Scattle Capital

Statement of Investment Principles

In 2015, the Pension Fund appointed an Investment Advisor to prepare a Statement of Investment Principles (SIP) on behalf of the Board of the Pension Fund. The primary objective of the SIP is to formally identify and determine the method and mechanism with which the investment decisions of the Board are associated with the particular strategic scope of the Pension Fund.

 

Strategic Targets

The Investment Targets and the Strategic Allocations of assets which are included in the SIP, were determined following a detailed analysis of the characteristics and needs of the Fund, a detailed assessment of risks and the possible returns of the different asset classes. The strategic target of the SIP is to assist the Board in managing the fund prudently, so that to ensure the:

  • security and protection of the Pension Fund assets
  • quantity and quality of investment options
  • liquidity in relation to the nature and duration of the liabilities
  • maximization of the return given the lowest possible investment risk
  • satisfactory profitability given the level of benefits
  • diversification of assets and the risk dispersion
  • complete satisfaction of the Funds’ institutional obligations and in particular, the complete adoption of the Investment Rules of Article 36 of the Law and the investment restrictions of Directive 2 of 2010.

Investment Horizon and Asset Allocation

ThemeaninvestmenthorizonofthePension Fundisdetermined to at least 25 years, taking into account the structure of the Fund, the nature and expected payment of benefits and the members’ average age (average age was 40 in March 2015). In addition, the working status of members and the normal retirement age of the Pension Fund (age 65) were taken into account, which supports the assumption that the members of the Fund will have on average at least 25 years of future service. 

The Pension Fund’s asset allocation as at March 2015 was as follows:

Strategic Asset Allocation

The Board has chosen to invest only in cash, deposits, bonds and equities based on certain restrictions described in the SIP.

The following table presents the long term investment policy of the Board and the minimum and maximum percentages to be invested in the selected asset categories.

 

Asset Class

Minimum percentage to be invested

Maximum percentage to be invested

Cash and Deposits

0%

20%

Government Bonds(Cyprus)

30%

50%

Corporate Bonds(Eurozone)*

0%

30%

Corporate BondsInternational)

0%

20%

Equity(ΧΑΑ-ΧΑΚ)

0%

10%

Equity (Eurozone/International)**

0%

30%

Real Estate

0%

15%

 

*EurozoneCorporateBondsgraded ΑtoΒΒΒ

** Mutual Funds

For each of the asset classes selected, the Board sets certain benchmarks which are used for the purposes of reviewing the performance of the Pension Fund investments.