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AIMCo CEO Evan Siddall in Edmonton on Oct. 13, 2021.Amber Bracken/Amber Bracken

Alberta Investment Management Corp. said it posted a 14.7-per-cent return for 2021, one of the top numbers for large Canadian pension funds.

The results mark a turnaround for AIMCo from 2020, when a $2.1-billion loss on derivatives in the early days of COVID-19 hobbled returns.

Heading into the pandemic, AIMCo’s public-equities portfolio included a strategy that bet against sharp swings in stock prices. That resulted in significant losses when COVID roiled markets.

AIMCo unwound the strategy in April, 2020, but the fund manager posted just a 2.5-per-cent return for the year. Since the blow-up, the fund manager has appointed a new chief executive officer, chairman and chief investment officer.

AIMCo called 2021 the strongest year in its history. The return on the benchmark investment portfolio it compares itself with was 8.0 per cent. Total assets at the end of the 2021 were $168.3-billion.

The annualized total fund returns over four and 10 years are 7.4 per cent and 8.6 per cent, respectively. All returns are after investment costs.

AIMCo invests globally on behalf of 32 pension, endowment and government funds in Alberta. Some member funds have been unhappy for quite some time: the Local Authorities Pension Plan, or LAPP, had complained that AIMCo underperformed its expectations for years, even before the derivatives mess.

The latest results, however, have LAPP pleased, according to Chris Brown, CEO of LAPP Corp. He said LAPP finished the year with a funding ratio of 124 per cent, or $1.24 in assets for every dollar it estimates it will owe pensioners.

“While long-term performance of our pension fund is our primary focus, as AIMCo’s largest client we have the most to gain from this banner year,” he said. “The strongest year in AIMCo’s history is also the strongest year in LAPP’s history, which is an indicator of how closely our organizations are tied and how important it is that we are always aligned in goals and objectives.”

AIMCo said each of its investment departments exceeded its benchmark.

Public equities – shares of companies traded on stock exchanges – returned 23.4 per cent, above an 18.1-per-cent benchmark. They now represent about 38 per cent of AIMCo’s portfolio.

Money-market and fixed-income investments – AIMCo’s second largest asset class, at 35 per cent of the portfolio – produced a 1.1-per-cent loss, better than a benchmark loss of 2.2 per cent.

AIMCo reported large gains in several departments that invest in private assets such as real estate, infrastructure and private companies.

AIMCo said it had a 65.9-per-cent return in its $8.2-billion private-equity department, well above its 8.8-per-cent benchmark.

Some of the deals in the private-equity department in 2021 included an initial public offering of pool-equipment seller Hayward Holdings; the sale of a stake in insurance-industry technology specialist Davies Group Ltd.; and the sale, with the Ontario Municipal Employees Retirement System, of a majority stake in Environmental Resources Management.

AIMCo reported a 14.5-per-cent return in its $18.3-billion real estate department and a 19-per-cent return in its $10.6-billion infrastructure department. Those returns topped their benchmarks by 6.8 percentage points and 12.2 percentage points, respectively.

Each of the “Maple Eight” big Canadian public pension plans serve a different demographic of benefit recipients, with a different mix of liabilities. So, their portfolios – and the returns they should expect – differ.

That said, AIMCo’s 14.7-per-cent return ranks as the second-highest figure among the five plans that report returns on a calendar-year basis.

OMERS, with $121-billion in assets, has reported the highest return at 15.7 per cent. The Caisse de dépôt et placement du Québec, with $419.8-billion in assets, posted a 13.5-per-cent return for 2021. The Ontario Teachers’ Pension Plan, with $221-billion in assets, reported an 11.1-per-cent return for 2021. The Healthcare of Ontario Pension Plan (HOOPP), with $114.2-billion in assets, recorded an 11.28-per-cent return on investments for 2021.

Editor’s note: This story has been updated to include reaction from the Local Authorities Pension Plan.

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