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Morneau Shepell Risk Management Portfolio: An innovative investment strategy for pension plans

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Pension/Retirement / Investment / Canada

Morneau Shepell Risk Management Portfolio: An innovative investment strategy for pension plans

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 Shepell.

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 Consulting Practice.

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

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

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