CBA Investment Policies and Procedures Policy

Effective Date: March 13, 2025

1. Introduction

1.1 Background

The Canadian Bar Association (CBA) reviewed the existing investment policies and procedures, with the conclusion that they required enhancement to provide a flexible management style for CBA Executives to meet long term objectives, without the necessity of being excessively involved in day-to-day decisions.

Investments of the Association are governed by:

• CBA Bylaw No 1, s. 21(2)(l) – Duties, Responsibilities and Authority of the Board
• CBA General Regulations, s. 15(2)(a) – Finance Committee
• CBA General Regulations, s. 16(1) – Investment Steering Subcommittee

The Investment Steering Subcommittee:

• advises the Finance Committee, and through it the Board, on the strategic investment of Association funds
• executes the Board-approved investment strategy.

The Canadian Bar Association investments are in the following funds: CBA General Funds; Aikins General Funds; Financial Reserve Fund; CBA Operating and Trust Funds: Viscount Bennett Award, and Sir James Aikins Bar Review.

1.2 Goals - Valued Asset Allocation

The goals for a strategic asset allocation of CBA investments are:

• preservation of capital and enhancement of purchasing power, investment income, and liquidity, having regard in the case of each fund to the purpose of the fund as listed below in part 3 - INVESTMENT OBJECTIVES.

1.3 Accounting Policy

Investments are carried at market value including any unrealized (before sale) gains or losses.

Investment income and proceeds of sales are recognized within the fiscal period in which the transaction occurs. Unrealized gains and losses are reported in the income statement after net income from operations.

2. Asset allocation targets

To follow the goals, as outlined below, and provide a reasonable rate of return, the CBA has established short- and long-term asset allocation ranges and targets. The Investments are categorized as short term, medium term or long term to appropriately balance the risk and asset mix in each fund as follows:

Long Term: Aikins Bar Review, Aikins General, Canadian Bar Foundation, Canadian Bar Law for the Future Fund

Medium Term: Viscount Bennett Trust

Short Term: CBA General, CBA Reserve

The specific Asset Allocation Targets are set according to the investment goals as defined in Section 3 – Investment Objectives.

Canadian Bar Association

Canadian Bar Foundation

Canadian Bar Law for the Future Fund¹

3. Investment objectives

The Investment Objectives of the portfolios are as follows:

3.1 Group Objective

The objective is to achieve a portfolio rate of return equal to or exceeding CPI plus (+) 4% with low volatility.

3.2 Purpose of Funds

General Funds - CBA General

• The primary objective is to provide investment income and the secondary objective is long term growth or capital appreciation.

Aikins General

• The primary objective is to provide investment income, and the secondary objective is long-term growth or capital appreciation.

Financial Reserve Fund

• The objective is to provide and maintain a reserve equal to four (4) months budgeted expenditures, approximately $3.4 Million. All investment income is to be retained and invested.

Viscount Bennett "Award" Trust - Established 1942

• The objective is to provide income to support scholarships to law students at either the graduate or undergraduate level. The award is $25,000, annually. Current level of income required is $25,000 annually, including the Award and expenses.

Aikins "Bar Review" Trust - Established 1922

• The objective is to provide income for the improvement and maintenance of the Canadian Bar Review.

Surplus Current Operating Funds

• The primary objective is liquidity that invests in liquid short term cash equivalent or money market securities or money market funds.

Canadian Bar Foundation

• The primary objective is to provide investment income, and the secondary objective is long-term growth or capital appreciation.

Canadian Bar Law for the Future Fund

• The objective is to provide income for grants to qualified recipients and to support the operations of the fund and fundraising activities. The current hurdle rate level of income required is $200,000 annually.
• Refer to Canadian Bar Law for the Future Fund Investment Policy (July 2020) for specific policy details.

4. Investment management

4.1 Investment Steering Subcommittee (ISS) - Appointment

The CBA may appoint an Investment Steering Subcommittee (ISS) comprised of the following persons:

• Three members - including the CBA Chair of the Finance Committee who shall Chair the Investment Steering Subcommittee.
• The CBA Chief Financial Officer (Staff Liaison).

