The Investment Management Corp. of Ontario’s investment portfolio lost 8.1% for 2022, as the value of its net investments fell to C$69.1 billion ($50.7 billion) from C$76.7 billion at the end of 2021. The loss, however, outperformed IMCO’s benchmark by 30 basis points.
The pension fund’s fixed income and public equities weighed down its portfolio the most, losing 19.2% and 13.5%, respectively, followed by global credit and real estate investments, which lost 7.7% and 0.3%, respectively.
The fixed-income losses were 10 bps below its benchmark’s return, while the public equity investments missed the benchmark by 160 bps. The biggest miss was by the fund’s real estate investments, whose benchmark returned 12%, compared with its 0.3% loss. Global credit was the only asset class in the red that outperformed its benchmark, which it beat by 510 bps.
Meanwhile, private equity was the top performing asset class, returning 12% and trouncing its benchmark, which lost 9.1% during the year. Global infrastructure returned 7.4% and also easily beat its benchmark, which lost 3.7% in 2022. The only other asset class reporting gains for the year was public market alternatives, which earned 1.9% but missed its benchmark’s return of 3.6%.
“2022 was a challenging year and we were certainly disappointed in these returns,” IMCO CIO Rossitsa Stoyanova said in a statement. “We remain focused on our strategy for navigating short-term turbulence by maintaining discipline in executing our long-term investment strategy, systematic rebalancing, and effective liquidity management to capitalize on investment opportunities arising from temporary dislocations.”
Stoyanova said that the pension fund continues to increase its private market exposure, “which was a huge returns driver for us in 2022,” adding that, “on the other hand, our absolute returns’ performance was driven mainly by losses in public equities and fixed income, as both public markets and bonds took an unprecedented hit.”
Stoyanova also said that “responsible investing and ESG integration will continue to play a growing role in our strategies.” She said IMCO believes companies that strategically manage material environmental, social and governance risks will outperform their peers in the coming years.
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Tags: annual return, Canada, IMCO, Investment Management Corporation of Ontario, Pension Fund, Private Equity, public equities, public market alternatives, Rossitsa Stoyanova