The Ontario Municipal Employees Retirement System (OMERS) is one of those big Canadian pension funds that tend to be on the cutting edge of institutional investment (see also AIMCo, CPPIB, OTPP and a few others). OMERS was one of the first pension funds that I know of to seed captive, external asset managers (see Borealis and Oxford Properties) and attempt to take on third party capital (see OIM and GSIA). So I generally keep a close eye on this fund’s strategy, as it offers some useful insights as to where pension investment policies may be moving. It was thus excited to see the fund’s latest annual report, which included a “Strategic Plan” for the years ahead. Here are some of the more interesting bits:
Private Assets: “Our investment strategy over the long term is to maintain our asset mix exposure to public market investments, such as public equities and interest bearing investments, at approximately 53 per cent of the Plan’s net investment assets with the remaining 47 per cent representing exposure to private market investments, such as private equity, infrastructure and real estate.”
Directed investing: “We are making significant progress in actively managing an increasing proportion of OMERS investments internally to enhance returns and reduce investment costs. The principal drivers are increased direct drive management of foreign publicly traded equities and private equity investments. Our long-term goal is to have 90 per cent of total Fund assets directly managed by 2015. This is expected to result in net savings of over $275 million over the next four years.”
Third Party Capital: “Accessing domestic capital to build a larger capital base that will enable us to pursue attractive investments continues to be a key priority. OMERS Investment Management (OIM) was established in 2009 with the principal objective of raising domestic capital from other pension plans, and other eligible clients...OMERS Strategic Investments (OSI) is leading our efforts to form a Global Strategic Investment Alliance (GSIA) to pursue large investments attractive to both OAC and like-minded investors in the United States, Europe, Asia and the Middle East. These efforts have resulted in considerable interest from many prospective partners, including foreign pension plans and superannuation funds. OMERS is currently engaged in a mutual due diligence process with several of these organizations. We expect that a first close of the GSIA will occur in 2012.”
Geographic Footprint: “We are in the process of creating a global investment footprint by (i) establishing a network of offices in major financial centers, (ii) building awareness of the OMERS Worldwide brand via a pro-active media strategy, participation in leading business conferences and building relationships with business and government leaders and (iii) creating awareness about our GSIA initiative. A new and expanded New York office with representatives of all the Investment Entities was opened in 2011. We launched OMERS Ventures in 2011 with a mandate of making venture capital investments in response to the pent up demand for new sources of venture capital in Canada.”
In sum, OMERS is looking to invest your and their money, on a direct basis, in private assets, around the world. Is that the future of pension investing? It depends on how well they do in the years ahead. It could be...
