Investments are centralized in the General Investment Fund, which holds in trust the surplus operating funds, endowments, and long-term donor restricted funds of all units. Interest is paid to units based on prevailing market rates for similar financial instruments. Net profits from the Fund are used to offset costs of administration, as well as to make allocations to programs and services.
Allocations from investment income are based on a spending policy tied to long-term average rates of return, which helps mitigate volatility in the capital markets. In the year ended March 31, 2012, the Fund earned $20.4 million, incurred expenses of $2.7 million and paid interest on constituent accounts of $6.4 million, for a net income of $11.3 million. In accordance with the spending policy, $11.4 million was allocated to the operations of territorial and divisional headquarters, meaning a small amount was withdrawn from the reserve to fund operations in the current year.
The General Investment Fund is managed by external investment managers in accordance with statements of investment beliefs and policy, which establish quality constraints, as well as prohibiting investment in companies whose primary business is the manufacture, distribution or promotion of alcohol, tobacco, pornography, gaming, gaming facilities, or armaments, as well as companies who are known to disregard environmental concerns. An investment advisory committee assists the Army by regularly reviewing both the investment policy, as well as individual manager’s performance compared to market benchmarks.
The target, operating ranges and actual asset mix of the Fund as at March 31, 2012, was as follows:
As of March 31, 2012, all asset classes were within the targeted range.
Investment Advisory Committee
Mr. William Chinery, Chair
Mr. William J. Stafford, Secretary
Mr. Kevin Fahey
Mr. R. Paul Goodyear
Ms. Janet Greenwood
Mr. Roger Robineau
Mr. Keith Walter
Lt-Colonel Neil Watt
Click here for a downloadable PDF of the 2011/12 Consolidated Financial Statements.