Risk. Reinsurance. Human Resources.

Aon HewittRetirement and Investment

Global Investment BeliefsJune 2015

Global Investment BeliefsAon Hewitt’s global investment beliefs represent our overarching investment philosophy. They describe how we believe institutional investors should pursue portfolio development and construction. Our beliefs are based on sound investment theory and the insights we have gleaned from working with sophisticated institutional investors around the world.

We believe maintaining a clear and concise set of investment beliefs is important for the following reasons:

• They unify our global investment advice while allowing for local implementation.

• They promote a consistent approach for portfolio construction and decision making.

• They communicate our core views to clients.

• They establish a roadmap for future research, inform how we structure our practice, and guide the development of internal and external tools and solutions.

Aon Hewitt’s investment consulting colleagues work in close partnerships with their clients to solve complex investment problems in practical, cost-effective ways within the framework of our investment beliefs.

Effective governance is a necessary condition for investment success.

Effective governance includes the application of the concepts of fairness, compliance with legal requirements, accountability, transparency, efficacy of actions, and efficiency. We believe that all of these are necessary—though not all-inclusive—conditions for lasting investment success, and as such we promote them in our actions and our advice to clients.

The appropriate resources in terms of knowledge and skill, as well as the decision-making framework and

authority requisite to act effectively and in a timely manner (whether the resources and authority are possessed within the client’s organization or delegated to a third party in a particular area) are requirements for effectively governed institutions. A focus on improving outcomes delivers superior results and encourages differentiated approaches to investments.

Our investment solutions are customized to client circumstances, objectives, and risk tolerance.

Our views on the relative merits of investment strategies are consistent across clients. However, our diverse client base exhibits a wide variety of characteristics owing to clients’ differences in governance objectives; circumstances; type of institution; time horizon; portfolio size; geographic location; environmental, social, and governance (ESG) investment concerns; and other factors. Therefore, a particular

strategy that may be optimal for one client may be inappropriate for another.

In advising clients, we take into account their individual circumstances, goals, and risk tolerances, and present investment strategies in a way that is relevant to maximizing reward and minimizing risk for their particular investment program.

Aon Hewitt’s Global Investment Committee, which comprises 10 senior investment professionals representing the Americas, EMEA, and APAC regions, develops and modifies the firm’s global investment beliefs. The investment beliefs are reviewed and updated as needed, but at least annually. Our investment beliefs are as follows.

Clients who access the full global opportunity set improve outcomes through enhanced portfolio diversification and efficiency.

The world market portfolio represents the aggregate views of global investors and should serve as a starting point for clients designing a long-term investment policy—subject to risk tolerance, time horizon, liquidity constraints, and other considerations.

Careful diversification into a broad set of asset classes with attractive risk and return properties improves portfolio efficiency by reducing risk and increasing return potential. Within asset classes, we advise using the broadest measure of the opportunity set as the

benchmark portfolio to maximize diversification and opportunity. The opportunity set in an asset class should be viewed holistically and not restricted to “traditional” sectors. For example, “fixed income” includes bank loans, emerging market debt, and credit; “equities” includes private equity and long-short strategies. We believe the portfolio should be viewed through multiple analytical perspectives such that common risk and return drivers across the portfolio are measured and managed.

Prevailing market conditions and outlook should influence portfolio construction in the long and medium term; no single investment strategy is ideal in all market conditions.

Our risk and return expectations for the global capital markets vary through time, reflecting market movements and current economic conditions while maintaining a focus on the long term.

Specifically, the rewards for taking different types of market risk, such as equity risk, are more attractive in some market environments than others. Therefore, we advise clients to set long-term investment policy using

current market expectations as an input, and revise those policies when warranted by changing conditions.

Additionally, we maintain medium-term views that complement our long-term expectations; using these views, we advise clients on determining the timing of long-term investment strategy changes, rebalancing decisions, adjusting market exposure hedges, and managing opportunistic mandates.

Success with active management requires strong conviction on the part of the investor, based on robust research.

This is best expressed through a significant allocation to alternative investments and highly active

traditional portfolios typically operating with broad, unconstrained mandates.

For clients that choose to minimize complexity or cost, passive traditional portfolios offer efficient capture of market returns.

The “arithmetic of active management”— the observation that active and passive management together comprise the total market, that active and passive managers in aggregate must therefore underperform the total market by the amount of their investment costs, and that active management fees and trading costs are significantly higher than those of passive—shows that success with active management depends on the ability to identify superior (skilled), not average, active managers.

We recommend active strategies only when we believe we can identify and implement active opportunities that are attractive relative to a low-cost passive approach.

We believe that there are ways in which clients can further improve their probability of success with active management. One approach is the removal of constraints on active management, in particular by employing broader mandates such as active global equity.

While constraints on active managers may reduce some risks and help enforce style purity, when managers are skillful in implementing a strategy, constraining them from fully employing that strategy reduces the potential for value added. Broadening mandates, on the other hand, allows managers to select the most attractive investments regardless of style, within appropriate active risk limits.

Additionally, alternative investment strategies such as hedge funds, private equity, and non-core private real estate offer an efficient approach to active risk taking, owing to their breadth and flexibility, and as such we recommend that clients able to tolerate the associated risks allocate a significant portion of their total portfolio risk to these areas.

Contact

Mike Sebastian Partner and Chair, Global Investment Committee Aon Center for Innovation and Analytics (ACIA), Singapore +65 9172 2424 mobile +65 6645 0122 office mike.sebastian@aonhewitt.com

Risk. Reinsurance. Human Resources.

About Aon Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.

© Aon plc 2015. All rights reserved.The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate profes-sional advice after a thorough examination of the particular situation.

www.aon.com