University of Waterloo investments are held and managed for a variety of purposes, including investment mandates for the pension plan, the endowment, special purpose trust funds, and expendable funds. The Board of Governors and Board Committees provide oversight for all University and Pension Plan investment policies and guidelines and for external fund manager appointments and performance.
To pursue investment objectives, mitigate risk, and manage investment fees, the University leverages different types of investments including active and passive fund management strategies, as well as different asset/investment classes, including public and private equities and fixed income across a variety of geographic regions and industry sectors.
Investment mandates
Pension Plan for Faculty and Staff
The University of Waterloo Pension Plan for Faculty and Staff is a contributory defined benefit plan with an objective to provide its members with retirement benefits. The Pension is a separate legal entity for which the University is the sponsor and administrator.
The Pension’s assets are invested with the objective to maximize long-term real returns, subject to an appropriate level of risk.
The Pension’s investment actions and decisions are approved by and/or recommended to the Board through the Pension & Benefits Committee and the Pension Investment Committee and are subject to compliance with the Pension’s Statement of Investment Policies and Procedures and Fund Implementation Procedures (Pension Plan Documents).
List of Pension Investment Holdings
Endowment fund
The Endowment Fund is comprised of restricted assets, generally donated to the University to be invested in perpetuity with the requirement of providing an annual revenue stream, to fund specific activities of the University. Through its investments, the University also works to preserve the Endowment Fund’s purchasing power.
The University is the legal owner of the Endowment Fund and is responsible for all matters relating to the administration, interpretation, and application of the Fund. Investment actions and decisions are approved by and/or recommended to the Board through the Finance & Investment Committee and are subject to compliance with the Endowment’s Statement of Investment Policies and Procedures and Fund Implementation Procedures.
List of Endowment Investment Holdings
Special purpose trust funds
Where the University has received large donations to facilitate long-term projects or initiatives, the University has established restricted investment pools with the purpose of providing reasonable market returns over the long-term. These returns are intended to enhance the support of the ongoing activities and achievements of the specific purposes for which the Trust Funds were donated.
The University is the legal owner of these special-purpose Trust Funds and is responsible for all matters relating to the administration, interpretation, and application of the Fund. Investment actions and decisions are approved by and/or recommended to the Board through the Finance & Investment Committee and are subject to compliance with the Statements of Investment Policies and Procedures and Fund Implementation Procedures, where appropriate.
Expendable funds
Expendable funds include the University’s unspent cash from operations, capital projects, ancillary operations, expendable donations and research grants. The purpose of these investments is to enhance the University’s investment income through a limited risk profile, preserving capital and ensuring liquidity. To facilitate this purpose, the majority of expendable fund investments are held in guaranteed investment certificates and shorter-term, high-quality corporate bonds.
The University is the legal owner of its expendable funds and is responsible for all matters relating to the administration, interpretation, and application of the funds. Expendable funds investments are guided by investment guidelines that are approved by the Finance & Investment Committee.
Fiduciary responsibility
Common law has established a “prudent investor” rule which applies to both the University and Pension investments. The prudent investor rule requires the University, and those involved in managing investments, to exercise the care, skill, diligence, and judgment that a prudent investor, or prudent person, would when making investment decisions for these funds. This responsibility is recognized in the various Board of Governors approved Statements of Investment Policies and Procedures.
There are additional requirements applicable to managing the Pension’s investments as compared to the University’s investments.
University of Waterloo
For the University, the prudent investor rule requires that investment decisions must be made in the best interests of the University; specifically, in the best interests of facilitating the required funding of the specific activities related to an investment mandate. In consideration of this responsibility, investment decision-making can consider any factors provided that they align with the overall goals of the University and the investment mandate, including the rate of return objectives and risk framework for the investment fund.
