Statement of Investment Philosophy and Beliefs Policy 34-205 | Effective Date: February 6, 2020


The purpose of this policy is to state the basic investment philosophy and beliefs of the Board of Directors.


This policy applies to all members of the Board of Directors, the Financial Services Evaluation Committee, and staff who are responsible for WorkSafeNB’s investments.


The cornerstone of WorkSafeNB’s investment philosophy, by both staff and the governing fiduciaries, is due diligence. 

The Board of Directors has developed investment principles outlining their philosophy and beliefs.


I. Governance: The Board of Directors believes in establishing clear and unambiguous governance principles, which enunciate the roles and responsibilities of all parties involved in the investment of funds, including the Board of Directors, the Finance and Investment Committee, staff, and external service providers. An effective governance structure is the foundation of a successful investment management program. Governance structures ensure that all parties fulfill their due diligence requirements, understand their roles and responsibilities and create accountability for the various decisions involved in developing and implementing the investment management function. Proper governance improves risk management; investment performance, and ensures efficient decision making processes for the Board of Directors, the Finance and Investment Committee (the Committee), and staff.

Accordingly, WorkSafeNB has adopted the following basic decision-making structure:

Level  Policy Strategy Implementation
 Board of Directors Approve    
 Finance and Investment
Recommend Monitor Monitor
 Internal Staff Recommend Approve and Revise Manage
 External Fiduciaries
(Investment Managers)

The investment related policies are subject for approval by the Board of Directors.

The Committee is responsible in recommending investment policies, which include asset mix, asset/liability matching and risk management, and on monitoring investment results and compliance with policies and directives.

It is the responsibility of the President and Chief Executive Officer, the Chief Financial Officer and specifically the Treasurer, to develop and implement various investment strategies that reflect and respect the Board of Director’s investment goals and objectives as outlined in the investment policies. These responsibilities include the development of an investment management structure, the hiring and termination of external investment management firms, and the development of appropriate mandates for each manager within the structure.

II. Fundamental Risk: The fundamental investment risk faced by WorkSafeNB is that it will have insufficient assets to pay its liabilities, which relate to the provision of future compensation payments to injured workers and their dependants.

The portfolio’s investment program must be customized to reflect its purpose, time horizon, risk tolerance, legal constraints and liquidity requirements. The primary long-term risk is that the assets of the fund, together with the future income thereon, will be insufficient to meet the benefits liabilities payable to the beneficiaries. Asset/liability studies are necessary to ensure that the portfolio remains suitable in light of the related liabilities. 

III. Asset Allocation Decision: The asset allocation decision is a key element in determining the future return and risk of the investment portfolio. Policy 34-200 Investment Goals and Objectives reflects the Board of Directors’ views on the asset allocation decision, expected returns, and acceptable risk tolerance.

The asset allocation decision is one of the most important factors in determining the variability of returns. Matching assets and liabilities, expected returns, and acceptable risk levels are reflected in the Policy Asset Mix as stated in Policy 34-200 Investment Goals and Objectives. In setting its policy asset mix, the Board of Directors will rely on periodic asset/liability studies, performed by reputable external consulting firms, to ensure that its assets are structured properly in light of the related liabilities. 

IV. Diversification: The primary tool available to control volatility of returns is diversification. This is accomplished by investing in various asset classes, geographies, industries, individual securities and investment styles.

The Board of Directors is committed to earning the highest possible rate of return at an acceptable level of risk.

Standard deviation, a measure of volatility of returns, is a common proxy used to evaluate risk in the investment industry. The Board of Directors intends to control the variability of returns while ensuring that the fund’s investment objectives are met.

The volatility of returns can be optimized through prudent and thoughtful diversification. Diversification is achieved by investing in different asset classes and by diversifying by investment style, geographically, sector and individual security. In addition, bond portfolios are diversified into various issuers and by term to maturity.

V. Disciplined Approach to Investing: A disciplined approach to investing, including rebalancing of policy asset allocations to target, is required to achieve good long-term investment results and to maintain risk at an acceptance level. 

WorkSafeNB has built its investment management program around a number of policies, directives, and procedures, based on this Statement of Investment Philosophy and Beliefs. These documents are the result of a considerable amount of research, analysis, and discussion by WorkSafeNB staff and members of the Board of Directors and the Committee. The Board of Directors believes that the result is a well-structured and appropriate process.

