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OMERS Net Assets Clear $60 Billion in 2012 with 10% Investment Return

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The press release states, “OMERS, one of Canada’s largest pension plans, today announced its 2012 financial results. OMERS net assets grew to $60.8 billion, rising by $5.7 billion in 2012 and by over $17 billion since the 2008 global credit crisis. Now in its 50th year, OMERS is an active, diversified investor, pension innovator, and an engine of economic growth and employment in Ontario and Canada.

OMERS total Plan investment return of 10% was driven by strong performance in its private market portfolio and solid public market performance in line with expectations and current market conditions.

“OMERS had a strong year in 2012. The $5.7 billion 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,” said Michael Nobrega, OMERS President and CEO.

OMERS private market portfolio had a 13.8% investment return – with returns of 19.2% (OMERS Private Equity), 16.9% (Oxford Properties), 12.7% (Borealis Infrastructure) and negative 10.1% (OMERS Strategic Investments). OMERS Strategic Investments, which represents less than two and a half per cent of OMERS net investments, has its principal assets in Alberta’s oil and gas sector. The year-end valuation of these assets was negatively impacted as oil and gas prices fell to their lowest levels in five years.

OMERS Capital Markets, which manages the public market portfolio including public equities, fixed income and debt investments, generated a 7.5% return.

Progress against Strategic Goals
In 2003 OMERS adopted its current strategic plan including an investment strategy designed to provide balance between public and private market assets and to generate long-term, stable cash flows while maintaining liquidity. The strategy has evolved to incorporate avenues for the growth of Plan assets and a “direct-drive” ownership model providing OMERS with greater control of its investments at a lower cost.

“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,” said Mr. Nobrega.

One of the key drivers of the strategic plan is OMERS asset mix. OMERS ended the year with 60% of its assets in the public markets and 40% in private market assets, compared with 82% public and 18% private before the new strategy was implemented nine years ago. Our long-term goal is to achieve a mix of approximately 53% public and 47% private market investments.

A second key driver is the strategic priority to directly own and actively manage investments rather than retaining external fund managers. OMERS ended the year with 88% of the portfolio now managed in-house, up from 74% five years ago. The long-term goal is to reach 95% of the portfolio managed internally.”

Read more: OMERS Press Release

Crown Property Bureau Moves Assets to Thailand King Under 2017 Law

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In December 2016, Crown Prince Maha Vajiralongkorn became King of Thailand, succeeding his father King Bhumibol Adulyadej who passed away in October 2016. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Three Successful Traits in Asset Management CEOs

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by Michael Maduell

In my frequent and vast interactions with chief executives of small-to-large asset management firms, I’ve witnessed a number of traits that successful firms – meaning growing and retaining assets under management plus getting real respect in the industry – are able to properly execute. Besides generating amazing returns and matching the right solutions for the asset owner clients, CEOs need to be advancing their firms. Of course, quality client service should remain front of mind for fund management firms. In this short piece, I will focus on three traits that successful fund managers tend to possess.

1. Abundant Charisma from Founders
What is memorable and what will stick in one’s mind? A cadre of asset managers possess charismatic chief executives. BlackRock’s Larry Fink, DoubleLine’s Gundlach and Rajiv Jain of GQG Partners are some prime examples that come to mind. DoubleLine is a relatively new player compared to BlackRock and already amassed over US$ 100 billion in assets. Being a founder of the fund management company also helps, as CEO hires (often bringing a book-of-business contacts) may tend to look elsewhere unless generously compensated.

Having an effective cheerleader CEO is essential in nurturing and growing a sustainable franchise in a monochromatic industry of imitators. Too often, CEOs of some asset management firms are pure “salespeople” – too pushy or fake, or a highly-bright number-cruncher with low or nil emotional intelligence.

2. Not Drinking Too Much of One’s Own Kool-Aid
“We are a data-driven, technology, ESG-focused, smart-beta, solutions-led provider of services.” Hey, 2018 did I get that right?

Yes, your stuff does not stink. Like a broken clock, many CEOs rely on the flavor of the year or grappling a playbook, beating the idea over the heads of pensions and sovereign fund clients and prospects. In the long-run – meaning maintaining assets over a lengthy period of time – I find it’s better to be more objective when discussing potential strategies. I’m talking about a healthy dose of informative marketing. However, being overly-transparent or even talking yourself out of the strategy is not what I am directly advocating. It is important to be realistic about the strategy or thematic idea, as the attractiveness of these concepts shift over time.

3. Stirring up Controversy – Strategically
Shaking the tree and stirring the pot – this trait can surely backfire if not properly executed. Being the brightest crayon in the box can work. Even virtue signaling – latching onto a social current – can work in some instances, but CEOs that can deliver impactful counter-culture statements that shock the conscience tend to draw attention – and capital. This might not be the best example; however, upon the ascendancy of Abraaj Group, the firm’s founder, Arif Naqvi, often commented to not describe countries like China, India, etc. as emerging markets but as global growth markets – then creating a comparison to Wall Street and its risks. Abraaj was able to raise a ton of capital, before its downfall stemming from early 2018.

Boards need to diligently examine the CEOs they select. Does the firm want to grow or hold the line for the planned dividend? My belief is that if you are not growing, you are decaying, as the world moves faster and faster.

The views in this article are expressed by Michael Maduell.
Michael Maduell is President of SWFI.
www.swfinstitute.org

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SWFI First Read, June 16, 2018

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State Street Names Maria Cantillon for Head of Sectors Solutions, EMEA

State Street named Maria Cantillon as head of sectors solutions for Europe, Middle East and Africa (EMEA). She will report to Liz Nolan, CEO of EMEA at State Street. Cantillon replaces Joerg Ambrosius who moved to another role at the firm. Previously, Cantillon was Global Head of Alternative Asset Manager Solutions at State Street.

Theranos Founder Elizabeth Holmes and Ramesh Balwani Face Federal Charges

Elizabeth Holmes, the founder of blood-testing company Theranos, is facing federal fraud charges. Also facing charges is Ramesh “Sunny” Balwani. Both individuals were indicted on charges that they engaged in schemes to defraud investors, doctors and patients, according to the U.S. Department of Justice (DOJ). They both face two counts of conspiracy to commit wire fraud and nine counts of wire fraud. These criminal charges were levied after Holmes had settled civil fraud charges initiated by the U.S. Securities and Exchange Commission (SEC).

Russian Investors Chopped Treasury Holdings in April

Revealed in a report from the U.S. Treasury, Russian investors dropped U.S. Treasury holdings in March 2018 from US$ 96.1 billion to US$ 48.7 billion in April 2018. Before March 2018, U.S. Treasury holdings by Russian investors remained steady in the US$ 100 billion range.

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