Ontario $57 Billion Fund Loads Up on Bonds Amid Market Turmoil

  • Omers increases fixed-income holdings sixfold; raises cash
  • `Market volatility we see today is unprecedented,' says CEO

An Ontario pension fund that manages C$77 billion ($57 billion) is seeing so much volatility in global financial markets that it increased fixed-income holdings sixfold.

The Ontario Municipal Employees Retirement System fund boosted fixed-income assets to C$25.4 billion at the end of 2015 from C$4.2 billion in 2014, according to a presentation in Toronto Friday. Over the same time, the fund cut its inflation-linked bonds to C$6.4 billion from C$23.4 billion last year, shortening the duration of its book to eight years from 16 years. Omers also shored up cash, almost doubling its holdings to C$20.5 billion, waiting for the right opportunity to buy assets.

"The volatility that we see in the marketplace today is unprecedented," Chief Executive Officer Michael Latimer said at the presentation to media.

Omers joins other investors including Fairfax Financial Holdings Ltd. taking steps to protect capital as markets roiled last year and interest rates hit record lows.

The pension fund, which manages money for 461,000 Ontarians in the public sector, reported Friday that it returned 6.7 percent in 2015, a decline from 10 percent in 2014 as a stock market rout and lagging energy bets cut performance.

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