The Plan’s assets are divided into 2 portfolios with different goals. These portfolios contain asset classes that are chosen to achieve the objectives of the total portfolio.
Total portfolio
7.3%
10-Year annualized return |
$1,810M
|
Year
|
Return
|
Benchmark indexes
|
2023
|
9.7% |
9.4%
|
2022
|
-16.5%
|
-18.7% |
2021
|
6.7%
|
4.3% |
2020
|
14.5%
|
13.1% |
2019
|
17.4%
|
17.4% |
2018
|
1.3%
|
-0.2% |
|
2017 |
12.7%
|
10.2% |
|
2016 |
7.9%
|
5.3% |
2015
|
8.2%
|
7.0% |
Performance portfolio
Strategy
The objective of the performance portfolio is to help the Plan achieve its long-term target return so that we can maintain
contributions at a reasonable level for Plan members and employers.
Result
We reached this objective in 2023, with an 11.3% annualized return over 10 years. All asset classes posted long-term annualized returns
that were higher than their respective targets, helping the DGPP improve its financial health.
In 2023, diversification and risk management investment strategies continued to perform well. After a difficult 2022, the stock market
rally was a major contributor to the performance portfolio's 8.6% return. This added $54 million in value, despite challenges in the real
estate market.
The latest interest rate hikes could continue to hurt the short-term return prospects of more interest-sensitive asset classes like real
estate and infrastructure. However, the portfolio's sector and geographic positioning should limit negative impacts.
11.3%
10-Year annualized return |
$1,377M
|
Matching portfolio
Strategy
The objective of the matching portfolio is to protect the Plan's financial health against changes in interest rates.
Result
In 2023, the DGPP remained in good financial health despite volatile interest rates. Lower
interest rates increased the value of the Plan's matched assets and liabilities. As a result, the
DGPP maintained its strong financial footing.
Although the strategy may result in greater volatility for returns, it protects and stabilizes
the Plan's financial position. The strategy also ensures that contributions remain stable,
guarantees that the Plan can pay out pensions at any time and helps the Plan comply with
the level of risk the organization wants to take on.
Generally speaking, the matching portfolio is a pool of bonds and other fixed-income
securities. These securities can be managed in the portfolio itself ("fixed-income portfolio")
or through strategies used to overlay the asset portfolio ("bond overlay"). At the end of 2023, the bond overlay portfolio was worth $5.8 billion.
Several hedge ratio optimization transactions were performed during the year in the context
of rate volatility. These operations helped maintain the Plan's financial health.