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Contents
Message from the Board Chair ..................................................................................................................... 1
Message from the President ......................................................................................................................... 2
Overview of IMANT ....................................................................................................................................... 4
Market Commentary ..................................................................................................................................... 7
Funds under Management............................................................................................................................ 9
Endowment Fund ................................................................................................................................... 10
Endowments with Investment Restrictions ........................................................................................... 20
Staff Pension Plan ................................................................................................................................... 22
Supplemental Arrangement ................................................................................................................... 29
Core Working Capital Fund ..................................................................................................................... 30
Investment Management Fees ................................................................................................................... 31
Endowment Fund and Staff Pension Plan Investment Policy Benchmarks ................................................ 32
Independent Auditor’s Report .................................................................................................................... 33
Financial Statements and Notes ................................................................................................................. 35
2015‐2016 IMANT Board of Directors ........................................................................................................ 45
Investment Managers by Mandate ............................................................................................................. 46
Advisors and Service Providers ................................................................................................................... 48
Cover photo: Lyle Wilson, Rendition of one side of a nineteenth century box drum (1992) The Transforming Image: Painted Arts of Northwest Coast First Nations Bill McLennan and Karen Duffek, UBC Press 2000 Courtesy of the Museum of Anthropology, UBC, Vancouver
1 | UBC IMANT 2016 Annual Report
Message from the Board Chair
In 2015/16, capital markets were volatile and one year investment
returns were either negative or in low single digits. Against this
backdrop, the Board remained focused on our long term investment
strategy and value creation for the UBC Endowment Fund, Staff
Pension Plan and other portfolios to support the University’s
research, scholarships and pension benefits. Although we expect
lower returns in the current environment, we remain confident that
the portfolios are well positioned as the market cycle shifts into the
next low but sustainable growth phase of the economy albeit with
very low interest rates globally. Despite the market uncertainty, we
are pleased to report that the Endowment Fund and Staff Pension
Plan exceeded their respective performance benchmarks for the year.
After consultation with the UBC faculty and students, the UBC Board of Governors approved creation of
the new Sustainable Future Fund. We are pleased to assist the University with implementing this new
fund in which Environmental, Social and Governance (ESG) factors will be considered as key criteria in
the investment process. This fund will help address a desire by the UBC community to invest in
environmentally and socially responsible companies with sustainable investment returns.
I would like to acknowledge the IMANT staff and thank them for their dedication and efforts in
implementing IMANT’s business objectives for 2015/16. To my fellow directors, thank you for your
commitment and support. I would like to recognize the contributions of Sarah Boatman, Jay Parker,
Peter Smailes and Cheryl Yaremko who retired as Board members. I am also pleased to welcome Orla
Cousineau, Emilian Groch, Lisa Pankratz and Andrew Simpson who joined as new directors this year.
Lastly, thank you to the UBC community and stakeholders for entrusting your portfolio assets with UBC
IMANT. It is important that we share the same long term vision and objective of delivering the
investment returns commensurate with each fund’s objectives, liability requirements and risk
parameters, while exercising the highest standard of prudence. We will continue striving to enhance the
risk/return characteristics of all investment portfolios, while strengthening our relationship with you
through regular reporting and other communications.
Martin Glynn
Chair of the IMANT Board of Directors
2 | UBC IMANT 2016 Annual Report
Message from the President
It is my pleasure to present UBC Investment Management Trust’s
2016 Annual Report on the University of British Columbia’s
investment portfolios for the fiscal year ended March 31, 2016. The
assets under IMANT’s management were $3.1 billion at March 31,
2016.
The Endowment Fund had a slightly negative return of ‐0.1% for the
year, net of external investment management fees, and was ahead of
the benchmark return of ‐0.5%. The Staff Pension Plan had a positive
return of 0.4% for the year, net of external investment management
fees, and was also ahead of its benchmark return of 0.1%. For the last
four years, the combined value added for the two portfolios over
policy benchmarks totaled $32 million.
2015/16 was a busy year for IMANT as several major projects were undertaken. A new custodian was
appointed for the University and Staff Pension Plan and transitioning of assets was successfully
completed in the beginning of July 2015. New commitments were made to alternative investment
managers to further transition the Endowment and Staff Pension Plan to their long‐term policy asset
mixes. IMANT also engaged a consultant during the year to review the investment structure of non‐
Canadian public equity investments. One of the recommendations of this study included consolidating
the US equity passive mid‐cap index into the US equity passive large‐cap index. For the Endowment
Fund, two‐thirds of the new 10% absolute return strategy allocation approved by the Board of
Governors in 2014 was funded.
Another project included a review of the Endowment Fund’s long‐term asset mix and return
expectations to confirm the sustainability of the current 3.5% spend rate. The results of the review were
presented to the Board of Governors and the current rate will be maintained for the upcoming fiscal
year. Further work on the Endowment’s asset mix is underway to determine whether any changes
should be made to the spend rate in the future.
IMANT continues to work with UBC’s Responsible Investing Policy Committee to incorporate ESG factors
to enhance our investment process and reporting. As part of the University’s new initiatives, IMANT will
be implementing the UBC Sustainable Future Fund which will invest in low‐carbon emission and high
ESG equity funds. This fund is expected to be available in 2016/17 and will provide donors another
investment option when contributing to the University.
3 | UBC IMANT 2016 Annual Report
I would like to thank the IMANT Board of Directors and staff for their commitment this past year in
achieving our investment and business objectives. I would also like to thank the UBC Board of
Governors, Staff Pension Plan Board and the greater University community for their support as we
continue our efforts in achieving the University’s investment objectives and stakeholders’ needs.
Jai Parihar, CFA, ICD.D
President and Chief Executive Officer
4 | UBC IMANT 2016 Annual Report
Overview of IMANT
UBC Investment Management Trust Inc. (IMANT), a wholly owned subsidiary of the University of British
Columbia (UBC), was established in 2003 in order to provide comprehensive portfolio management
services and related advice to UBC. IMANT's mission is to deliver the investment returns agreed upon
with our clients, commensurate with each fund's objectives, liability requirements and risk parameters,
while exercising the highest standard of prudence.
Governance Structure
The University, through its Board of Governors (BOG), is the Administrator of the investment portfolios
and is responsible for the overall management of the UBC Plans and funds. The BOG has established a
governance structure and delegated certain responsibilities and powers for investing the portfolios to
the IMANT Board of Directors.
The IMANT Board is comprised of ten directors ‐ seven unrelated members from the business
community and three UBC‐related members. Board members unrelated to UBC are appointed by the
UBC BOG on recommendation of the IMANT Board. UBC‐related directors, including those who are UBC
senior executives and representatives from the UBC BOG, are appointed directly by the UBC BOG. The
Board meets at least quarterly and provides oversight and governance to IMANT through its three
standing committees: Investment Committee, Audit Committee, and the Governance and Human
Resources Committee. The IMANT Board discharges its investment related responsibilities through its
Investment Committee, which consists of the entire Board. The responsibilities of the Investment
Committee include:
Formulating investment beliefs to guide the development of investment policies
Recommending investment policies for the UBC funds to the UBC BOG (with the exception of
the Staff Pension Plan), taking into account each fund’s objectives and risk tolerances. This
includes asset allocation with ranges, benchmarks, and the currency hedging policy
Ensuring the appropriateness of long term policy asset mixes relative to obligations/liabilities
and return objectives and advising the University if they are not aligned (with the exception of
the Staff Pension Plan)
Approving overall investment manager structures, asset class guidelines, and certain investment
transactions
Approving the manager selection process and manager appointment/termination
recommendations brought forward by the President and CEO
Monitoring and evaluating investment performance and cost effectiveness against objectives
and benchmarks
Overseeing the operations of IMANT
5 | UBC IMANT 2016 Annual Report
IMANT’s Responsibilities and Organizational Structure
Return requirements and risk preferences are established by the client (various groups at the University)
and factored into the investment policy recommendation. The investment policies for all portfolios are
recommended by IMANT’s President to the IMANT Board with the exception of the Staff Pension Plan
(SPP). All policies are reviewed by the IMANT Board and submitted to the UBC BOG for approval except
the SPP’s investment policy, which is prepared by the SPP Board with assistance from their investment
and pension consultants. The SPP investment policy is then recommended by the SPP Board to the UBC
BOG for approval.
