The Ontario Municipal Employees Retirement System saw its net investment return rise to 11.5 per cent at the end of 2017, compared to 10.3 per cent at the end of 2016 and a benchmark of 7.3 per cent.
Its investments generated almost $10 billion in net investment income during the year, with net assets increasing to $95 billion at Dec. 31, 2017, up from $85.2 billion at the end 2016. Also, OMERS’ funded status improved slightly, rising to 94 per cent from 93.4 per cent in 2016.
During a press conference in Toronto on Friday, Jonathan Simmons, the pension fund’s chief financial officer, said the double-digit returns have allowed OMERS to reduce its discount rate by a further 20 basis points in 2017. Though it will cost $2.7 billion, Simmons added it’s the right thing to do.
During the year, OMERS decreased its exposure to inflation-linked bonds, to four per cent in 2017 from six per cent in 2016, as well as government bonds, to seven per cent in 2017 from 11 per cent in 2016. Its credit assets increased slightly, rising to 18 per cent from 17 per cent. The greatest share of its asset mix was in public equity at 34 per cent, up from 28 per cent in 2016.
Indeed, OMERS’ public equity portfolio saw the biggest net return in 2017 at 14.7 per cent, compared to 7.1 per cent in 2016. Private investments held mostly steady, posting a 11.6 per cent return, compared to 11.8 per cent the previous year. And its infrastructure portfolio posted a return of 12.3 per cent in 2017, compared to 10.9 per cent in 2016.
At the end of January, OMERS expanded its presence in the cryptocurrency sector by creating a new company called Ethereum Capital Inc. Its objective, according to a news release, is to become the central business and investment hub for the Ethereum ecosystem, a technology touted as a backbone for enterprise applications developed using blockchain protocols.
During the annual results announcement, Simmons noted OMERS has no investments in cryptocurrency today and no plans to make them. “We’re certainly invested in the underlying technology,” he added.
The pension fund is also looking at emerging markets, added Simmons, with a team travelling to India in January to look at that market.