Despite difficult markets, the Fund achieved an overall return of 6.23 per cent, beating its investment benchmark by 145 basis points. This marks the 10th straight year that HOOPP has surpassed its benchmark. The Fund’s return fell short of the nominal long-term target by 52 basis points.

• As of December 31, 2007, net assets available for benefits stood at $30 billion, while liabilities (the future benefits owing to members based on service earned to date) stood at $28.7 billion. 

• HOOPP’s real estate and private equity portfolios both posted robust returns in 2007 – earning 22.65 per cent and 17.49 per cent respectively. The Fund’s equity and fixed income portfolios also reported positive returns (before currency conversion for foreign equity holdings), despite softening markets.

Proactive decision-making positioned HOOPP to sidestep a number of investment challenges, including the collapse of the U.S. sub-prime mortgage market and turmoil in the asset-backed commercial paper market. Thanks largely to foresight and HOOPP’s investment policy, the Plan had:

• no direct exposure to sub-prime mortgages
• no holdings in non-bank issued asset-backed commercial paper

Likewise, effective hedging strategies helped mitigate the impact of currency exchange losses generated by a soaring Canadian dollar.

In 2007, HOOPP was able to:

• hold member and employer contribution rates at 2008 levels until the end of 2009
• provide all pensioners (including survivors) with a cost of living adjustment equal to 75 per cent of the increase in the consumer price index – the increase of 1.79 per cent was applied April 1, 2008

The Plan’s planned move toward a liability-driven investment approach continued to build momentum. This progressive approach to investing is designed to help HOOPP maintain a suitable balance between risk and return – and to protect and grow the Plan’s assets in line with its liabilities.

HOOPP changed its asset mix policy, setting new targets for the general allocation of assets. The new targets – which support the Plan’s move toward liability driven investing – better align investment risk with pension liabilities. In particular, the new targets significantly reduce the Plan’s exposure to equity investments, while increasing the Plan’s exposure to other less risky investments.

The Plan reduced the level of risk in HOOPP’s investment portfolio. The development and implementation of investment technology continued. The new technology includes an integrated data and performance management system that supports investment decision-making, and will enhance risk management capabilities.