After a fund’s investment policy is approved by the UBC BOG, IMANT is responsible for implementing
the investment policy asset mix. Rather than making direct investments, IMANT concentrates on
evaluating, hiring, monitoring, and replacing external investment managers as required. This “manager
of managers” approach is both best practice and the most cost effective for the size of assets under
management.
At March 31, 2016, IMANT managed $3.1 billion of UBC and UBC‐related portfolio assets. IMANT’s team
of investment professionals works under the direction of the President and CEO with oversight by the
IMANT Board of Directors.
IMANT BOARD OF DIRECTORS
President & CEO
Director, Manager Relations &
Investment Operations
Director, Quantitative Analysis & Strategic
Research
Associate, Analytics &
ResearchAnalyst
Administration Manager
6 | UBC IMANT 2016 Annual Report
The President’s responsibilities include:
Preparing the long term investment policies appropriate for the funds’ obligations and risk
tolerance for recommendation to the IMANT Board (for submission to the UBC BOG with the
exception of the Staff Pension Plan)
Implementing the long term policy asset mixes by recommending the overall investment
manager structure, asset class guidelines, and appointment/termination of external investment
managers
Evaluating the investment performance of portfolios to ensure efficient implementation of the
long term policy asset mix
Evaluating the appropriateness of the long term policy asset mixes relative to liabilities and
return objectives (with the exception of the Staff Pension Plan)
Monitoring and evaluating external investment managers
Reporting regularly to the IMANT Board, SPP Board and UBC BOG
Ensuring the effective operations of IMANT
7 | UBC IMANT 2016 Annual Report
Market Commentary The past fiscal year ended with asset classes generating mixed returns in Canadian dollar terms. The
collapse in crude oil prices to sub US$40 prices, a slowdown in China and overall pessimism in the global
economy contributed to instability in the financial markets. Furthermore, investors witnessed volatility in
interest rates as a result of diverging monetary policy actions by central banks and diverse views of
investors on the state of global economic growth. In the Canadian market, government bond yields
remained low as the Bank of Canada continued to hold the overnight policy rate at 0.5%.
Canadian equities declined ‐6.6% as commodity prices ended lower during the fiscal year despite a slight
rebound in the last quarter. Markets in the United States advanced 3.9% in Canadian dollar terms (1.4%
in US dollars) as signs of an economic recovery prompted the Federal Reserve to raise its benchmark
rates by a quarter percent for the first time in nearly a decade. International equity markets (EAFE)
declined ‐6.3% in Canadian dollars as central banks in Europe and Japan took aggressive measures to
stimulate the economy by pushing interest rates into negative territory. Concerns over economic growth
in China and Brazil resulted in poor returns for emerging market equities which was also hampered by
low commodity prices and a strengthening US dollar. The Canadian dollar depreciated against most
developed currencies during the year, resulting in currency gains for Canadian investors with foreign
currency investments including IMANT.
Note: Asset class returns shown are annualized returns. Currency returns shown are cumulative returns, not annualized, and are
based on Bank of Canada Noon Rates.
Asset Class Index 1 Year 4 Year 10 Year
Cash FTSE TMX 91 Day T‐Bills 0.5% 0.9% 1.7%
Universe Bonds FTSE TMX Universe Bond 0.8% 4.0% 5.2%
Long Bonds FTSE TMX Long Bond ‐0.6% 5.7% 6.9%
Real Return Bonds FTSE TMX Real Return Bond ‐2.2% 1.8% 4.9%
Canadian Equities S&P/TSX ‐6.6% 5.3% 4.0%
U.S. Equities S&P 500 3.9% 19.8% 8.1%
International Equities MSCI EAFE ‐6.3% 11.4% 2.9%
World Equities MSCI World ‐1.4% 15.3% 5.4%
Emerging Market Equities MSCI Emerging ‐10.2% 3.5% 4.1%
Hedge Fund of Funds HFRI FOF: Conservative ‐1.6% 9.5% 2.4%
CAD/USD Change ‐2.2% ‐23.0% ‐10.0%
CAD/EUR Change ‐7.8% ‐9.8% ‐4.1%
CAD/JPY Change ‐8.4% 5.0% ‐13.9%
CAD/GBP Change 1.0% ‐14.4% 8.8%
Returns to March 31, 2016 (in Canadian Dollars)
8 | UBC IMANT 2016 Annual Report
In alternative asset classes, demand for real estate and infrastructure investments remained strong,
reflecting the desire for additional yield by institutional investors. More attractive opportunities by
investors are being sought globally with mixed investment results. However, new investment activity by
private equity managers slowed as a result of recent volatility in global public equity markets.
Commercial real estate markets continued to provide investors stable income returns with some capital
appreciation. Given low capitalization rates, many real estate managers continue to be cautious in
making new acquisitions with some opting to construct new buildings for their portfolios. Similar to real
estate, both global and Canadian core infrastructure investments have become relatively expensive and
expected returns are lower due to greater competition with many large institutional investors.
In this difficult, low yielding market environment, IMANT remains focused on the University’s long term
objectives and continues to explore strategies to reduce risk and enhance net of fee returns across UBC
portfolios.
9 | UBC IMANT 2016 Annual Report
Funds under Management
At March 31, 2016, IMANT provided oversight on $3.1 billion of assets across four portfolios (listed in
the table below). Each portfolio has different risk and return objectives and varies in policy asset mix as
well as corresponding performance results. One of the portfolios is part of the University’s working
capital and is a shorter term fixed income portfolio. Others are balanced funds that contain traditional
public investments in bonds and equities, as well as alternative investments such as private equity, real
estate, infrastructure and absolute return strategies.
Note: Changes in market values reflect investment earnings as well as external cash flows made into and out of the portfolios.
There are an additional $144 million (2015: $142 million) of endowed assets at other foundations that support programs at UBC
that are not listed in the above table (see page 20‐21). IMANT reviews the performance results of these investments on behalf
of the University, but does not have discretion over these assets. During the year, total proceeds from the Brain Research
Centre Fund were transferred to the UBC Operating account and proceeds from the Special Working Capital Fund were
transferred to the Core Working Capital Fund.
Portfolios are constructed with multiple asset classes for risk diversification and to match assets to
liabilities. Client preferences, time horizon, and other factors such as investment management fees are
also considered during the asset allocation process.
Portfolio Mandate March 31, 2016 March 31, 2015
Endowment Fund Balanced 1,311.5 1,339.6
Staff Pension Plan Balanced 1,382.5 1,358.9
Supplemental Arrangement Plan Balanced 80.7 81.4
Core Working Capital Fund Fixed Income 315.3 307.4
Brain Research Centre Fund Immunized fixed income ‐ 11.3
Special Working Capital Fund Fixed Income ‐ 0.8
Total 3,089.9$ 3,099.4$
Market Value ($ millions)
10 | UBC IMANT 2016 Annual Report
Endowment Fund ($1,311 million)
The Endowment Fund is the result of the accumulation of over 100 years of philanthropy from generous
donors as well as prepaid endowment land lease sale proceeds. The Endowment Fund benefits over
3,000 specific areas throughout all faculties, helping to support learning, teaching, and research for the
current and future generations.
Long Term Policy Asset Mix
The Endowment funds are invested in financial assets to generate annual distributions for various
programs in accordance with the Statement of Policies and Procedures approved by the UBC Board of
Governors. The following table contains the actual and long term policy asset mix as of March 31, 2016.
The Endowment Fund continued its multi‐year transition to its long term investment policy weights
during the year. As mentioned in the President’s message, a review of the portfolio’s non‐Canadian
equity structure review recommended elimination of the US equity mid‐cap allocation and consolidation
into the US large‐cap allocation. New commitments of $12 million USD and $25 million USD were made
to two new value‐add US and global real estate funds respectively. Additionally, two thirds of the 10%
target allocation to absolute return strategies (ARS) was funded to quantitative ($40 million USD) and
fundamental ($45 million CAD) multi‐strategy managers. This new allocation was approved by UBC’s
Board of Governors in 2014.
