The Investment Management Corp. of Ontario is reporting that the weighted average net return of its clients’ portfolios was negative 8.1 per cent for the year ended Dec. 31, 2022, which narrowly beat its consolidated benchmark return of negative 8.4 per cent.
Over the three years since assets have been managed according to the IMCO’s strategies, the annualized return was two per cent compared to a consolidated benchmark return of 1.6 per cent. Its assets under management sat at $73.3 billion at the end of 2022.
Since the IMCO’s clients are public sector entities, each has its own unique investment horizon and tolerance for risk, noted a press release. Therefore, the range of returns across the IMCO’s client portfolios was negative 9.1 per cent and 1.6 per cent in 2022.
“Although 2022 was the most turbulent year for markets in recent memory, we outperformed our benchmark and delivered added value for the third straight year, reaffirming the effectiveness of our long-term approach to helping clients build resilient portfolios,” said Bert Clark (pictured), president and chief executive officer of the IMCO, in the release.
“We witnessed an unusually large dispersion of returns across pension funds and asset managers in 2022, where funds with higher allocations to private assets typically posted higher returns. We continue to help many of our clients increase their allocations to private assets and to leverage their longer investment time horizon, as well as our strategic relationships and direct investment capabilities.”
In 2022, the IMCO closed 12 private equity direct and co-investments totalling more than $500 million. This included a co-investment in a Canadian dental support organization, a co-investment in a life sciences company and the commitment of $100 million to an impact fund.
“We continue to increase our private market exposure alongside our strategic partners, which was a huge returns’ driver for us in 2022,” said Rossitsa Stoyanova, chief investment officer of the IMCO, in the release. “On the other hand, our absolute returns’ performance was driven mainly by losses in public equities and fixed income, as both public markets and bonds took an unprecedented hit.”
The IMCO also committed more than $2 billion to new managers in its global credit portfolio, including exposure to actively managed public credit. In 2022, it also released a climate action plan, which set out the organization’s road map to achieving net zero by 2050.
“As we move forward, responsible investing and [environmental, social and governance] integration will continue to play a growing role in our strategies,” said Stoyanova. “We believe that companies that strategically manage material ESG risks and turn them into opportunities will outperform their peers in the years to come and understand the importance making this a priority for IMCO.”