How We Invest

The United Nations Secretary-General has delegated the fiduciary responsibility and authority for the management and investment of the Fund’s assets to the Representative of the Secretary-General (RSG). The RSG is responsible and accountable for the investments of the Fund, including oversight of the Office of Investment Management (OIM) which assists the RSG in carrying out his/her duties. Consequently, the RSG has delegated to the Chief Investment Officer (CIO) the authority to make decisions relating to the investment of the assets of the United Nations Joint Staff Pension Fund subject to the following limitations:

• All investment decisions remain subject to the RSG’s ongoing oversight and management; and
• All investment decisions must be consistent with the investments policy and investment guidelines established in accordance with the Regulations, Rules and Pension Adjustment System of the United Nations Joint Staff Pension Fund.

Investments must, at all times, meet the criteria of safety, profitability, liquidity and convertibility.

Long-Term and Short-Term Investment Objectives

The Fund’s “Long-Term Investment Objective” is to meet or exceed a real rate of return (net of inflation, as measured by the US Consumer Price Index: All Urban Consumers not seasonally adjusted) in US dollars over the long-term (15 years and longer) without undue risk of loss, that factors in the liabilities of the Fund and the Required Contribution Rate as defined in the Funding Policy. In the short term (3 years), the Fund aims to meet or exceed the Policy Benchmark’s returns while keeping Key Risk Indicators in line with OIM’s Risk Management Framework.

Click here to see the Funding Policy.

Investment Policy Statement

Management of the investment of the assets of UNJSPF is the fiduciary responsibility of the Secretary-General of the United Nations, in consultation with the Investments Committee, and in the light of observations and suggestions made from time to time by the Pension Board in relation to the investment policy.

The Representative of the Secretary-General (RSG) for the investment of the assets of the Fund has the responsibility and authority to act on behalf of the Secretary-General in all matters involving the fiduciary duties of the Secretary-General relating to the investment of the assets of the Fund, including representing the Secretary-General at meetings of the Investments Committee, the Pension Board, and other meetings where investment matters pertaining to UNJSPF are discussed.

The Representative of the Secretary-General is assisted by OIM. Investments must, at the time of initial review, meet the criteria of safety, profitability, liquidity and convertibility.

Investments are carried out within the framework of the Investment Policy Statement (IPS). The purpose of this Investment Policy Statement (IPS) is to set forth the parameters which shall guide the RSG and OIM staff in managing the investment of the assets of the UNJSPF. The IPS specifies the Long-Term and Short-Term Investment Objectives; the eligible investment universe of asset classes, investment channels, and investment instruments; the Strategic Asset Allocation (SAA) and the Policy Benchmark; the risk parameters; and the investment process.

A full-scale review and updating of the IPS is undertaken in consultation with the Investments Committee and other stakeholders, and in light of the observations and suggestions provided by the United Nations Joint Staff Pension Board (Pension Board or UNJSPB) and taking into account the results of each Asset Liability Management (ALM) Study, conducted once every four years.

The IPS is a living document and will be continuously updated, amended and enhanced as needed by the RSG, in order to provide the Fund with the necessary flexibility and tools required to address specific market conditions or developments.

The Investment Policy Statement was last updated in 2023.

Strategic Asset Allocation

The purpose of the Strategic Asset Allocation (SAA), as reflected in the Policy Benchmark, is to achieve the Fund’s Long-Term Investment Objective. Therefore, strategic investment decisions for the Fund shall be made based on a long-term horizon.

*Global Equities include Public Equity (across Developed, Emerging and Frontier Markets)
*Real Assets include Infrastructure, Timberland and Commodities.
Numbers are rounded off to the single decimal point and may not add up due to rounding effects.
(Data from independent Master Record Keeper)

Chart Note

Portfolio Strategies

The Fund seeks to invest in active funds in order to achieve excess return over the benchmark. The Fund invests in passive funds when the goal is to provide a low cost and quick implementation of the strategic asset allocation. Participation in passive funds is also an importation source of knowledge sharing and investment research.

Real Assets

The Real Assets team is responsible for global investments in real estate, infrastructure, timber and commodities through externally managed funds. The team works proactively through the selection and management of its external managers to reduce risk and increase long term returns.

Our real estate program originated in 1971. Today the portfolio is invested globally through over 100 externally managed funds. The real estate program invests in high quality managers that provide superior long-term risk adjusted returns while improving overall portfolio diversification. The allocation is 50 percent core “open ended” funds and 50 percent non-core “closed end” funds. The Fund’s core funds are diversified by geography and property type, and its non-core funds are diversified by vintage year, geography, property type and risk profile.

