Nunavut Trust fund on track for 2007 targets

EVE LAZARUSNo room for more spending

The trust does very little spending — its chief responsibility is to protect the capital forever and generate the income to fund several Inuit organizations and program, including Nunavut Tunngavik Inc., Atuqtuarvik Corporation, and the elders’ pension plan.

Funding requests in 2000 included an increase in funding to NTI sponsored programs, a 50 per cent increase in the monthly elders’ pension plan, and $50 million over five years to a new beneficiary organization, the Nunavut Economic and Social Development Trust Inc., which funds Atuqtuarvik Corporation, a for-profit company that invests in Inuit businesses.

In its 2000 annual report, the trust says that, while it expected to be able to meet the increased spending demands, it “advised beneficiary organizations that we have virtually no safety margin to absorb any additional spending before the end of 2007.”

Campbell says that by the end of this year, the trust will have loaned NTI about $100 million, to be repaid by 2011 under the trust’s current forecast. That’s according to a joint financial plan worked out between the Trust and NTI that was recently revised.

There is also a $4-million loan to the elders’ pension trust, a registered charity that provides Inuit elders aged 46 and over a sliding scale of payments.

On the top 100 list

Tony Williams, a management consultant with Toronto-based Buck Consultants, says the trust is large by Canadian standards and among the country’s top 100 endowment and pension funds.

He agrees that because the fund is designed for the ongoing benefit of the Inuit, it needs to take a certain amount of risk in pursuit of long-term returns.

“The asset mix of 65 per cent equities and 35 per cent fixed income is consistent with earning a high real rate of return. The 45 per cent foreign content (50 per cent invested in the United States and the other half in the rest of the world) implies a well-diversified portfolio,” Williams said.

Ethical investing

While a decent return is important, Okalik Eegeesiak, chair of the trust, says they are careful where the money goes. “We try to make sure none of our money is used to finance wars or anything like that.”

Adds Campbell: “You always have to come up with assessments. Bombardier has a plant in Ireland that builds pieces for tanks, but they also build snowmobiles. Do you invest in them or not?”

The plant is less than one per cent of the company’s total revenue stream, and the trustees felt comfortable investing in it.

A decision was made not to invest in Talisman Energy, a Canadian oil company with a big stake in war-torn Sudan, where Christian and animist guerillas in the south of the country have been fighting a repressive Islamic dictatorship for many years. Talisman has been accused of helping the Sudanese government finance its war effort.

While final decisions are made by an Inuit board of six trustees, Campbell, a former manager of the $500-million Canada Mortgage and Housing Corporation pension plan, heads up a staff of five at the Ottawa-based office and is part of an investment advisory committee that includes Roger Chiniara, a former manager of Alcan’s pension funds, and Bob Rabinovitch, president of the CBC.

Campbell says the advisors focus on the long-term, ignoring short-term shocks to the market.

“Over the long term we are going to see little bit higher return on investment, but we do think the peaks and valleys are going to be deeper,” says Campbell. “All of our forecasts are based on long-term averages and there will be years of feast and years of famine, but in the long term it will balance out.”