Commitments to private equity, real estate and infrastructure managers are drawn over time depending
on their investment type and fund structure. The total commitment may not be fully drawn by the
manager and later stage funds provide greater distributions back to their investors. As a result, the
Endowment tends to make commitments that exceed its target policy mix to maintain a stable
Asset Class Policy Mix Actual Mix
Fixed Income 20.0% 20.7%
Cash and Net Currency Forwards 2.0% 1.2%
Universe Bonds 13.0% 13.5%
Mortgages 5.0% 6.0%
Equities 40.0% 46.4%
Canadian Equities 15.0% 19.1%
Global Equities 15.0% 18.1%
Emerging Market Equities 10.0% 9.2%
Alternatives 40.0% 32.9%
Private Equity 10.0% 6.9%
Real Estate 10.0% 7.5%
Infrastructure Equity 10.0% 11.5%
Absolute Return Strategy 10.0% 7.0%
Total 100.0% 100.0%
11 | UBC IMANT 2016 Annual Report
allocation to these asset classes. Combining actual investments and outstanding commitments, the
Endowment has 9.9% allocated to private equity, 12.6% allocated to real estate and 14.1% allocated to
infrastructure equity compared to policy weights of 10.0% each. Additional opportunities in private
equity, real estate and infrastructure funds are currently being reviewed by the investment team.
Distributions from private equity funds were strong and pacing of new investments continued to be
slow. As alternative investment commitments are drawn by investment managers, funds will be
provided from the overweight allocations in Canadian and global equities.
Below is a table summarizing major transactions completed and opportunities reviewed in 2015/2016.
Actual Return Compared to Required Return
For the Endowment Fund to be sustainable, it needs to maintain its inflation‐adjusted value to be able
to achieve intergenerational equity for its beneficiaries. Therefore, its long‐term returns must equal or
exceed its required rate of return. The Endowment’s current required return objective is equal to the
sum of the University’s spend rate of 3.5%, administrative expenses of 0.65%, and annual inflation (as
proxied by CPI, the Canadian Consumer Price Index).
*The Endowment’s required return is equal to Spend Rate + Expenses + Inflation (1 Year = 3.5% + 0.65% + 1.27% = 5.4%).
**Note the 10‐year required return is higher as the spend rate was 5.0% prior to Apr 2009 and administrative expenses were
0.9% prior to Apr 2011.
Note: Returns are reported net of external investment management fees starting January 2010. Returns stated are annualized
for periods greater than one year. Numbers may not add due to rounding.
Public Equities and Fixed Income
• consolidated US equity mid‐cap allocation
into primary US large‐cap allocation
• made redemptions from global equities to
fund absolute return strategy funds
Alternatives
• commited $12 million USD to a value‐add
U.S. real estate fund
• committed $25 million USD to a value‐add
global real estate fund
• funded $40 million USD into a quantitative
multi‐strategy absolute return strategy fund
• funded $45 million CAD into a fundamental
multi‐strategy absolute return strategy fund
1 Year 2 Year 3 Year 4 Year 10 Year**
Actual Return ‐0.1% 6.6% 9.5% 9.9% 5.1%
Required Return* 5.4% 5.4% 5.5% 5.5% 6.5%
‐5.5% 1.2% 4.0% 4.4% ‐1.4%
12 | UBC IMANT 2016 Annual Report
The Endowment Fund’s actual return for the one year ending March 31, 2016 was ‐0.1% which was
behind the required return objective for the Fund. However, on a 2‐year to 4‐year basis, this objective
was met. On a 10‐year basis, the Fund has not met the required return objective partly due to the 2008
financial crisis and higher spend rate requirement prior to 2009.
Actual Return Compared to Policy Benchmark
The Endowment Fund return is also compared to its policy benchmark portfolio return to gauge the
effectiveness of asset mix implementation. The policy benchmark portfolio serves as a proxy for a
passively invested portfolio and consists of a policy weighted average return of different asset class
benchmarks. For public investments, public market indices are used. For alternatives, where investable
indices are not available, other industry indices, combinations of relevant public indices and inflation
plus premium benchmarks are used. For the components of the Endowment investment policy portfolio
benchmark, please see page 32.
Note: Returns are reported net of external investment management fees starting January 2010. Returns stated are annualized
for periods greater than one year. Numbers may not add due to rounding.
The Endowment Fund’s 1‐year return of ‐0.1% is 40 basis points ahead of the policy benchmark return of
‐0.5%. Over a four year period, the Fund exceeded its benchmark portfolio return by 0.2% and over a
ten year period, the Fund lagged by 0.2%.
1 Year 2 Year 3 Year 4 Year 10 Year
Actual Return ‐0.1% 6.6% 9.5% 9.9% 5.1%
Inv. Policy Benchmark ‐0.5% 6.5% 9.4% 9.7% 5.3%
Value Added 0.4% 0.1% 0.1% 0.2% ‐0.2%
13 | UBC IMANT 2016 Annual Report
2015/16 investment results (net of investment manager fees) across all asset classes outperformed their
respective benchmarks with the exception of private equity. At the total fund level, manager selection
added value; however, this was partially offset by asset allocation due to an overweight in public
equities. Stock selection by public equity managers particularly Canadian and emerging markets resulted
in strong outperformance over their respective equity benchmarks. The results in alternative
investments were also positive as investments in real estate and infrastructure equity performed well
against their CPI‐based benchmarks. Depressed oil prices hurt valuations for energy‐related private
companies and private equity overall underperformed against its benchmark. The new addition of
absolute return strategies was also a strong outperformer during the year.
The Endowment Fund’s currency hedging policy remains unchanged and includes hedging back to
Canadian dollars non‐equity foreign investment currency exposures (e.g. foreign real estate,
infrastructure and absolute return strategy investments). Currency hedging is managed passively by an
external manager through currency forward contracts on major developed market currencies (e.g. US
dollar, Euro, Pound Sterling, and Japanese Yen) with investment grade counterparties.
5.5%
5.8%
5.3%
2.8%
‐10.2%
‐1.4%
‐6.6%
2.1%
0.8%
‐0.5%
7.1%
9.4%
8.4%
‐0.3%
‐6.5%
‐0.6%
‐5.6%
2.6%
1.0%
‐0.1%
‐15.0% ‐10.0% ‐5.0% 0.0% 5.0% 10.0% 15.0%
Absolute Return Strategy
Infrastructure Equity
Real Estate
Private Equity
Emerging Market Equities
Global Equities
Canadian Equities
Mortgages
Universe Bonds
Total Fund
1 Year Performance to March 31, 2016
Endowment Fund Benchmark
14 | UBC IMANT 2016 Annual Report
Endowment Fund Exposures
IMANT collects information on portfolio holdings to analyze the risk exposures of the Endowment Fund
including company concentration risk, currency risk, credit rating risk and interest rate risk. This is
monitored by IMANT and the IMANT Board to ensure that the fund is within established risk
parameters. The information is aggregated from the underlying holdings in external manager pooled
funds. Exposures at March 31, 2016 are provided for information below.
