OMERS pension fund returns 6.5 per cent for 2013

Investment income slipped to $4 billion from $5.2 billion in 2012, as assets rose to $65.1 billion compared with $60.8 billion a year earlier, fund manager says

Toronto Star
Feb. 24, 2014
By Katia Dmitrieva

Ontario Municipal Employees Retirement System, one of Canada’s largest pension fund managers, reported a 6.5-per-cent return on its investments last year, below the 10-per-cent return in 2012.

Investment income slipped to $4 billion from $5.2 billion in 2012, as assets rose to $65.1 billion compared with $60.8 billion a year earlier, the Toronto-based fund manager said Monday in a statement.

The fund missed the 14-per-cent median return for Canadian pension funds in the year ended Dec. 31, according to Royal Bank of Canada’s RBC Investor & Treasury Services unit.

“Public market equity returns in excess of 20 per cent were offset by a significant market-valuation reduction in the fund’s holdings of inflation-linked bonds and commodities,” according to the statement.

As a result, the pension manager’s return from its capital markets unit, which makes up 57 per cent of the fund and comprises stocks, bonds, and other debt investments, returned 0.5 per cent, compared with a 7.5 per cent gain in 2012.

OMERS finished implementing a new public markets portfolio in 2013 which includes a portfolio that places short and long positions on currencies, commodities, stocks and bonds. The new strategy is aimed at creating more stable investment returns in the long term.

“We have a high conviction that this public markets strategy is the right one for a prudent pension plan investor,” Chief Executive Officer Michael Nobrega said in the statement.

OMERS’ private equity unit returned 24 per cent last year and Oxford Properties, its real estate unit, rose 14 per cent. Borealis Infrastructure returned 12 per cent and Omers Strategic Investments, which oversees venture capital and Western Canadian energy assets, rallied 9.1 per cent compared with a 10 per cent decline in 2012.

“We now have a long-term strategy that balances portfolio risks to the drivers of capital market returns, namely growth and inflation,” Nobrega said in the statement.