The world’s 42 largest public sector pension investment organizations saw their combined assets decline by nine per cent in the year ending June 30, 2022, according to a new report by data platform Global SWF.
“The last time we saw a decline was 2015 but that was a small drop,” says Diego Lopez, founder and executive director of the SWF. “But nine percent — it’s never happened before.”
In total, the pension investment organizations analyzed for the report lost US$1.3 trillion last year, with their combined assets under management falling from US$23 trillion to US$21 trillion. The poor performance was caused by the strong correlation between stocks and bonds during the year, with the global universe for both types of assets dropping by more than 10 per cent, says Lopez. “This hasn’t happened one other time in the past 50 years. And about 75 per cent of these pensions’ assets are held in liquid markets.”
The report also ranked the overall performance of these pension investment organizations. The Ontario Teachers’ Pension Plan claimed the top spot with returns of 1.2 per cent. The other Canadian pension investment organizations included on the list also performed relatively well, with three more included among the top 10.
With losses of 0.4 per cent, the Ontario Municipal Employees’ Retirement System placed second. The Alberta Investment Management Corp. and the Canada Pension Plan Investment Board placed eighth and ninth, respectively, with 6.8 per cent and 7.9 per cent losses during the period.
Lopez says Canada’s entrants escaped much of the economic turmoil for three main reasons. “The Canadian plans are focused on diversification across asset classes, especially private equity, and across geographies. Most Canadian funds have been opening offices overseas and hiring expert personnel in-house.”
In 13th place, with losses of 7.9 per cent, the Caisse de dépôt et placement du Québec was the lowest-ranked Canadian investment organization included in the report. Despite this, it was named the 2022 fund of the year by Global SWF. According to Lopez, the Caisse received the award for its impact on the development of Quebec, its leadership among sovereign and public investors worldwide and its investment activities during 2022.