Item - 2026.IB17.3

The Director, Capital Markets and Treasury recommends that:

1. The Toronto Investment Board authorize the Chief Financial Officer and Treasurer to retain an independent external investment consultant, through the City's procurement process, to:

• assess the suitability of an Outsourced Chief Investment Officer model for the management of the City's Sinking Fund;

• evaluate potential Outsourced Chief Investment Officer implementation options and governance considerations; and

• if warranted, support a subsequent Outsourced Chief Investment Officer search and selection process.

2. The Toronto Investment Board direct staff to report back to the Board with the consultant's findings and recommendations, including any recommended next steps with respect to an Outsourced Chief Investment Officer search and selection process.

This report seeks authority from the Toronto Investment Board to retain an independent external investment consultant to assess the suitability of implementing an Outsourced Chief Investment Officer ("OCIO") model for the investment management of the City's Sinking Fund and, if appropriate, to evaluate the implementation approaches best suited to the City's needs. Subject to the Board's approval of the consultant's recommendations, the selected consultant would also assist with the OCIO search and selection process.

An Outsourced Chief Investment Officer (OCIO) model is an arrangement under which some or all investment management functions, including asset allocation, investment manager selection, portfolio monitoring, and risk management, are delegated to an external investment firm under a defined mandate. Under such a model, the OCIO would work collaboratively with City staff and report regularly to the Toronto Investment Board, providing investment expertise, implementation support, performance reporting, and strategic advice while enabling staff and the Board to focus on governance, oversight, and strategic direction.

Staff believe it is appropriate to assess whether an OCIO approach could enhance the management of the Sinking Fund, given the significant amount of financial obligations supported by the fund and the City's existing governance measures. Under the current legislated structure, City staff cannot be delegated authority to act as investment portfolio managers, while the Toronto Investment Board is a directional board serving in an oversight and strategic capacity. The proposed review would evaluate the potential benefits, risks, costs, governance implications, and implementation considerations of an OCIO model relative to the current investment management structure, how an OCIO could support the Board's governance and oversight responsibilities, and the development of a process to continue to monitor performance.

Staff would report back to the Toronto Investment Board with the consultant's findings and recommendations, facilitate a presentation by the consultant, and seek direction on any recommended next steps.

The costs associated with retaining an external investment consultant to undertake the review have been provisioned for within the Toronto Investment Board’s approved 2026 Operating Budget.