Santiago Principles Self-Assessment

Alberta Heritage Savings Trust Fund

Fund Details Fund Website Search Assessments PDF version
  • Pillar 1: Legal
  • Pillar 2: Institutional
  • Pillar 3: Investment
Principle 1

1. The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s).

1.1. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions.

1.2. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed.

The Alberta Heritage Savings Trust Fund is not a separate legal entity. The legal framework is established in the Alberta Heritage Savings Trust Fund Act. Her Majesty, with the advice and consent of the Legislative Assembly, has delegated responsibility for investment of the fund to the President of Treasury Board and Minister of Finance. Her Majesty in Right of Alberta is the legal and beneficial owner of the fund. The President of Treasury Board and Minister of Finance has the legal authority to enter into agreements where the fund is concerned. Operationally the fund is invested independently of the governing body so interactions between other state bodies do not occur.

Principle 6

6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.

The governance framework is not included in one specific document but is laid out in many acts and regulations. These documents included but are not limited to the AHSTF Act, AIMC Act, Fiscal Management Act, and Statement of Investment Policy and Goals (SIP&G). The division of roles and accountabilities is clearly defined in the investment policy. The guidelines for the Minister have been clearly defined in the applicable legislation. The Minister has delegated certain responsibilities to staff within the Ministry to develop investment policy. Implementation of said policy has been delegated to the wholly owned investment manager AIMCo. The Act establishes a Standing Committee of the Legislative Assembly, which is made of 9 members of the Legislative Assembly from all of the parties. There function is to receive and review the quarterly reports on operation and results of the fund. The committee is also responsible for approving annual reports and holding public meetings with Albertans on the investment activities and results of the funds.

http://www.finance.alberta.ca/business/ahstf/heritage-fund-statement-investment-policy-and-goals.pdf

Principle 18

18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.

18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.

18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.

18.3. A description of the investment policy of the SWF should be publicly disclosed.

The risk exposures and use of leverage are outlined in the Investment Policy. Leverage is commonly used to rebalance and manage risk in the portfolio. It is also used in asset classes such as real estate and private equity, where it is an integral part of the underlying strategy and is monitored.

The decision to use external managers is left up to province’s investment manager AIMCo. AIMCo selects and monitors the performance of these investment managers.

The investment policy is publically available on the Heritage Fund’s website.

http://www.finance.alberta.ca/business/ahstf/heritage-fund-statement-investment-policy-and-goals.pdf