A disciplined approach to investing requires proper due diligence on the part of all involved with the investment fund. A long-term focus is required in the decision making process in-line with the Commission’s liabilities. The long-term policy asset mix is selected through the help of an asset liability study. 

A structured rebalancing mechanism is employed as outlined in Policy  34-200 Investment Goals and Objectives. A disciplined rebalancing approach is also employed for each investment manager’s target allocation within the management structure, and ensuring that their allocations remain within expected guidelines.

A successful long-term investment program is developed to provide the highest rate of return at an acceptable level of risk. 

VI. Investment Managers: WorkSafeNB’s goal is to employ the best investment managers for each of the mandates in its investment management structure. As a result, external professional investment managers will be used exclusively in the management of the fund’s assets.

To achieve the highest possible rate of return at an acceptable level of risk, the Board of Directors’ goal is to employ the world’s best investment managers for the various mandates in its investment management structure.

General guidelines regarding the use of external managers are contained in Policy 34-200 – Investment Goals and Objectives, Directive 34-205.04 Investment Portfolio Management Structure, and Directive 34-205.02 Process and Criteria for Hiring an Investment Manager. 

Each investment manager will be hired to fill a specific mandate in the portfolio’s overall management structure. Each manager will be subject to a due diligence review prior to being hired, will agree to an Investment Counsel Agreement and a customized Manager Mandate, and the manager’s performance and continued suitability for the mandate will be monitored actively by WorkSafeNB staff.

VII. Performance Measurement: Performance results will be measured, monitored, and compared to investment objectives. Reporting of performance measurement results will be clear and concise.

The fund’s performance will be measured at both the total portfolio and asset class level. Investment performance results will be evaluated against, and compared with, measurable investment objectives as established in Policy 34-200 – Investment Goals and Objectives. Returns will be reported to the Committee on a quarterly basis. Investment returns will be calculated in accordance with the guidelines established by the Global Investment Performance Standards (GIPS). Performance measurement will be provided by an external performance measurement firm.

Returns will also be measured at the individual manager level, as part of the manager monitoring process delegated to staff. Returns will be analyzed and monitored over a number of periods, and attribution analysis will be used where feasible to improve the understanding of the sources of the manager’s added return and risk levels.

VIII. Education: Ongoing access to education for the Board of Directors, the members of the Finance and Investment Committee, and staff is crucial in ensuring that the investment policies and strategies remain consistent with WorkSafeNB’s investment objectives

Members of the Board of Directors and Committee are expected to maintain their knowledge of investment matters so as to be able to fulfill their fiduciary duties with respect to the investment portfolio management process.

Treasurer and Senior Investment Analyst are required to obtain and maintain a high degree of expertise with respect to investment related matters. In addition, staff will assist the Board of Directors and Committee members to obtain the required education through ongoing processes.

IX. Administration and Management Costs: Administration and management costs can have a significant impact on long-term results and will be monitored, controlled, and reported.

In formulating Policy 34-200 – Investment Goals and Objectives, and in particular the policy asset mix, the Board of Directors gives consideration to the impact of administrative expenses, external management fees, and other costs on net returns.

In exercising control over administrative costs and management fees, it is recognized that fees and expenses must be compared with the quality of the services provided. The goal is to obtain the best advice and services on a value-for-money basis.

Performance is generally reported on a before-fee basis, in compliance with standards developed by the CFA Institute. However, total expenses will also be reported to the  Committee, as well as net-of-fee performance. 

X. Code of Ethics: All employees of WorkSafeNB involved in the investment process must abide by all applicable laws and regulations, conduct themselves in an ethical manner, and always place WorkSafeNB’s interests ahead of their own.

Members of the Board of Directors are required by legislation to remain free of interests or relationships which might prove harmful or detrimental to WorkSafeNB’s best interests, and to disclose any conflict or appearance of conflict that may arise.

All employees and members of the Board of Directors are bound by WorkSafeNB’s Code of Ethics.

In addition, individual employees involved in the investment process are expected to comply with all governing laws and regulations, and the CFA Institute's Code of Ethics and Standards of Professional Conduct. These criteria apply to the President and Chief Executive Officer, the Chief of Financial Officer, the Treasurer, and the Senior Investment Analyst. 


Due diligence – the care that a reasonable person exercises under the circumstances to avoid harm to other persons or their property.


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