This Investment Policy Statement accurately reflects the Association's current investment profile.
Investment and Financial Management Policy
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