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Investment Management Corp. of Ontario has found a chief investment officer to kick-start its asset management program as it prepares to court new clients.

For nearly a year, the Toronto-based investment manager for public sector clients in the province, known as IMCO, has been integrating $60-billion worth of assets from the Workplace Safety and Insurance Board (WSIB) and the Ontario Pension Board (OPB).

Now, it is developing its strategy to attract even more institutions onto its platform – a plan that hinges on an ability to develop individualized portfolio approaches and offer specialty investments at lower fees.

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To take action on this plan, IMCO is bringing in pension management veteran Jean Michel as CIO. Mr. Michel was most recently executive vice-president of depositors and total portfolio at la Caisse de dépôt et placement du Québec. He also was president of Air Canada Pension Investments, overseeing Air Canada’s 14 pension plans during the years they were reorganized and swung from a solvency deficiency to a surplus position. He starts in the role in early July.

Bert Clark, CEO of IMCO, said he was drawn to Mr. Michel’s experience in portfolio construction, which involves an analysis of a client’s liabilities and needs and how each investment made for them will contribute to their overall investment goals.

“Almost every investor will agree that that’s the most important thing you do is decide what you’re going to invest in. And yet if you look at the asset management industry, the time that’s spent on portfolio allocation pales in comparison of the amount of time that’s spent on outperformance in individual asset classes,” Mr. Clark said.

Mr. Michel will also build up more internal investment expertise at IMCO so that clients’ money can be directly put to work in asset classes such as private equity, infrastructure or real estate. This is already a significant departure for the two current clients, which outsourced the majority of their investments.

Because IMCO was not beholden to any legacy investment process, IT or other client-management systems, the fund has been building many of these functions from scratch, including hiring chief risk officer Saskia Goedhart from an Australian financial company earlier this year.

While being able to adopt modern systems has had advantages, Mr. Clark said getting IMCO into a position to add new clients – an initiative scheduled to start in 2019 − has been a bigger and longer project than anticipated.

Mr. Clark also said he knows he is building a strategy for direct investing at a moment when finding assets to buy is an immense challenge. Twenty years ago, an institutional investor could put money into a private market fund in real estate, infrastructure or private equity and typically still enjoy the benefit of an illiquidity premium on their returns, even after paying hefty management fees. These days, even eliminating the external managers is not a recipe for success as more global institutional investors with fat wallets compete for large assets like toll roads, bridges and office space.

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Still, Mr. Clark said there will always be a role for private assets in a well-balanced approach to investing, and that it is still possible to access quality opportunities by developing specialties. In infrastructure, that might include a building project with a large, expensive construction component.

The Ontario government established IMCO in 2016 to improve the management of public sector funds, but it made participation voluntary so that IMCO would have to attract clients, separating it from other provincially created efforts such as Alberta Investment Management Corp.

“It’s daunting at some level, but I actually think it’s a very good thing for an organization starting out to have the requirement that they’ve got to win clients, because it forces us to build an organization that is good enough for someone to actually choose to join it,” Mr. Clark said.

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