4.2 Investment Advisor

The CBA may retain an Investment Advisor or may instruct those members of the ISS who are CBA members or employees to retain an Investment Advisor and to take actions to improve Investment Advisor performance or to reduce costs related thereto. The Investment Advisor's responsibilities are to monitor the investments and performance of the Funds (having regard to their investment objectives), report as referred to in Section 5, recommend the reinvestment of maturing investments and generally provide advice and assistance consistent with the Investment Advisor's expertise and these Policies and Procedures.

The CBA shall determine with the Investment Advisors appropriate compensation for the Investment Advisor's services. A formal review of the investment advisor and investment fees will be held every 5 years, commencing in the 2020 year, or as frequently as is otherwise advisable.

4.3 The Investment Steering Subcommittee - Responsibilities

The ISS is expected to:

1. Set, monitor and review the long-term goals, asset allocation targets and investment objectives;
2. Establish appropriate performance measurements;
3. Meet either by conference call or in person on a quarterly basis to review the portfolio performance against the investment objectives, and make adjustments to the asset allocations as necessary;
4. Make investment decisions consistent with these Policies and Procedures.

Wherever possible, investment decisions shall be made by the full ISS and the Investment Advisor will refer to the quarterly conference calls or meetings all decisions which can be made at those calls or meetings in relation to investment activities expected to occur during the following three months. If an investment decision must be made between quarterly conference calls or meetings, a special conference call of all ISS members will be arranged. If it is not possible to have all ISS members participate in such a call, then the Chair may make any required investment decision but, in no event, may less than the full ISS make investment decisions between quarterly calls or meetings relating to assets having a value of more than 25% of any Fund, and such decisions shall be communicated forthwith to the other members of the subcommittee.

4.4 Investment Guidelines

The ISS is expected to maintain a portfolio of investments that complies with the Allocation Targets and Investment Objectives referred to above.

4.5 Portfolio Diversification

Subject to Sections 2.0, 3.0 and 4.6, each Fund is to be invested in a prudent and broadly diversified manner.

The market value of any single issue at the time of investment is not to exceed 10% of the market value of that asset class, except for issues guaranteed by the Government of Canada or a province of Canada. This restriction does not include bank deposits, nor investments in mutual, pooled, alternative investment or segregated funds, which comply with the above. All direct investments in fixed income and money market investments must be investment grade.

4.6 Allowable Investments

The allowable investments include:

1. Debt instruments issued or guaranteed by the Government of Canada, a Province or Municipality of Canada;
2. Mortgage backed securities;
3. Debt instruments issued or guaranteed by a major Canadian chartered bank including bankers' acceptances;
4. Commercial paper rated R-1 or A-1 by a major Canadian bond rating service;
5. Corporate bonds of investment grade as rated by a major Canadian bond rating service;
6. Units or shares of mutual fund and pooled funds, exchange traded funds, or alternative investment funds;
7. Certificates of deposits, GIC's, term deposits or other evidence of indebtedness of a major Canadian chartered bank;
8. Bonds, debentures or other evidence of indebtedness of, or guaranteed as to the repayment of principal and interest by the government of a country, other than Canada;
9. Common shares listed on a recognized stock exchange;
10. Exempt market products, including trusts or limited partnerships.
11. ESG Investment Funds includes units or shares in mutual funds, pooled funds, exchange traded funds, or alternative investment funds with a publicly stated specialization in ESG focused investments.
12. Other instruments, not specifically listed above for which the Investment Manager has received approval from the Board.

4.7 Performance Management

The performance of CBA investments is measured according to the indices, as listed below, for each asset allocation target in each portfolio.

Investment Performance Indices

5. Communication & reporting

5.1 The Investment Advisor is expected to report at least quarterly, in writing, to the ISS through the CBA Director of Finance, who will be responsible to coordinate the distribution of the reports to the ISS and organize the quarterly meetings or conference calls.

5.2 The quarterly reports should include:

• Recent performance;
• Recommendations from the ISS, if any, for changes in asset allocations.

5.3 The Chair will report, at least annually, on behalf of the ISS to the Board of Directors of the CBA. The annual report should include:

• Current portfolio asset allocation at cost and market value;
• Report from Investment advisor including the current strategy and an analysis of annual and long-term performance.

End notes