Endowment Total Fund Exposure by Geographical Region
Canada50%
United States22%
Western Europe11%
Asia Pacific12%
South America
1%
Other4%
15 | UBC IMANT 2016 Annual Report
Endowment Public Equity Exposure Geography Sector Breakdown
Endowment Fixed Income Exposure Credit Rating Issuer Type
Credit Rating
AAA 13%
AA 28%
A 14%
BBB 13%
Mortgages (unrated) 32%
Sector
Financials 27%
Consumer Staples 15%
Industrials 10%
Consumer Discretionary 10%
Telecommunications 9%
Energy 7%
Technology 7%
Materials 5%
Healthcare 5%
Utilities 5%
Federal8%
Provincial27%
Corporate33%
Mortgages32%
Canada37%
United States32%
Asia Pacific18%
Western Europe5%
South America
3%
Other5%
16 | UBC IMANT 2016 Annual Report
Endowment Private Equity Exposure
Fund Type
Endowment Real Estate Exposure Geography Fund Type
Property Type
Property Type
Industrial 28%
Residential 26%
Office 20%
Retail 13%
Hospitality 6%
Mixed Use 5%
Other 2%
Primary Funds31%
Co‐Investment
Funds20%
Fund of Funds22%
Secondary Funds27%
Core RE54%
Value Added RE
29%
Opportunistic RE10%
Mezzanine Debt8%
Canada72%
USA 19%
Other9%
17 | UBC IMANT 2016 Annual Report
Endowment Infrastructure Equity Exposure Geography Revenue Type*
* Excludes publicly listed infrastructure equity fund
Industry Sector
Industry Sector
Transportation 30%
Electric 26%
Telecommunications 10%
Water 8%
Oil & Gas Services 7%
Engineering & Construction 6%
Healthcare Services 3%
Diversified/Other 10%
Contracted29%
GDP Driven32%
Regulated31%
Other8%
Canada20%
USA 25%
UK23%
Western Europe ex
UK11%
South America10%
Australia6%
Other5%
18 | UBC IMANT 2016 Annual Report
Responsible Investing
As part of implementing the University’s Endowment Responsible Investment (RI) Policy established in
2014, IMANT continued integrating environmental, social and governance (ESG) factors into the
investment process. In the past year, IMANT made significant progress in incorporating and applying all
facets of the RI Policy. This included:
1. Development of an ESG implementation plan
2. Assisting UBC in evaluating a fossil fuel divestment proposal
3. Helping the University in establishing the UBC Sustainable Future Fund
4. Engagement with external investment managers
5. Review of monitoring services on external managers’ equity portfolio ESG ratings
6. Collective engagement with other investors and organizations on various issues
Over the course of the year, IMANT staff developed an ESG implementation plan that was approved by
the IMANT Board of Directors. This plan lays out specific ESG related goals to be implemented by
IMANT by the end of the next fiscal year.
In response to a fossil fuel divestment initiative that was considered by the UBC Responsible Investment
Committee, IMANT prepared a detailed analysis of the Endowment Fund’s holdings. IMANT also
provided a comparison of the CO2 emissions of broadly used global equity indexes versus fossil fuel free
portfolios and portfolios that emphasize ESG matters. Ultimately, IMANT’s research resulted in the
recommendation to the University that a mix of low carbon and high ESG‐rated investments would serve
as the best combination for achieving the greatest reduction in CO2 emissions and improvements in ESG
outcomes.
An outcome of the fossil fuel divestment initiative was the establishment of the UBC Sustainable Future
Fund (SFF) – a fund with a goal of delivering required investment returns while improving ESG outcomes
and materially reducing CO2 emissions compared to the typical, passive equity market index methods of
investment. The SFF will be seeded with $10 million from the University and will allow donors to direct
their donations to either the existing Endowment Fund or the SFF. Donors that made contributions in
the past will have the opportunity to redirect their donations to the SFF. After the development of a
suitable investment policy for the SFF, IMANT staff set out to identify appropriate investment managers
and investment products that could be expected to meet the requirements of the SFF in fiscal year
2016/2017. The initial, small size of the fund placed an additional challenge on keeping the fund well
diversified and costs low. As a result, the IMANT team has established some in‐house investment
capabilities that are expected to lower investment costs for the SFF.
Investor engagement is one of the cornerstones of the UBC Responsible Investment Policy. IMANT has
been engaging investment managers with respect to their approach to formally integrate ESG in their
investment process. IMANT is pleased to see one of its largest managers responding by establishing a
19 | UBC IMANT 2016 Annual Report
dedicated ESG team within its organization and making considerable improvement in ESG integration
and disclosure.
The University’s commitment to responsible investing enabled IMANT’s investment team to purchase
commercially available ESG ratings of publicly listed companies. Access to this information allows for
the monitoring of portfolio holdings of investment managers and enables IMANT to drive the
conversation with respect to the consistency of manager portfolio holdings with the responsible
investment objectives of the University. ESG rating monitoring services are still in the early stages of
commercial availability and towards the end of the year, IMANT staff switched to a more cost effective
data provider that better integrated with IMANT’s existing risk management tools.
Another area of implementation of the UBC Responsible Investment Policy is IMANT’s collective
engagement alongside other investors and industry groups in advancing ESG implementation. Within
the Pension Investment Association of Canada (PIAC) Investor Stewardship Committee, IMANT had the
opportunity to cooperate with other investors on improving proxy voting and discussed approaches to
ESG implementation and disclosure. As a member of the Canadian Coalition of Good Governance
(CCGG), IMANT contributed to the efforts to improve corporate board governance. Additionally, IMANT
and University of Toronto Asset Management (UTAM) actively encouraged the CCGG to expand its
mandate beyond governance matters to include environmental and social considerations. IMANT is
pleased to see that the CCGG is currently working with members to expand the mandate of the
organization.
20 | UBC IMANT 2016 Annual Report
Endowments with Investment Restrictions ($144.4 million)
Endowments with Investment Restrictions refer to the endowments specified for UBC at the Vancouver
Foundation, UBC Foundation, and Jarislowsky Fraser Limited Investment Counsel. IMANT reviews their
respective performance results on behalf of the University but does not have discretion over these
investments. At March 31, 2016, they totaled $144.4 million.
UBC Foundation
Assets held at the UBC Foundation consist of a donation of publicly traded common shares for Wall
Financial Corporation, a Canadian real estate investment and development company. The assets were
valued at $90.7 million on March 31, 2016.
Vancouver Foundation
At March 31, 2016, there was $50.1 million of endowment assets at Vancouver Foundation which were
invested in Vancouver Foundation’s Consolidated Trust Fund, a balanced fund. The policy and actual
asset mixes are provided in the table below along with performance information.
Endowments Held At Mandate March 31, 2016 March 31, 2015
UBC Foundation Canadian Equity 90.7 87.1
Vancouver Foundation Balanced 50.1 51.2
Jarislowsky Fraser Balanced 3.7 3.8
Total 144.4$ 142.1$
Market Value ($ millions)
Asset Class Long Term
Policy MixActual Mix
Fixed Income 29.5% 26.4%
Cash and Cash Equivalents 0.0% 0.0%
Fixed Income 24.0% 23.4%
Mortgages 5.5% 3.1%
Equities 53.5% 56.9%
Canadian Equities 21.5% 22.0%
Global Equities 32.0% 34.9%
Alternatives 17.0% 16.7%
Real Estate 7.0% 4.8%
Absolute Return Strategy 10.0% 11.9%
Total 100.0% 100.0%
21 | UBC IMANT 2016 Annual Report
Note: Returns are reported gross of investment management fees. Returns stated are annualized for periods greater than one
year. Numbers may not add due to rounding.
Jarislowsky Fraser (Merilees Chair)
Assets at Jarislowsky Fraser are invested in the JF Global Balanced Fund. The policy and actual asset
mixes are provided in the table below along with performance information.
Note: Returns are reported gross of investment management fees. Returns stated are annualized for periods greater than one
year. Numbers may not add due to rounding.
1 Year 2 Year 3 Year 4 Year 10 Year
Actual Return 1.4% 6.6% 9.9% 9.9% 6.0%
Inv. Policy Benchmark ‐0.5% 5.6% 8.2% 8.3% 5.2%
Value Added 1.9% 1.1% 1.8% 1.6% 0.8%
Asset Class Long Term
Policy MixActual Mix
Fixed Income 46.0% 38.1%
Cash and Cash Equivalents 6.0% 4.6%
Canadian Bonds 40.0% 33.5%
Equities 54.0% 61.9%
Canadian Equities 22.0% 21.5%
U.S. Equities 16.0% 21.6%
International Equities 16.0% 18.8%
Total 100.0% 100.0%
1 Year 2 Year 3 Year 4 Year 10 Year
Actual Return 0.5% 7.7% 10.6% 11.0% 6.5%
Inv. Policy Benchmark ‐1.3% 5.4% 7.9% 7.9% 5.2%
Value Added 1.8% 2.3% 2.6% 3.0% 1.3%
22 | UBC IMANT 2016 Annual Report
Staff Pension Plan ($1,382 million)
Established January 1, 1972, the Staff Pension Plan (SPP) is a target benefit pension plan that provides
retirement, termination, and death benefits for eligible staff of UBC and related employers. The Plan is
funded by fixed contributions from Plan members and the University and serves over 10,000 UBC staff
employees and retirees. The University has delegated the day‐to‐day administration of the Plan to the
SPP Board. Assets are the property of the plan members and beneficiaries.