The Real Assets team also invests in externally managed infrastructure funds. Selection is based on moderate leverage, strong cash flow and a demonstrated record of realizations. Modest allocations to timber and commodities funds, invested on a global basis, are also part of the Real Assets portfolio.

Global Fixed Income, Cash & Treasury

The Global Fixed Income portfolio seeks to achieve an above benchmark return by investing globally in local currency, investment grade securities. The portfolio is traded actively.

For Fixed Income assets, the Fund manages 80% actively and the rest is invested in passive strategies.

The Fixed Income team uses a top-down macro/fundamental research focus to identify investment ideas in local debt markets. Analysis is performed on the economic outlook, valuations and positioning. A bottom-up analysis is used for individual security decisions. This includes an examination of credit quality, sector allocation, maturity profile, liquidity and relative value. The portfolio is constructed with a bias towards low risk securities and with consideration given to diversification and relative value. The portfolio is reviewed actively to adjust to changes in the economic environment and to take advantage of emerging opportunities. Strict compliance with investment guidelines and allocated risk budget is maintained at all times.

In addition to the Global Fixed Income portfolio, the team manages the Operational Cash and Treasury Cash portfolios.

Transaction Costs

Transaction costs within Fixed Income and Foreign Exchange comprise costs that relate to the buying and selling of securities and associated movement of cash. These costs can change annually depending on the types of securities transacted, market volatility and volume.    

Transaction costs may be both explicit ie readily identifiable and also implicit ie not easily observed.  Within the Fixed Income market, most transaction costs are implicit costs.  

Transaction costs the Fund may incur within Fixed Income include:

  • Brokerage/Commission costs for Fixed Income ETFs and other exchange traded instruments (explicit cost)
  • Transition manager commission (explicit cost)
  • Settlement and clearing costs (explicit cost)
  • Taxes e.g. Withholding tax, Financial transaction tax (explicit cost)
  • Market associated costs (explicit costs)
  • Compensation paid for failed trades (explicit costs)
  • Buy-sell spreads on the underlying product or security as well as the market impact due to trading volume (implicit cost)

The Fund incurred the following explicit transaction costs related to Fixed Income for calendar year 2022:

  • USD 2,115,659.425 associated with transition manager commissions associated with the 2022 benchmark change.  
  • USD 4,918.49  Financial transaction taxes.
  • USD 4,537.19 market associated costs.

The Fund also received compensation for failed Fixed Income trades totaling USD 5,151.27.

Cost Analysis versus Benchmark (2022 CEM Investment Benchmarking Analysis) can be found here.

Alternative Investments

The Alternative Investments team is responsible for investments primarily in private equity through externally managed funds.

The private equity programme began in June 2010. Its charter is to build a private equity portfolio by identifying and investing in top-tier managers that provide superior long-term risk adjusted returns while improving overall portfolio diversification. The Fund’s Private Equity programme currently consists of a select number of externally managed funds diversified by vintage year, private equity sub-sectors and geography. The performance benchmarks for the private equity portfolio are the Morgan Stanley Capital International All Country World Index (MSCI ACWI) Index plus 200 basis points and the Private iQ benchmark.

The Alternative Investment team works closely with the Risk, Compliance and Legal teams to ensure conformity with risk corridors and investment policy considerations.

2022 Economic and Market Conditions for Asset Classes

Stock Markets

Stock markets were down sharply in 2022, as the unexpected rise in Interest rates led to a repricing of present value of future earnings. Moreover, global earnings were revised down as a combination of a) Rise in geopolitical tensions b) lockdowns in China c) Normalization of consumption in the US after a post-pandemic boom in the US. As a result, stocks fell globally with the US down -19% and emerging markets down -22%. Japanese stocks fared better with markets down minus nine per cent as the Bank of Japan did not hike policy rates.

Bond Markets

As Central banks geared up to fight stubbornly high inflation and rising inflation expectations, they ended more than a decade of cheap money. The Federal Reserve hiked rates at their fastest pace in modern history and bond yields soared from extremely low levels. Eurozone government bonds fell by 18% and US government bonds fell by 12%. Corporates suffered from higher borrowing costs, tighter financial conditions and the economic slowdown. Investment Grade corporate bonds recorded returns of  -14% in the eurozone and -16% in the US. High-Yield bonds were down 11% in the US and eurozone.

Public Equities

The Office of Investment Management (OIM) is a long-term investor in high quality companies across the world including emerging and frontier markets. The public equity portfolio is managed internally by four teams: North America, Europe, Asia Pacific, and Global Emerging Markets (GEM). The benchmark is Morgan Stanley Capital International All Country World Index (MSCI ACWI) which is composed of more than 2400 securities across 47 countries/regions, including 24 Emerging Markets.

Currently, the Fund manages all public equities in active strategies.

Current and Past Investment Policy Statements

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