Pension Plan for Faculty and Staff
The pension prudent investor rule, set out in Ontario’s pension legislation, requires the University, as the pension plan administrator, to make investment decisions that are in the best financial interests of members (i.e. retirees, or their beneficiaries, employees who are plan members, former employees who are deferred members, etc.). Any preference in favour, or absolute refusal to consider an investment, or class of investments, based on factors that are not financial or risk related considerations is potentially a violation of the administrator’s fiduciary duties. When weighing investments, institutional preferences can be relied upon as a “tie breaker” when deciding between otherwise equally financially prudent investments.
Investment Managers & Funds
For restricted asset investments, the majority of assets are invested through pooled funds where individual investments/holdings are determined by investment managers. This makes the University a manager of managers with respect to its investments, whereby the University evaluates and engages with managers on a variety of items including investment returns, risk management, and responsible investing practices and considerations.
The University has approved the following investment managers and funds for use in its investment mandates. The approval of a manager/fund does not guarantee its use within an investment mandate. Use of investment funds and allocations to those funds are determined through the relevant Board committee(s).
- CBRE Global Alpha Fund
- Fiera Global Equity Fund
- Mirova Global Sustainable Equity Fund
- Garage Capital Fund V
- Garage Capital Opportunity Fund III
- IFM Global Infrastructure Fund
- Northleaf Senior Private Credit Fund
PH&N Investment Services (a division of RBC Global Asset Management)
- PH&N Canadian Equity Fund
- PH&N Enhanced Total Return Bond Fund
- PH&N Total Return Bond Fund
- RBC Global Equity Focus Pension Trust
- Sound Point U.S. Direct Lending Fund III
TD Global Investment Solutions (TD Asset Management)
- TD Emerald All-Country World Index Fund
- TD Emerald Canadian Bond Index Fund
- TD Emerald Canadian Equity Index Fund
- TD Emerald Canadian Long Bond Broad Market Index Fund
- TD Emerald International Equity Index Fund
- TD Emerald US Market Fund
- TD Emerald US Pooled Fund
- True North Fund
- Velocity Fund II
- Walter Scott NCS Global Equity Fund
Responsible Investing
The University chooses investments and investment managers that it believes will deliver superior financial performance over the long term. As part of this determination process, the University considers environmental, social and governance (ESG) factors in selecting investment managers as well as assets that are directly held.
For more information please refer to the University’s ESG Principles and Guidelines, Responsible Investment Policy and Responsible Investment website.
Glossary of terms
Pooled fund investments
Investment funds that are shared between a group of investors. The assets held within the pooled fund are generally owned by the investment fund, and investors hold and own units of the fund. Investors in pooled funds share in the fixed and variable costs that come with diversification and professional fund management, leading to lower costs. Pooled funds can be either active or passively managed. As these funds are owned by many investors, each investor has little influence on investment decisions.
Segregated fund investments
Also referred to as Privately Managed Funds, these are assets that are owned by one investor. Management of the fund can be directly by the investor, or by an Investment Manager on their behalf. These funds are generally actively managed and, if managed by an investment manager, typically come with higher fees. As the investments are held directly by the investor, this provides the investor with a greater level of transparency and control over investment decisions.
Active management
Active management is an investment strategy where Fund Managers make buy, hold and sell decisions on individual assets with the goal of outperforming a particular benchmark. Actively managed funds typically come with higher fees to compensate a Fund Manager for a higher level of analysis.
Passive management
Passive management is an investment strategy where Fund Managers mirror a market index, or closely track the index to achieve similar returns. Buy, hold and sell activities match changes to the benchmark index. Passively managed funds typically come with lower fees as there is less analysis is involved in the process.
Public equity
Refers to ownership in companies, through stock/shares, that are traded on public stock exchanges like the Toronto Stock Exchange (TSX), or the New York Stock Exchange (NYSE).
Private equity
Refers to ownership in companies that are not publicly traded, meaning that their stock/shares are not offered to the general public.
Fixed income investments
Refers to investments that pay a set, or fixed, level of income to investors. Example: Bonds and guaranteed investment certificates (GICs).
Venture capital
Generally, private equity or fixed income investment in startup and early-stage companies.