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Reflections with CEO/CIO of bcIMC, Doug Pearce

Doug Pearce

Doug Pearce, CEO/CIO, bcIMC

On August 27, 2013, The British Columbia Investment Management Corporation (bcIMC) issued a press release announcing the retirement of its CEO/CIO, Doug Pearce, after a 25-year tenure with the public investor. Mr. Pearce granted the Sovereign Wealth Fund Institute an interview outlining his role over the years and how he’s seen the asset management industry change since he began 37 years ago. The bcIMC is a major Canadian public investor – see rankings here.

The Sovereign Wealth Fund Institute asked Mr. Pearce how his views on asset management have evolved during the 25 years the bcIMC has ballooned from a C$ 15.9 billion fund to just over C$ 102 billion.

Mr. Pearce responded first with a correction. “Actually, that 15.9 number we’ve been using for the press isn’t quite right,” he said. “The number was closer to C$ 9 billion.” He then continued by detailing the fund’s conservative roots. “When we started in ’88 we were invested in Canadian bonds and the Canadian money market exclusively. Starting quite early, we worked on getting legislation to start allocating to equities and real estate. That began in 1989, and we implemented it in 1990.”

Another major change, he noted, was transitioning out of purely Canadian investments and developing a more global portfolio. Whereas the fund started at 100% Canadian investments, it has moved to 60% Canadian and 40% ex-Canada with a 50/50 split on the horizon.

Mr. Pearce sees a challenging investment environment ahead, noting that the “tailwinds of declining interest rates since 1981” have helped bcIMC best its benchmark. He sees the low return environment compounded with an inevitable rise in interest rates as “great possible headwinds.”

Another challenge Mr. Pearce sees isn’t directly linked to investments, per se, but policy and the general public’s opinion. He clarified by saying, “The general public doesn’t really understand the value of long-term capital. They get caught up in quarterly returns when we really should be looking at 10, 15, 20 year investment horizons [for public investors].” A number of the largest sovereign wealth funds report only on a 5, 10, and 20-year basis publicly.

He also mentioned special interest groups leading cries against the cost of defined benefit plans. He laments that there isn’t enough community outreach to explain that the investments these funds make in Canadian businesses directly helps the people so opposed to their dealings. “Some of the businesses we support, like TimberWest [a privately managed forest landowner], pay wages and support communities; when the employees retire, they’ll also have a pension benefit waiting for them.”[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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