Long Term Policy Asset Mix
The SPP funds are invested to provide stable lifetime retirement pensions in accordance with the
Statement of Policies and Procedures approved by the UBC Staff Pension Plan Board and UBC Board of
Governors. The following table contains the actual and long term policy mix as of March 31, 2016.
Investments in real estate and private equity will continue to be made to achieve a diversified portfolio
by vintage year and investment type.
During the year, IMANT continued to implement the Staff Pension Plan’s transition plan to reach its
target policy weights. Notable changes during the year include the transition from separate Long Bond
and Mortgages mandates into a combined Long Term Fixed Income mandate based on the latest long
term policy asset mix. Similar to the Endowment Fund, a review of the portfolio’s non‐Canadian equity
structure review recommended elimination of the US equity mid‐cap allocation and consolidation into
the US large‐cap allocation.
New commitments of $12 million USD and $25 million USD were made to two new value‐add US and
global real estate funds respectively. Commitments to private equity, real estate and infrastructure
Asset Class Policy Mix Actual Mix
Fixed Income 45.0% 44.4%
Cash and Net Currency Forwards 1.0% 1.6%
Long Term Fixed Income 29.0% 29.4%
Real Return Bonds 5.0% 3.4%
Infrastructure Debt 10.0% 10.1%
Equities 25.0% 30.8%
Canadian Equities 10.0% 12.7%
Global Equities 10.0% 13.9%
Emerging Market Equities 5.0% 4.3%
Alternatives 30.0% 24.8%
Private Equity 5.0% 3.8%
Real Estate 12.5% 8.8%
Infrastructure Equity 12.5% 12.0%
Absolute Return Strategy 0.0% 0.1%
Total 100.0% 100.0%
23 | UBC IMANT 2016 Annual Report
managers are drawn over time depending on its investment type and fund structure. The total
commitment may not be fully drawn by the manager and later stage funds provide greater distributions
back to their investors. As a result, the Staff Pension Plan may commit more than its target policy mix to
maintain a stable allocation to these asset classes. Combining actual investments and outstanding
commitments, the Staff Pension Plan has 5.3% allocated to private equity compared to a policy weight
of 5%, 14.0% allocated to real estate compared to a policy weight of 12.5%, 15.0% allocated to
infrastructure equity compared to a policy weight of 12.5% and 10.4% allocated to infrastructure debt
compared to a policy weight of 10%. Additional value‐add real estate and infrastructure funds in the US
and global markets are being reviewed by the investment team. As alternative investment commitments
are drawn by investment managers, funds will be provided from the overweight allocations in Canadian
and global equities. The Plan continues to receive distributions from legacy hedge fund investments,
reducing the asset class weight to 0.1%.
Below is a table summarizing major transactions completed and opportunities reviewed in 2015/2016.
Actual Return Compared to Policy Benchmark
Note: Returns are reported net of external investment management fees starting January 2010. Returns stated are annualized
for periods greater than one year. Numbers may not add due to rounding.
The SPP return is compared to its benchmark portfolio return to gauge the effectiveness of asset mix
implementation. For the year, the Staff Pension Plan returned 0.4% and was ahead of the policy
benchmark return of 0.1%. Over a four year period, the Plan outperformed the benchmark portfolio by
0.6% and over a ten year period, the Plan underperformed by ‐0.5%. For the components of the Staff
Pension Plan investment policy portfolio benchmark, please see page 32.
Public Equities and Fixed Income
• consolidated US equity mid‐cap allocation
into primary US large‐cap allocation
• transitioned mortgage and long bond funds
into a long duration bond fund
Alternatives
• commited $12 million USD to a value‐add
U.S. real estate fund
• committed $25 million USD to a value‐add
global real estate fund
1 Year 2 Year 3 Year 4 Year 10 Year
Actual Return 0.4% 7.8% 8.7% 9.0% 5.2%
Inv. Policy Benchmark 0.1% 7.7% 8.1% 8.5% 5.7%
Value Added 0.3% 0.1% 0.6% 0.6% ‐0.5%
24 | UBC IMANT 2016 Annual Report
2015/16 investment results (net of investment manager fees) across all asset classes outperformed their
respective benchmarks with the exception of infrastructure debt and private equity. At the total fund
level, manager selection added value; however, this was partially offset by asset allocation due to an
overweight in public equities. Canadian, global and emerging market equity managers performed well
against their respective equity benchmarks. In alternative investments, real estate and infrastructure
equity managers also outperformed their CPI‐based benchmarks. This was partially offset by
underperformance by private equity managers as depressed oil prices hurt valuations for energy‐related
private companies.
The Staff Pension Plan follows the same currency hedging policy as the Endowment Fund in which only
non‐equity foreign investment currency exposures will be hedged back to Canadian dollars (e.g. foreign
real estate and infrastructure investments). Currency hedging is managed passively by an external
manager through currency forward contracts on major developed market currencies (e.g. US dollar,
Euro, Pound Sterling, and Japanese Yen) with investment grade counterparties.
5.8%
5.3%
2.8%
‐10.2%
‐1.4%
‐6.6%
3.6%
‐2.2%
‐0.3%
0.1%
9.5%
6.7%
‐2.7%
‐6.5%
‐0.2%
‐5.1%
1.9%
‐2.3%
0.0%
0.4%
‐15.0% ‐10.0% ‐5.0% 0.0% 5.0% 10.0% 15.0%
Infrastructure Equity
Real Estate
Private Equity
Emerging Market Equities
Global Equities
Canadian Equities
Infrastructure Debt
Real Return Bonds
Long Term Fixed Income
Total Fund
1 Year Performance to March 31, 2016
Staff Pension Plan Benchmark
25 | UBC IMANT 2016 Annual Report
Staff Pension Plan Risk Exposures
IMANT collects information on portfolio holdings to analyze the risk exposures of the Staff Pension Plan
including company concentration risk, currency risk, credit rating risk and interest rate risk. This is
monitored by IMANT and the IMANT Board to ensure the fund is within established risk parameters. The
information is aggregated from the underlying holdings in external manager pooled funds. Exposures at
March 31, 2016 are provided for information below.
Staff Pension Plan Total Fund Exposure by Geographical Region
Canada67%
United States16%
Western Europe8%
Asia Pacific7%
Other2%
26 | UBC IMANT 2016 Annual Report
Staff Pension Plan Public Equity Exposure Geographical Region Sector Breakdown
Staff Pension Plan Fixed Income Exposure By Credit Rating Issuer Type
Sector
Financials 29%
Consumer Staples 14%
Industrials 11%
Consumer Discretionary 10%
Telecommunications 9%
Energy 7%
Technology 6%
Materials 5%
Utilities 5%
Healthcare 4%
Credit Rating
AAA 18%
AA 23%
A 27%
BBB 10%
Other (mortgages/unrated) 22%
Federal13%
Provincial37%
Corporate46%
Mortgages4%
Canada44%
United States31%
Asia Pacific14%
Western Europe7%
Other6%
27 | UBC IMANT 2016 Annual Report
Staff Pension Plan Private Equity Exposure
Fund Type
Staff Pension Plan Real Estate Exposure Geography Fund Type
Property Type
Property Type
Residential 29%
Office 28%
Industrial 23%
Retail 12%
Hospitality 5%
Other 3%
Primary Funds21%
Co‐Invest‐ment Funds29%
Fund of Funds20%
Secondary Funds34%
Canada83%
USA 15%
Other2%
Core RE69%
Value Added RE
23%
Mezzanine Debt6%
Opportun‐istic RE2%
28 | UBC IMANT 2016 Annual Report
Staff Pension Plan Infrastructure Exposure Geography Revenue Type*
* Excludes publicly listed infrastructure equity fund
Industry Sector
Industry SectorElectric 32%
Transportation 26%
Telecommunications 7%
Oil & Gas Services 7%
Water 6%
Healthcare Services 6%
Engineering & Construction 3%
Diversified/Other 13%
Contracted32%
GDP Driven25%
Regulated33%
Other10%
Canada29%
USA 18%
UK18%
Western Europe ex
UK11%
South America13%
Australia6%
Other5%
29 | UBC IMANT 2016 Annual Report
Supplemental Arrangement ($80.7 million)
The Supplemental Arrangement, serving about 1,000 members, is a tax deferred benefits plan for UBC
employees whose annual contributions exceed the limit allowed under the Income Tax Act for
registered pension plans. The Plan is an extension of the UBC Faculty Pension Plan (FPP) and has a
policy asset mix consisting of 60% equities and 40% fixed income.
