Vestcor Investment Management Corp. posted an eight per cent return on total assets under active management in 2017, up from 6.2 cent the year before.

Formerly the New Brunswick Investment Management Corp., Vestcor provides administration services for 11 public sector pension plans, as well as global investment management services to nine public sector clients with a total of about $16.6 billion in assets under management. In addition to its eight per cent return, its long-term annualized return was 7.2 per cent, according to a news release.

Read: New Brunswick public pensions create independent investment manager

“We are very pleased to report that our investment activities have continued to meet both the specific long-term return and risk objectives of our clients with a management expense ratio that is lower than the previous year,” said John Sinclair, president and chief executive officer, in a press release. “Our administration teams also experienced significant improvements on a number of client-based service delivery metrics during the year.”

While Vestcor noted in its 2017 annual report that it has been able to meet its clients’ needs, it has concerns going forward. “Most investment markets are at historically high valuation levels, increased political uncertainty and protectionism has the potential to impact global economic growth and information technology threats remain a concern to the business community,” said Sinclair in the report.

Most fixed-income categories beat their benchmarks, with long-term bonds yielding 9.8 per cent within a special client restricted fund, while corporate bonds yielded the next highest return at 2.9 per cent, just shy of its benchmark of 3.4 per cent.

Read: Public pensions stressing corporate governance, board diversity as key issues for 2018

Between market-cap-weighted and low-volatility public equity allocations, Vestcor saw strong returns across the board, with international market-cap-weight equity outperforming with a return of 18.7 per cent. U.S. low-volatility equities posted the worst performance, yielding 6.7 per cent, well below its benchmark of 10.5 per cent.

Private equity was the standout in alternative investments, with an 18.3 per cent return, followed by real estate at 11.3 per cent and infrastructure at 8.1 per cent. “From a geographic perspective, European and Canadian private equity positions were the strongest contributors to performance during the year, while U.S. positions, although positive, lagged the rest of the portfolio,” the report noted.

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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