Investment Process

Our process is designed to ensure that we capture the movements of the Index in the portfolio. We seek to replicate the Index by investing in all constituent stocks of the Index at, or close to, benchmark weight. Where investment constraints exist, the portfolio may instead use stratified sampling and/or optimization. Technology and proprietary software are used to maintain tight thresholds which help ensure the portfolio mirrors the make-up of the Index as closely as is practical.

Understanding theBenchmark:

Effectively tracking benchmarks requires expertise in understanding the rules and guidelines of each index provider surrounding index inclusions, exclusions, rebalancing and other changes. To that end, we conduct and remain abreast of research on upcoming and forecasted changes.

Portfolio Construction and Maintenance:

We only invest in securities currently present in the benchmark with the objective of seeking to minimize tracking error in all periods. Our stratified sampling technique matches key attributes at all levels to ensure broad and deep index representation that aims to reduce risk. The key attributes considered are duration, yield and sector weight.

Understanding Risk

We have implemented effective risk management practices, investment, financial, regulatory and operational risk is all managed and monitored on a real-time basis. Our clients value that we have a dedicated Risk Management Group that works independent of the Investment Management team.

Effective Trading:

Effective trading is a critical aspect of a successful indexing strategy. Within the strict constraints established in the management process, the portfolio management team focuses on a wide range of specialized trading strategies, ensuring low-cost trading across all portfolios. We work closely with a wide array of counterparties seeking to ensure competitive pricing and access to liquidity. Furthermore, we have invested heavily in technology to help ensure we have connectivity to a broad range of trading systems, venues and crossing networks to maximize the opportunities for quality execution.

Risk Management and Continuous Monitoring:

Our Trade Management Oversight Committee (TMOC) was established as a best execution framework. TMOC meets quarterly to evaluate order execution quality and contains representation from various business units, including portfolio management, trading, risk management, compliance and operations. Additionally, TMOC has sub-committees for all asset classes that meet quarterly to facilitate in-depth reviews of broker-dealer capabilities.

Expertise in Indexing:

Since our establishment in 1987, passive investment management has been a significant part of our Canadian business. While we offer a full spectrum of investment solutions and take pride in our long and successful track record as a leading provider of passive investment strategies. Our passive investment teams are composed of uniquely skilled and thoroughly experienced investment professionals, which has been a key component of our success.