A tactical decision to shift investments into global stock markets paid off last year for British Columbia Investment Management Corp., which earned a 14.2-per-cent return for the year and boosted its total assets to $124-billion.
BCIMC reported it moved more assets into global equities during the fiscal year ended March 31, 2015, while reducing its weighting in fixed income holdings and mortgages, responding to volatility in Canadian stock markets as oil prices declined.
The fund ended the fiscal year with 49.5 per cent of its assets invested in public stock markets, up from 47.6 per cent a year earlier. BCIMC had 21.5 per cent of its holdings in fixed-income securities such as bonds, down slightly from 22 per cent last year, while 14.6 per cent of the portfolio is in real estate, a decline from 17.4 per cent at the end of fiscal 2014.
The fund said its Canadian public equity holdings earned a 7.5-per-cent return last year, while global public equities earned a far higher 23 per cent and emerging markets equities posted 21.4-per-cent gains, illustrating the value of shifting out of Canada's volatile stock market.
Although the fund adjusted its weightings last year, chief executive officer Gordon Fyfe said it continues to have a long-term investment strategy to ensure member funds are able to deliver pensions to their members.
"Maintaining our discipline, while focusing on due diligence and diversification allows BCIMC to manage market risks so our investments can provide stable cash flows and will appreciate in value over time," he said in a statement.
BCIMC said investing in passive benchmarks last year would have earned a 12.6-per-cent return, so its active investment strategy added $1.4-billion in additional returns. Over the past 10 years, BCIMC earned an average 8.1-per-cent annualized return, exceeding its benchmark of 7.3 per cent.
BCIMC published its annual report Thursday, showing its executive compensation payments for the past year. Mr. Fyfe, who joined the fund last July, earned $2.2-million in total compensation for the portion of the year he worked, while Lincoln Webb, senior vice-president of private markets, earned $1.27-million in fiscal 2015.
BCIMC oversees investments for B.C. public sector pension plans as well as other government funds. It is Canada's fourth-largest pension fund manager behind the Canada Pension Plan Investment Board, the Caisse de dépôt et placement du Québec and the Ontario Teachers' Pension Plan.