Ontario Municipal Employees Retirement System, a pension fund manager in Canada’s most populous province, reported a 6.5 percent return on its investments last year, below the 10 percent return in 2012.
Investment income slipped to C$4 billion ($3.6 billion) from C$5.2 billion in 2012, as assets rose to C$65.1 billion compared with C$60.8 billion a year earlier, the Toronto-based fund manager said today in a statement.
The fund missed the 14 percent median return for Canadian pension funds in the year ended Dec. 31, according to Royal Bank of Canada’s RBC Investor & Treasury Services unit.
“Public market-equity returns in excess of 20 percent were offset by a significant market-valuation reduction in the fund’s holdings of inflation-linked bonds and commodities,” according to the statement.
As a result, the pension manager’s return from its capital markets unit, which makes up 57 percent of the fund and comprises stocks, bonds, and other debt investments, returned 0.5 percent, compared with a 7.5 percent gain in 2012.
Omers finished implementing a new public markets portfolio in 2013 which includes a portfolio that places short and long positions on currencies, commodities, stocks and bonds. The new strategy is aimed at creating more stable investment returns in the long term.
“We have a high conviction that this public markets strategy is the right one for a prudent pension plan investor,” Chief Executive Officer Michael Nobrega said in the statement.
Omers’ private equity unit returned 24 percent last year and Oxford Properties, its real estate unit, rose 14 percent. Borealis Infrastructure returned 12 percent and Omers Strategic Investments, which oversees venture capital and Western Canadian energy assets, rallied 9.1 percent compared with a 10 percent decline in 2012.
“We now have a long-term strategy that balances portfolio risks to the drivers of capital market returns, namely growth and inflation,” Nobrega said in the statement.
To contact the reporter on this story: Katia Dmitrieva in Toronto at firstname.lastname@example.org