As readers will no doubt be aware, our investment performance in the past year or two has been less than satisfactory. Accordingly, our board undertook a review of our managers and their performance. This process was not undertaken lightly as we have had a long-term relationship with Burgundy Asset Management, who, historically, have served us well.
Two conclusions were reached during the review: the returns received in our infrastructure investment with CCL, while reasonable, do not support the lack of liquidity inherent in these types of investments, and; with the takeover of Burgundy by the Bank of Montreal, there is a reasonable risk of a significant change in investment management style in the coming years and their recent performance has lagged the benchmark.
Accordingly, the board made the decision to divest of our infrastructure holdings and conduct a search for a new value manager. Fortunately, we have a great deal of experience in the Finance Committee, and we were able to handle the search internally. As of the beginning of September, we had closed our account with CCL and moved the funds at Burgundy to Leith Wheeler Investment Counsel (LW). Our asset allocation has only changed slightly from the old model and LW has the same value management styles as is used by Burgundy. While past performance is never a guarantee of future returns, LW has significantly outperformed Burgundy in every major period in the past 10 years. Furthermore, fees are in line with what we have paid in the past, so we are hopeful about better returns going forward.
Of course, we don’t know where the markets will go tomorrow or next year. But we believe we are well positioned to continue to earn returns to support endowment payouts and awards.