Heritage Fund - Frequently Asked Questions

Questions and Answers

Albertans have questions about their Heritage Fund.   We've answered a few of the most common questions here.

FAQ Index

 

Did you know?

The Alberta Heritage Savings Trust Fund is unique to Alberta. No other province has such a fund.

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What is the Heritage Fund?

The Heritage Fund is Alberta’s main long-term savings fund. Originally, the Fund was established to collect a portion of Alberta’s non-renewable resource revenue for future generations. The Fund today produces income which supports government programs essential to Albertans like health care and education.

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What is the value of the Alberta Heritage Savings Trust Fund?

On November 21, 2011, the government released the Alberta Heritage Savings Trust Fund 2011-12 Second Quarter Update that states the Fund's fair value stood at $14.7 billion as of September 30, 2011.

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How much money is the government putting into the Heritage Fund this year?

The Fund has a legislated provision for retaining a portion of its income for inflation-proofing.

The annual amount forecast to be retained from investment income in the Fund for inflation-proofing is $355 million.

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How have the Heritage Fund investments performed this year?

In the second quarter of 2011-12, the Fund posted a loss of 3.6%, bringing the total return over six months to a loss of 2.9%.

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What happens to the investment income earned by the Heritage Fund?

The investment income earned by the Heritage Fund, less the amount retained in the fund for inflation proofing, is transferred to the province's main operating fund, the General Revenue Fund, to help pay for priority programs.

Over the past 35 years, investment income from the Heritage Fund has benefited Albertans in many ways. Approximately $32 billion in investment income has been transferred to the province's General Revenue Fund to support program spending in areas such as health care, education, infrastructure, debt reduction and social programs.

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How is the Heritage Fund invested?

The investment is balanced on two important concepts:  diversification to manage risk, and a long-term planning horizon to earn greater returns.

The Heritage Fund's portfolio consists of investments in private and public companies, bonds, real estate, and infrastructure investments.

A little more than half of the Fund is invested in equities.  Historically, equities have outperformed fixed income securities over the long-term as investors are paid a risk premium to hold stocks.

See the Detailed List of Investments at March 31, 2010, which was released with the 2009-10 Heritage Fund Annual Report.

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Who keeps track of the fund's investments?

The Minister of Finance is ultimately responsible for the Fund and its investments. The Department looks after setting the long-term strategy, developing investment policy and monitoring investment performance.

The purchasing of stocks, bonds and other investments for the portfolio is managed by a group of highly qualified and experienced professionals of Alberta Investment Management Corporation (AIMCo).

The Minister of Finance reports to Albertans on the performance of the fund quarterly and releases the fund’s annual report within 90 days of the end of the fiscal year.  See publications.

The Standing Committee on the Alberta Heritage Savings Trust Fund reviews and approves the business plan and annual report of the fund.

The Standing Committee has representation from the major parties of the legislature and receives regular reports on the performance of the Fund. The Standing Committee conducts public meetings annually in different locations across the province to update Albertans on the management of the Fund and to solicit input from Albertans.

The business plan of the Heritage Fund is published as part of the provincial budget.

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Are these investments secure?

As mentioned previously, the key to sustainable performance is maintaining a diverse portfolio with a long-term focus, prudence, and investment discipline.

The Heritage Fund has a significant commitment to equities because it is managed to earn higher returns over the long-term. Equity investments can lead to variations in the amount of income earned from year to year, but they are proven to earn greater returns. Therefore, steps are taken to manage any risk and protect the Heritage Fund's assets. The fund's managers make investment choices based on the Prudent Person Rule, which means they only make investment choices that would be made by a prudent investor. Also, assets are held across market sectors. The government doesn't, as the expression goes, "put all its eggs in one basket".

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Why did the government conduct another public consultation on the Heritage Fund?

The government first asked Albertans about the future of the Heritage Fund in 1995. From the consultation entitled, "Can we interest you in an $11 Billion Decision?", Albertans told government to keep the fund, but they also told government to take another look when the province's financial picture was more certain.

Looking Forward: Planning the Future with the Alberta Heritage Savings Trust Fund - this survey was conducted in the fall of 2002, and the results were released in March 2003.

Over 77,000 Albertans responded to this survey on the Heritage Fund's future. Overall, the results showed that most Albertans (61 per cent) wanted the Heritage Fund to continue to operate as an endowment fund.

Albertans value the Heritage Fund, and it is government's responsibility to ensure it will continue to play an important role for future generations.

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How do I find out more?

You can find out more about the Heritage Fund by mail, phone, fax or email, or by contacting your MLA's office.

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