The policy asset mix and actual asset mix at March 31, 2016 are presented below.
Note: Returns are reported net of investment management fees starting April 2015. Returns stated are annualized for periods
greater than one year. Numbers may not add due to rounding.
For the year, the Supplemental Arrangement returned ‐1.5% and was ahead of the policy benchmark.
Over a four year period, the Fund returned 8.2% and was 0.1% ahead of the policy benchmark. There is
no value add expected for the Fund as it is invested in an index fund structure to match the UBC Faculty
Pension Plan asset mix to the best extent possible.
Asset Class Policy Mix Actual Mix
Fixed Income 40.0% 39.3%
Cash and Cash Equivalents 0.0% 0.1%
Bonds & Mortgages 40.0% 39.2%
Equities 60.0% 60.7%
Canadian Equities 20.0% 20.9%
Global Equities 35.0% 31.1%
Emerging Market Equities 3.6%
Real Estate (REITs) 5.0% 5.1%
Total 100.0% 100.0%
1 Year 2 Year 3 Year 4 Year 10 Year
Actual Return ‐1.5% 6.4% 8.2% 8.2% 5.3%
Inv. Policy Benchmark ‐1.7% 6.3% 8.1% 8.1% 5.3%
Value Added 0.2% 0.1% 0.0% 0.1% 0.0%
30 | UBC IMANT 2016 Annual Report
Core Working Capital Fund ($315.3 million)
The Core Working Capital Fund (CWCF) consists of monies from the reserves of the University’s working
capital pool. These include proceeds from provincial operating grants, tuition fees, private, corporate
and government research grants, operating income, and funds for capital projects. The Fund is
structured as a passive fixed income portfolio of Government of Canada, Provincial and agency bonds
with a duration of approximately 2.5 years and a focus on capital preservation. Overall responsibility for
the University's cash management rests with UBC Treasury.
The following table contains the policy asset mix and actual asset mix at March 31, 2016.
Note: Returns are reported gross of investment management fees. Returns stated are annualized for periods greater than one
year. Numbers may not add due to rounding. The policy benchmark consists of the combined return of 50% 2‐year Canada
bond and 50% 3‐year Canada Bond. Prior to Oct 2014, the benchmark was 50% 3‐year Canada bond and 50% 5‐year Canada
bond.
For the year, the CWCF returned 1.2% and was 0.1% ahead of the policy benchmark return of 1.1% (see
the above table). Duration slightly declined during the year relative to the benchmark as cash inflows
were invested over a shorter time horizon pending cash needs from UBC. Over a four year period, the
Fund returned 2.5% and was ahead of the benchmark.
Asset Class Policy Mix Actual Mix
Fixed Income 100.0% 100.0%
Cash and Cash Equivalents 19.4%
Bonds 80.6%
Total 0.0% 100.0%
1 Year 2 Year 3 Year 4 Year
Actual Return 1.2% 2.6% 2.1% 2.5%
Inv. Policy Benchmark 1.1% 2.6% 2.2% 2.3%
Value Added 0.1% ‐0.0% ‐0.1% 0.2%
31 | UBC IMANT 2016 Annual Report
Investment Management Fees
Investment management fees charged by IMANT’s external investment managers can vary widely
depending on the type of investments in the portfolios, the mandate size and whether there is a
performance incentive fee. Below is a summary of total external investment management fees as a
percentage of assets for the Endowment and Staff Pension Plan. The figures include base and incentive
fees, some of which are invoiced and some of which are charged directly to the funds by investment
managers.
Note: Infrastructure debt is classified as an alternative asset in the table above.
Overall fees are slightly higher for the Endowment Fund as a result of a larger allocation to alternative
assets which typically charge higher base and incentive fees. Additionally, the Staff Pension Plan has an
allocation to infrastructure debt (included in the alternative asset category), which charged higher front
loaded fees in previous years and resulted in lower fees in later years.
External investment management fees for the Supplemental Arrangement and Core Working Capital are
5 basis points (0.05%) and 3 basis points (0.03%), respectively.
In addition to the above, UBC portfolios also pay for other expenses including IMANT’s portfolio
management fees, custody fees, transaction fees, performance measurement fees, and fund
administration expenses. IMANT’s portfolio management fees are charged to UBC portfolios on a cost
recovery basis. For the fiscal year, IMANT’s fees totaled $1.8 million, representing a cost of 6 basis points
(0.06%) to UBC portfolio assets.
Endowment Fund Staff Pension Plan
Traditional Assets
Base Fees 0.28% 0.21%
Incentive Fees 0.00% 0.00%
Subtotal 0.28% 0.21%
Alternative Assets
Base Fees 1.26% 0.88%
Incentive Fees 0.40% 0.26%
Subtotal 1.66% 1.14%
Overall 0.68% 0.53%
32 | UBC IMANT 2016 Annual Report
Endowment Fund and Staff Pension Plan Investment Policy
Benchmarks
The Endowment Fund and Staff Pension Plan investment policy benchmarks as of March 31, 2016 are provided below for reference. Endowment Fund
Asset Class Investment Policy Portfolio Benchmark Long Term Policy
Allocation
Fixed Income 20.0%
Cash & Cash Equivalents FTSE TMX Canada 91 Day T‐Bill Index 2.0%
Universe Bonds FTSE TMX Canada Universe Bond Index 13.0%
Mortgages FTSE TMX Canada Short Term Bond Index + 1.0% 5.0%
Equities 40.0%
Canadian Equities S&P/TSX Composite Index 15.0%
Global Equities MSCI World Net Index (CAD) 15.0%
Emerging Market Equities MSCI Emerging Markets Net Index (CAD) 10.0%
Alternatives 40.0%
Private Equity MSCI World Net Index (CAD) + 2% (lagged 3 months) 10.0%
Real Estate CPI + 4.0% 10.0%
Infrastructure CPI + 4.5% 10.0%
Absolute Return Strategy FTSE TMX CA 91 Day T‐Bills + 5% 10.0%
Total 100.0%
Staff Pension Plan
Asset Class Investment Policy Portfolio Benchmark Long Term Policy
Allocation
Fixed Income 45.0%
Cash & Cash Equivalents FTSE TMX Canada 91 Day T‐Bill Index 1.0%
Long Term Fixed Income FTSE TMX Canada Long Term Overall Bond Index 29.0%
Real Return Bonds FTSE TMX Canada Real Return Bond Index 5.0%
Infrastructure Debt FTSE TMX Canada Long Term Federal Bond Index + 1.9% 10.0%
Equities 25.0%
Canadian Equities S&P/TSX Composite Index 10.0%
Global Equities MSCI World Net Index (CAD) 10.0%
Emerging Market Equities MSCI Emerging Markets Net Index (CAD) 5.0%
Alternatives 30.0%
Private Equity MSCI World Net Index (CAD) + 2% (lagged 3 months) 5.0%
Real Estate CPI + 4.0% 12.5%
Infrastructure Equity CPI + 4.5% 12.5%
Absolute Return Strategy HFRI Fund of Funds: Conservative Index (CAD) 0.0%
Total 100.0%
33 | UBC IMANT 2016 Annual Report
Independent Auditor’s Report
INDEPENDENT AUDITORS' REPORT
To the Directors, UBC Investment Management Trust Incorporated
Report on the Financial Statements
We have audited the accompanying financial statements of UBC Investment Management Trust Incorporated, which comprise the balance sheet as at 31 March 2016, and the statements of retained earnings (deficit), earnings and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for private enterprises, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the management's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the management's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
34 | UBC IMANT 2016 Annual Report
INDEPENDENT AUDITORS' REPORT - Continued
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of UBC Investment Management Trust Incorporated as at 31 March 2016, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for private enterprises.
