Canadian pension plan heavyweight OMERS recorded a return of ten per cent last year thanks to the strong performance of its private equity arm.
OMERS private equity returned 19.2 per cent in 2012, helping to outweigh a minus 10.1 per cent return from the pension fund’s Alberta-focused oil and gas assets owned by its Strategic Investments department.
The pension plan’s overall private market portfolio had a 13.8 per cent investment return across the year, completed by a 16.9 per cent return from Oxford Properties and 12.7 per cent from Borealis Infrastructure.
OMERS Capital Markets, which manages the public market portfolio including public equities, fixed income and debt investments, generated a 7.5 per cent return.
The institutional investor, which is celebrating its 50th year, saw its net assets rise by $5.7bn last year to $60.8bn, and has added more than $17bn to that total since the 2008 global credit crisis.
OMERS president and CEO Michael Nobrega said, “OMERS had a strong year in 2012. The $5.7bn increase in our net assets demonstrates the strength and robustness of OMERS’ business model with the capacity to generate growing investment cash yields and more than ample liquidity to withstand market shocks under stressed financial conditions.”
The pension fund said a key driver of its performance was increasing its private market investments to 40 per cent of its portfolio last year, up from 18 per cent before it introduced a new strategic plan in 2003.
It said its long-term goal was to achieve a mix of 53 per cent public and 47 per cent private market investments.
OMERS said its results had also been boosted by a priority of increasing direct and actively-managed investments rather than relying on external fund managers.
The LP ended last year with 88 per cent of the portfolio managed in-house compared to 74 per cent five years ago.
It added that its long-term goal in that area was to manage 95 per cent of its portfolio internally.
Nobrega said, “As a pension plan we are focused on our ability to pay pensions to our members over the long term in spite of factors such as the increasing average age of plan members, low interest rates and volatility in the public equity markets.
“Our strategy is continuing to evolve to provide us with a fortress-like balance sheet that enables the growth of our assets while maintaining the necessary liquidity to withstand market disruptions.”
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