Asset Mix – the types and combination of our investments
The asset mix for each fund is determined through asset-liability studies and careful analysis of the liability structure of its associated plan. Because all asset classes have different risk and volatility characteristics (e.g., how much the investment can go up or down), the STF is able to tailor the asset mix of each fund to best suit its liability structure (e.g., how soon will the money be needed).
The Investment Committee reviews and updates the Policy Asset Mix for each plan based on the changing nature of each plan’s liabilities. As you can see, the plans that require more liquid assets and have a shorter time horizon have a much higher allocation to fixed income or credit, which are less volatile assets, and a low allocation to alternative assets, which are illiquid. Each fund is constructed to maximize returns without taking on unnecessary risk, which enables the Federation to administer sustainable benefit programs with stable contribution rates.
Check out the Returns page to see how asset mix affects investment returns.
Note: You may notice that the STRP’s policy asset mix is different from its current asset mix. That’s because the policy asset mix is a target mix, while the current asset mix is a snapshot of what the fund looks like on a given day.