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, Canada 3 June 2016
The accompanying notes are an integral part of these financial statements.
35 | UBC IMANT 2016 Annual Report
Financial Statements and Notes
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDBalance Sheet
31 March 2016
2016 2015
Assets
Current Cash $ 192,849 $ 157,101 Accounts receivable 1,913 25,565 Prepaid expenses 30,656 29,272 225,418 211,938 Equipment and leasehold improvements (Note 3) 34,050 39,265 Security deposit 5,941 5,941 $ 265,409 $ 257,144
Liabilities Current Accounts payable and accrued liabilities (Note 4) $ 334,878 $ 324,065 Deferred lease inducement (Note 6) 284 3,692 335,162 327,757 Commitments (Note 7)
Shareholder's Equity (Deficit) Share capital (Note 8) 100 100 Retained earnings (deficit) (69,853) (70,713) (69,753) (70,613) $ 265,409 $ 257,144
APPROVED BY THE DIRECTORS: Director
Director
The accompanying notes are an integral part of these financial statements.
36 | UBC IMANT 2016 Annual Report
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDStatement of Retained Earnings (Deficit)
For the year ended 31 March 2016
2016 2015 Balance - beginning of year $ (70,713) $ (101,625) Net earnings for the year 860 30,912 Balance - end of year $ (69,853) $ (70,713)
The accompanying notes are an integral part of these financial statements.
37 | UBC IMANT 2016 Annual Report
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDStatement of Earnings
For the year ended 31 March 2016
2016 2015 Revenue Portfolio management fees (Note 5) $ 1,746,447 $ 1,635,293 Expenses Salaries and related benefits 1,081,693 1,065,335 Directors fees and expenses 196,414 180,147 Office lease 114,096 111,474 Computer support and licenses 92,080 76,835 Travel, conferences, and seminars 64,665 83,270 Executive search 64,052 - Consulting and research 39,926 13,022 Office 26,136 24,457 Audit and accounting 18,725 14,375 Telephone 12,259 10,242 Dues and memberships 10,418 3,270 Insurance 5,000 - Legal 4,919 8,477 Advertising and promotion 2,314 1,416 Bank charges and interest 2,268 1,373 Repairs and maintenance - 180 Amortization of equipment and leasehold improvements 10,622 10,508 1,745,587 1,604,381 Net earnings for the year $ 860 $ 30,912
The accompanying notes are an integral part of these financial statements.
38 | UBC IMANT 2016 Annual Report
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDStatement of Cash Flows
For the year ended 31 March 2016
2016 2015 Cash provided by (used in): Operating activities Net earnings for the year $ 860 $ 30,912 Items not involving cash
Amortization of equipment and leasehold improvements 10,622 10,508 Amortization of deferred lease inducement (3,409) (3,409) 8,073 38,011 Changes in non-cash working capital balances
Accounts receivable 23,652 (17,236) Prepaid expenses (1,384) (4,231) Accounts payable and accrued liabilities 10,813 9,173 41,154 25,717 Investing activity
Purchase of equipment and leasehold improvements, net (5,406) (10,531) Financing activity Advances to shareholder - (56,598) Net increase (decrease) in cash 35,748 (41,412) Cash - beginning of year 157,101 198,513 Cash - end of year $ 192,849 $ 157,101
39 | UBC IMANT 2016 Annual Report
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDNotes to the Financial Statements
For the year ended 31 March 2016
1. Incorporation
The Company was incorporated on 28 March 2003 under the provisions of the Company Act of British Columbia and commenced operations on that date. The Company is a wholly owned subsidiary of the University of British Columbia (UBC). The Company manages four of UBC’s investment funds and the Company earns a portfolio management fee for its services.
2. Summary of significant accounting policies
These financial statements are prepared in accordance with Canadian accounting standards for private enterprises. The significant policies are detailed as follows:
(a) Financial instruments (i) Measurement of financial instruments
The Company initially measures its financial assets and liabilities at fair value, except for certain non-arm’s length transactions. The Company subsequently measures all of its financial assets and financial liabilities at amortized cost, except for investments in equity instruments that are quoted in an active market, which are measured at fair value. Changes in fair value are recognized in net income. Financial assets measured at amortized cost include cash and accounts receivable. Financial liabilities measured at amortized cost include accounts payable and accrued liabilities.
(ii) Impairment Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income.
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDNotes to the Financial Statements
For the year ended 31 March 2016
2. Summary of significant accounting policies - Continued
(a) Financial instruments - Continued
40 | UBC IMANT 2016 Annual Report
(iii) Transaction costs The Company recognizes its transaction costs in net income in the period incurred.However, financial instruments that will not be subsequently measured at fair valueare adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.
(b) Revenue recognition Fees for services are recognized as revenue when the services are rendered and billed. (c) Equipment
Equipment is recorded at cost and is being amortized over its estimated useful life on thefollowing basis:
Furniture and fixtures 20% Declining balance Computer equipment 30% Declining balance
(d) Leasehold improvements
Leasehold improvements are recorded at cost and are amortized on a straight-line basis over six years.
(e) Impairment of long-lived assets
The Company tests for impairment whenever events or changes in circumstances indicatethat the carrying amount of the assets may not be recoverable. Recoverability is assessed bycomparing the carrying amount to the projected undiscounted future net cash flows thelong-lived assets are expected to generate through their direct use and eventual disposition.When a test for impairment indicates that the carrying amount of an asset is not recoverable,an impairment loss is recognized to the extent carrying value exceeds its fair value.
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDNotes to the Financial Statements
For the year ended 31 March 2016
2. Summary of significant accounting policies - Continued
41 | UBC IMANT 2016 Annual Report
(f) Income taxes
The Company follows the future income taxes payable method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated incometaxes payable for the current year. Future income tax assets and liabilities are recognized forthe estimated tax consequences attributable to temporary differences between the amounts reported in the financial statements and their respective tax basis, using enacted income taxrates. The effect of a change in income tax rates on future income tax assets and liabilities isrecognized in operations in the period that the rate becomes substantially enacted.
(g) Use of estimates The preparation of financial statements in accordance with Canadian accounting standards
for private enterprises requires management to make estimates and assumptions that affectthe reported amounts of assets, liabilities and revenues and expenses and disclosure of contingent assets and liabilities at the balance sheet date. Accounts subject to significantestimates include amortization of equipment and accrued liabilities. Management believesthat the estimates utilized in preparing the financial statements are prudent and reasonable, however, actual results could differ from those estimates.
3. Equipment and leasehold improvements
CostAccumulatedAmortization
2016 Net
2015 Net
Furniture and fixtures $ 100,104 $ 83,787 $ 16,317 $ 16,448 Computer equipment 67,488 58,906 8,582 9,977 Leasehold improvements 73,606 64,455 9,151 12,840 $ 241,198 $ 207,148 $ 34,050 $ 39,265
4. Accounts payable and accrued liabilities
2016 2015
Accounts payable and accrued liabilities $ 323,147 $ 310,046 GST payable 11,731 14,018 $ 334,878 $ 324,065
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDNotes to the Financial Statements
For the year ended 31 March 2016
42 | UBC IMANT 2016 Annual Report
5. Shareholder transactions
(a) During the year the Company entered into the following transactions with UBC:
2016 2015 Portfolio management fees $ 1,746,447 $ 1,635,293 Operating expenses $ 3,107 $ 11,356 Interest expense $ - $ 696
These transactions were in the normal course of operations and were measured at the
exchange value which represented the amount of consideration established and agreed to by the related parties.
