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Alberta Investment Management Corp. reported a 3.4-per-cent loss last year as falling values for publicly traded stocks and bonds outweighed strong returns from investments in infrastructure and renewable resources.

The investment losses reduced AIMCo’s total client assets by about $10-billion from the previous year, to $158-billion. AIMCo had the strongest year in its history in 2021, posting a 14.7-per-cent return that made it one of the top-performing pension investors in Canada that year.

The plan’s annualized return over four years is 5.9 per cent, and it has returned 7.2 per cent over 10 years, which beat the benchmarks against which AIMCo measured itself in both cases.

AIMCo’s 2022 returns were still 1.8-per-cent higher than its internal benchmark in spite of the loss, demonstrating how difficult it was to be an investor last year as high inflation and rapid interest rate increases shook global markets. Like many of its peers, AIMCo suffered from a rare simultaneous dive in public equities and fixed income markets, which make up a large share of the plan’s assets.

The public equities portfolio at AIMCo, which owns shares traded on stock exchanges, lost 10 per cent last year, while private equity had a modest 0.5-per-cent return. Money market and fixed-income investments, which include bonds, lost 8.1 per cent. All three portfolios did better than the benchmarks AIMCo uses as a yardstick, which were a loss of 10.6 per cent for public equities, a loss of 9.1 per cent for fixed income and a loss of 3.7 per cent for private equity.

“It was certainly a difficult year,” said Marlene Puffer, the chief investment officer who joined AIMCo in January, in an interview.

Other large pension plans also wrestled with tough conditions in markets last year. The Caisse de dépôt et placement du Québec lost 5.6 per cent in 2022 and its chief executive officer Charles Emond predicted there is more volatility ahead. Ontario Teachers’ Pension Plan reported a 4-per-cent return last year, and the Ontario Municipal Employees Retirement System gained 4.2 per cent. But the varying returns are driven partly by differences in the mix of assets each plan holds for its members and are hard to compare directly.

Looking ahead to the rest of this year, Ms. Puffer said “it is definitely an environment with a lot of uncertainty but we’re seeing opportunities across the board.”

AIMCo invests more than 30 pools of money on behalf of 17 pension, endowment and government funds in Alberta, and its global approach to investing is set by those clients, which choose the mix of assets they want. Over the past two years, AIMCo has overhauled its leadership, bringing in Evan Siddall as CEO, Ms. Puffer as CIO and David Scudellari as head of international investment.

Because AIMCo’s public securities account for a large share of AIMCo’s overall investing portfolio, with a combined market value of $79-billion, their weak performance in 2022 overshadowed strong returns that AIMCo earned from some private assets.

AIMCo’s $17.4-billion infrastructure portfolio gained 16.8 per cent for the year, beating its benchmark by 8.5 percentage points. And its renewable resources portfolio, which is comparatively small at $3-billion and includes timberland and agricultural investments, increased by 25.7 per cent, which was 18 percentage points above its benchmark.

Some of those investments benefitted from exposure to higher commodity prices, Ms. Puffer said. But they also performed well because they are “less linked to GDP than other asset classes are,” she said. “So as economic growth has slowed, it hasn’t impacted those areas as much.”

The plan’s real estate portfolio, which has struggled with low returns over the past four years, was also a bright spot with a 4.6-per-cent gain that outpaced its benchmark of 2.1 per cent.

AIMCo has yet to release a detailed breakdown of performance for each of its portfolios, which will be included in an annual report to be released in June.

In a news release, Mr. Sidall, the CEO, said AIMCo “will enhance our commitment to private asset classes,” which are proving popular with clients.

One of the key opportunities for investments is in credit, and private debt and loans in particular, as yield from that lending are typically tied to interest rates and have risen accordingly. And AIMCo has just secured access to a new pipeline to generate those loans: When it hired Mr. Scudellari from its larger rival the Public Sector Pension Investment Board in January, the two pension fund managers struck an agreement to jointly fund private loans to companies.

The first deal under the agreement was just completed, Ms. Puffer said, though details have not been disclosed.

“It’s a beautiful asset class at this point in time, provided that you invest in it prudently in high-quality areas of that market,” she said.

The fall in public equity and bond values, however, has meant that many clients are bumping up against their target allocation levels for private assets. And that means there is less money available to increase allocations to those areas.

“We are not in a situation of having to reduce any of those allocations but we are more limited than usual in terms of the availability of that dry powder,” Ms. Puffer said.