Annual Review 2012-2013

Report on Investments

Investments are centralized in the General Investment Fund (“the 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, 2013, the Fund earned $65.1 million, incurred expenses of $3.2 million and paid interest on constituent accounts of $7.2 million, for a net income of $54.7 million. In accordance with the spending policy, $11.8 million was allocated to the operations of territorial and divisional headquarters, meaning funds have been transferred to the reserve to be used to fund future operations.

The 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. Copies of the statements of investment policy and beliefs are available on the Army’s website,

The target, operating ranges and actual asset mix of the Fund as at March 31, 2013, was as follows:

Asset Class Target Range Actual
Cash 0 0–10% 4%
Fixed Income 40% 35–45% 35%
Canadian Equities 30% 25–32.5% 30%
Foreign Equities 30% 25–32.5% 31%
100% 100% 100%

As of March 31, 2013, all asset classes were within the targeted range.

Banking services are provided by Royal Bank of Canada, Bank of Nova Scotia and Canadian Imperial Bank of Commerce. Custodial and trust services are provided by CIBC Mellon. Investment management services are provided by BlackRock Asset Management Canada Limited, Fiera Capital Corporation, Sprucegrove Investment Management Limited, CIBC Asset Management, Baillie Gifford Overseas Limited, Phillips, Hager and North Investment Management Ltd. and QV Investors.

Investment Advisory Committee

Mr. William Chinery (chair)
Mr. William J. Stafford (secretary)
Mr. Kevin Fahey
Mr. Roger Robineau
Mr. Keith Walter
Ms. Janet Greenwood
Mr. R. Paul Goodyear
Lt. Colonel Neil Watt

Click here for a downloadable PDF of the 2012/13 Annual Review.
Click here for a downloadable PDF of the 2012/13 Consolidated Financial Statements.