(b) Included in accounts payable are amounts due to:
2016 2015 UBC $ 1,269 $ 14,541
6. Deferred lease inducement
2016 2015 Office lease $ 284 $ 3,692
The Company received a lease inducement of $20,450 as part of its office lease agreement. This amount has been recorded as a deferred lease inducement and is being amortized as a reduction of rent expense on a straight-line basis over the term of the agreement. The deferred portion of the lease inducement will be amortized into income as follows:
2017 $ 284
UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDNotes to the Financial Statements
For the year ended 31 March 2016
43 | UBC IMANT 2016 Annual Report
7. Commitments The Company is committed to the rental of office premises which expires November 2021. The minimum annual lease payments are as follows:
2017 $ 64,987 2018 65,685 2019 66,440 2020 67,950 2021 67,950 Subsequent years 45,300 $ 378,312
8. Share capital
Authorized
100,000 common shares without par value
Issued
2016 2015 100 common shares $ 100 $ 100
9. Financial instruments
The Company is exposed to various risks through its financial instruments. The following analysis provides a measure of the Company’s risk exposure and concentrations at the balance sheet date, 31 March 2016.
(a) Liquidity risk Liquidity risk is the risk that a company will encounter difficulty in meeting obligations associated with financial liabilities. The Company is exposed to liquidity risk mainly inrespect of its accounts payable and accrued liabilities. The Company manages liquidity riskby maintaining adequate cash. There has been no change to this risk exposure from 2015.
44 | UBC IMANT 2016 Annual Report
(b) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss forthe other party by failing to discharge an obligation. The Company’s main credit risk relatesto its cash and accounts receivable. Cash is in place with a major financial institution. The Company provides credit to its customers in the normal course of the operations.
(c) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market prices. Market risk comprises three types of risk:currency risk, interest rate risk and other price risk. The Company is mainly exposed tointerest rate risk.
(d) Interest rate risk
Interest rate risk is the risk that the fair market value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company isexposed to interest rate risk on its floating interest rate financial instruments. Floating-rate instruments subject the Company to a cash flow risk.
10. Non-capital losses
The Company has non-capital losses carried forward of $54,176 which are available to reduce the taxable income of future years. If not utilized, these non-capital losses will expire as follows:
2032 $ 30,050 2033 3,401 2034 10,032 2035 8,335 2036 2,358
$ 54,176
45 | UBC IMANT 2016 Annual Report
2015‐2016 IMANT Board of Directors
Ken Bancroft Corporate Director Orla Cousineau Executive Director, Pensions, UBC Staff and Faculty Pension Plans Diane Fulton Vice President, Chief Investment Officer Vancouver Foundation Martin Glynn Corporate Director & Board Chair Emilian Groch Corporate Director
Paul Haggis Corporate Director Brian Kenning Corporate Director & Vice Chair Alice Laberge Corporate Director, UBC Board of Governors Lisa Pankratz Corporate Director Andrew Simpson Vice President, UBC Finance
Standing (L‐R): Paul Haggis, Orla Cousineau, Ken Bancroft, Andrew Simpson, Diane Fulton, Emilian Groch Sitting (L‐R): Alice Laberge, Brian Kenning (Vice Chair), Martin Glynn (Chair), Lisa Pankratz
46 | UBC IMANT 2016 Annual Report
Investment Managers by Mandate
As at March 31, 2016
Manager Mandate(s)
Market Value
($ millions)
Canadian Fixed Income & Mortgages 1,062.2$
Cash and Cash Equivalents N/A
ACM Advisors Commerical Mortgages
Addenda Capital Commerical Mortgages
Manulife Asset Management Long Bond
Phillips, Hager & North Investment Management Universe Bond, Mortgages, Long Bond
State Street Global Advisors Universe Bond Index, Long Bond Index, Real
Return Bond Index
Currency Hedging N/A
State Street Global Advisors Passive
Infrastructure Debt 139.1
Fiera Capital Corporation Infrastructure Debt ‐ Canadian
Stonebridge Financial Corporation Infrastructure Debt ‐ Canadian
Canadian Equity 425.5
Beutel, Goodman & Company Ltd. Canadian Dividend
BlackRock Asset Management Enhanced Canadian Index
Leith Wheeler Investment Counsel Ltd. Canadian Value
Global Equity (including Emerging Markets) 608.7
Acadian Asset Management Emerging Markets Managed Volatility
Leith Wheeler (subadvised by Sprucegrove Investment
Management)
International Value
State Street Global Advisors US Index
TD Asset Management Global Low Volatility
Vontobel Asset Management Emerging Markets Growth at a Reasonable
Price
Private Equity 142.7
Commonfund Fund of funds ‐ Global
Fulcrum Capital Partners Buyout/Mezzanine ‐ Global
GE Asset Management Buyout ‐ Global
Hamilton Lane Co‐investment ‐ Global
Azimuth Capital Management Energy ‐ North America
Lexington Capital Secondaries ‐ Global
MatlinPatterson Global Advisors Distressed ‐ Global
NB Alternatives Secondaries ‐ Global
Northleaf Capital Fund of funds ‐ Global
Pantheon Ventures Fund of funds ‐ Global
The Carlyle Group Buyout ‐ US and Asia
47 | UBC IMANT 2016 Annual Report
Manager Mandate(s)
Market Value
($ millions)
Real Estate 220.3
Aetos Capital Real Estate ‐ Asia
British Columbia Investment Management Corporation
(bcIMC)
Real Estate ‐ Canada
Bentall Kennedy Real Estate ‐ Canada
Brookfield Asset Management Real Estate ‐ US, Global
Fiera Properties Ltd. Real Estate ‐ Canada
GPM Investment Management Real Estate ‐ Canada
LaSalle Investment Management Real Estate ‐ Canada, Asia, Japan
Second City Real Estate Real Estate ‐ US
Starwood Capital Real Estate ‐ US, Asia, Europe
Woodbourne Canada Management Real Estate ‐ Canada
Infrastructure Equity 317.1
Direct co‐investments (administered by Kindle Capital) Infrastructure co‐investments ‐ Worldwide
British Columbia Investment Management Corporation
(bcIMC)
Infrastructure Equity ‐ Global
Fengate Real Asset Investments Infrastructure Equity ‐ Canada (public‐private
partnerships)
Macquarie Infrastructure Partners Infrastructure Equity ‐ North America
Deutsche Asset Management Infrastructure Equity ‐ Europe
IFM Investors Infrastructure Equity ‐ Global
RARE Infrastructure Infrastructure Equity ‐ Global (listed equity)
Absolute Return Strategy 93.7
AQR Capital Management Quantitative Multi‐Strategy
BlackRock Alternative Advisors Hedge Fund of Funds (in wind up)
Blackstone Alternative Asset Management Mortgage Credit (in wind up)
Diversified Global Asset Management Hedge Fund of Funds (in redemption)
Standard Life Investments Fundamental Multi‐Strategy
Balanced Funds 80.7
BlackRock Asset Management Passive Index
Total Assets Under Management 3,089.9$
Endowments with Investment Restrictions 144.4
UBC Foundation Canadian Equity
Vancouver Foundation Balanced
Jarislowsky Fraser Balanced
Grand Total 3,234.3$
48 | UBC IMANT 2016 Annual Report
Advisors and Service Providers
Auditor Rolfe, Benson LLP Chartered Accountants Custodians/Administrators Northern Trust, Sun Life Financial Legal Counsel Bull, Housser & Tupper LLP Performance Consultant Northern Trust
UBC Investment Management Trust Inc. 1055 West Hastings Street, Suite 1188
Vancouver, BC V6E 2E9 Canada
Tel: +1 (604) 681‐7858 Fax: +1 (604) 681‐7895 www.ubcimant.ca
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