The Alberta Investment Management Corp. delivered a 10.6 per cent return in 2019, net of all fees, representing a net investment income of about $11.5 billion and bringing the fund’s total assets under management to $118.8 billion.
While the results were positive, and well above the organization’s 2.5 per cent return in 2018, its total fund return was 0.5 per cent below its benchmark.
“As institutional investors, we understand that even well-diversified portfolios are bound to deliver more favourable returns in some years compared to others,” said Kevin Uebelein, chief executive officer of the AIMCo, in a press release.
“While over the long term, we are proud that AIMCo has earned its clients strong value-added investment performance across all asset classes — beating the benchmark in 10 of the past 12 years at the total fund level — we acknowledge that, in the short term, we have not met our clients’ expectations.”
While the total fund return was below the AIMCo’s benchmark, it outperformed its benchmark by 0.5 per cent and 0.8 per cent, respectively, on a four- and 10-year basis.
“Despite all asset classes earning strong absolute returns, some did not outperform their respective market benchmarks in 2019,” said Dale MacMaster, the AIMCo’s chief investment officer. “Illiquid assets, for instance, which have consistently posted strong returns over the past few years, experienced more modest performance last year. On the public equities side, for active managers like AIMCo, it was a challenging year — the market was very narrow, with fewer stocks and fewer sectors exceeding their benchmarks. Remaining patient while being willing to innovate will ultimately serve our clients well, especially in this current investment climate.”
And while 2019 saw challenges, the beginning of 2020 has been unparalleled, with the global economic impact of the coronavirus pandemic and an oil price war “causing virtually all asset values to be significantly repriced and investment markets to enter a period of sudden and unprecedented volatility,” noted the release.
As so many asset classes decline in tandem, the typical benefits seen from portfolio diversification in the short term will diminish, it said.
“Our team is responding decisively in an effort to protect our clients’ liquidity and assets in the near and medium term, while still identifying longer-term investment opportunities that will come out of these challenging market circumstances.” said Uebelein. “We know the impacts to their portfolios during these times of market uncertainty will be significant, and we are committed to accountability and full transparency to our clients as we navigate these conditions together.”