Many Nations Multi-Employer Pension Plan
For the average person who must somehow make longterm decisions in this volatile market environment, it has never been more important to provide sound research to help shine some light on the path ahead. Which is one of the reasons, the Board of Directors relies on the Many Nations Pension Committee and our independent Pension Consultant to ask the difficult questions and get the cold hard facts.
More than ever before, the Pension Committee and the Pension Consultant need to produce answers for our Members that make sense. The market crisis has affected every Fund Manager and every asset class. No one is safe from this turmoil. As the markets recover from this crisis and we continue forward, it is the Pension Committee and the Pension Consultant who will provide information to light the way.
- Board of Directors of Many Nations
In 2008, all the major stock markets around the world declined substantially, some by more than 40%. What began as a problem with real estate loans in a small sector of the U.S. market spread into a financial crisis with U.S. banks, and then a global economic crisis.
The Many Nations Pension Plan offers a wide variety of investment options, to allow for different investment objectives of the members. All of these investment options are monitored each quarter by the Pension Committee, with the assistance of their Pension Consultant. The Pension Committee meets each quarter with Industrial Alliance who also performs due diligence on the funds. At the quarterly meetings, the Pension Committee discusses with Industrial Alliance any concerns it might have with any of the funds. If the Pension Committee, with the advice of the Pension Consultant, concludes that an investment option is no longer satisfactory, it will remove it from the menu.
The Pension Committee will be looking at the 2008 performance of all of the funds at its meeting in February. Industrial Alliance's Diversified Fund is the fund that holds most of the members' money. It is broadly diversified and conservatively managed, with investments in both stocks and bonds. It is a multi-manager fund, which means that there are several investment managers that manage portions of the fund. Although not all the information is available yet, we do know that the Diversified Fund lost 13.2% in 2008. Although this result is poor, it is consistent with the performance of other balanced funds that hold both stocks and bonds. (Funds that hold only stocks typically lost more than 30% in 2008).
Investing in the stock market, even through a balanced fund of stocks and bonds such as the Diversified Fund, will have good years and bad years. The markets performed very poorly in 2008, but some of the previous years were very good. The average annual rate of return of the Diversified Fund over the past 10 years was 6.9%.
The Pension Committee is satisfied that the pension plan continues to provide appropriate investment options. The Board of Directors is confident that the Pension Committee, with the assistance of the Pension Consultant, applies a rigorous process in selecting, monitoring and evaluating the investment options.
- Harry Satanove, Satanove & Flood Consultant on behalf of the Pension Committee
Although bad economic news is no longer having as negative an effect as it did just a few weeks ago, investors are not yet in a "buy" mode. Instead, they seem to be waiting for more concrete signs of a recovery. However, don't forget that the stock markets generally recover six to nine months before gross domestic product and corporate profits. Until then, the emphasis is placed not on profits or market valuations but on investor confidence, necessary to trigger an economic recovery.
The current strategy of the fund remains the same. For the bond portion, duration remains short and the fund continues to hold its underweight in corporate bonds. For stocks, the fund remains overweight in Materials and Financials and neutral in Energy.
The portfolio advisor will continue to monitor the effects of all the actions undertaken by governments and central banks around the world to solve the financial crisis and reinvigorate the world's economy. Some tentative signs of improvement are showing, but the portfolio advisor is still looking for more concrete results that would influence both the equity and bond portion of the fund.
- Eric Vachon, Fund Manager & Institutional Advisor — Industrial Alliance
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