After a record-breaking year, Alberta’s public sector investment fund manager is seeking to earn the trust of its client pension funds.
“A combination of factors had undermined trust between AIMCo and some of our clients,” wrote Evan Siddall, chief executive officer of the Alberta Investment Management Corp., in the organization’s 2021 annual report. “Whatever the reasons, AIMCo’s imperative as a service provider is to do all it can to repair these relationships and earn their trust.”
The long-running dispute between the investment manager and several of its public sector pension fund clients began in 2019 when the provincial government passed a bill mandating the transfer of assets from several public sector pension plans to the AIMCo.
In response, the Alberta Teachers’ Association launched a legal challenge against the provincial government in order to maintain control of pension investment decisions. In September 2021, two months after Siddall stepped into his current role, an agreement was reached allowing the AIMCo to maintain custody of the pension plan’s assets as long as the funds were invested along the lines of a framework provided by the Alberta Teachers’ Retirement Fund Board.
“We signalled our commitment to do just that by coming to an investment management agreement with Alberta Teachers’ Retirement Fund last September and have considered this objective in everything we have done since,” wrote Siddall.
The annual report also included a more detailed look at the investment manager’s performance than had been revealed in an April press release.
During the year ending on March 31, 2022, the AIMCo’s assets under management grew by a record amount — 14.7 per cent or $146.6 billion to $168.3 billion. The performance was led by the organization’s private equity portfolio, which saw returns of 68.5 per cent, growing from $59.61 billion to $87.06 billion.
Other alternative allocations saw comparatively modest returns, with the AIMCo’s real estate portfolio growing by 14.5 per cent — to $18.27 billion — and its infrastructure portfolio by 19 per cent — to $10.58 billion. Combined, its alternative investment portfolio grew by 24.1 per cent, reaching $39.61 billion.
The investment manager’s public equity portfolio grew by 23.4 per cent, from $44.97 billion to $51.93 billion. Within its public equity portfolio, its allocation to Canadian equities experienced the most significant growth, ballooning by 30.5 per cent, from $6.45 billion to $9.29 billion.
In the report, Siddall made it clear clients shouldn’t expect similar returns each year. “Yet, while the returns reported here are excellent — historic, even — annual returns give a long-term investor like AIMCo little satisfaction. They represent much more than a year of work and cannot reasonably be sustained at this level over the long-term investment horizons of our clients.”