Delivering healthy long-term expected returns with reduced volatility
TORONTO, Nov. 29, 2011 /CNW/ - Morneau Shepell Ltd. has developed the
Risk Management Portfolio, which is designed to reduce volatility in
the financial position of pension plans.
"We believe plan sponsors will welcome this innovative approach that
seeks to reduce fluctuations in a plan's financial position, while
maintaining expected long-term returns," says Patrick De Roy, Partner
and National Leader of the Risk Management Practice for Morneau
De Roy says the traditional pension plan portfolio is heavily invested
in equities with a large mismatch between plan assets and liabilities.
The Morneau Shepell Risk Management Portfolio is based on an investment
policy with a target asset allocation different from that of the
traditional portfolio. The objective is to reduce risk by better
matching liabilities, and investing in alternative strategies that
generate returns less correlated with equity markets.
"Since the beginning of the year, bond yields have decreased and equity
returns have been negative, resulting in an increase in liabilities and
a decrease in the value of the traditional portfolio," says Jean
Bergeron, Partner and Practice Leader for Morneau Shepell's Investment
View the Morneau Shepell Risk Management Portfolio performance graph
"As of October 31, 2011, we estimate that a typical pension plan with a
traditional portfolio would have seen its financial position
deteriorate by about 7% since the beginning of the year," says
Bergeron. "Meanwhile, the Morneau Shepell Risk Management Portfolio
would have kept pace with the growth in the liabilities and would have
experienced less volatility during the same period."
"The Morneau Shepell Risk Management Portfolio can be easily put in
place by plan sponsors, and would do a better job of managing pension
risks," says De Roy. "This is the first step of a thorough and dynamic
risk management process that would align with a plan sponsor's
strategic objectives for the long term."
Morneau Shepell is the largest Canadian-based firm offering
industry-leading benefits and pension consulting, outsourcing, as well
as health and productivity solutions. The company works with clients to
develop innovative solutions that integrate with their business
strategies to achieve results. Through Benefits and Health Solutions
Consulting, Pension Consulting, Health Management, Administration
Solutions and Shepell•fgi's Employee Assistance Program, Morneau
Shepell helps clients reduce costs, increase employee productivity, and
improve their competitive positions by supporting their employees'
financial security, health and well-being.
Established in 1962, Morneau Shepell has grown to serve over 8,000
clients, ranging from small businesses to some of the largest
corporations and associations in North America. With approximately
2,500 employees in offices across North America, we provide services to
organizations across Canada, in the United States and around the globe.
Morneau Shepell Inc. is a publicly traded company on the Toronto Stock
Exchange (TSX). For more information, visit www.morneaushepell.com.
SOURCE Morneau Shepell Ltd.
For further information:
For media inquiries, please contact: