AIMCo total fund return of 8.2 per cent for most recent fiscal year

CALGARY – Alberta Investment Management Corp., whose total fund return dropped during the most recent fiscal year, said Tuesday it wants more leeway on how much money it can borrow to make investments.

Alberta places limits how much leverage pension funds can take on, with the exception of real estate investments. That means returns at AIMCo, which manages about $70-billion on behalf of provincial public sector pension plans, tend to lag its peers, chief executive officer Leo de Bever told reporters.

He said AIMCo is talking to provincial regulators about giving the fund more “latitude.”

“It’s not a huge deal. I don’t want to go in there with cannons blazing. But it’s certainly a discussion we have,” de Bever said.

“We’re basically asking the regulator to decide: ‘If you want efficient financing of pension plans, are you willing to give me a bit more freedom than I have now to do the kinds of things that an organization like (the Ontario Teachers Pension Plan) can?'”

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The 2010-11 total fund return of 8.2 per cent fell from last year’s return of 12 per cent. AIMCo’s returns on pensions and endowment assets were 10.3 per cent, down from a year-earlier 17.8 per cent. Returns on $20 billion of short-term investments for Goverment of Alberta clients dropped from 3.2 per cent last year to 3.1 per cent in 2011.

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Total assets under management fell from $70.7 billion in 2010 to $68.8 billion this year.

In 2011, net contributions from government funds dropped 7.6 per cent, endowments dropped 0.57 per cent and pensions rose 0.9 per cent.

“Most of our challenges were in unlisted assets; valuations often lag when listed markets do well, as they have done recently. Restructuring costs for underperforming historical private equity assets detracted about 0.2 per cent,” AIMCo said in its annual report.

“Rapid growth in recent years to many unlisted categories gave rise to usual lags in return relative to listed benchmarks.”

While the results reflect largely above-average market returns, de Bever said the results were not as strong as he had hoped.

“We sort of met market return, but we incurred some costs to deal with restructuring, particularly of private equity portfolios,” he said.

AIMCo is one of 13 Canadian financial players – together dubbed Maple Group – taking a run at the TMX Group, owner of the Toronto Stock Exchange. The TMX board is reviewing the Maple Group’s bid after a friendly merger deal with the London Stock Exchange fell apart last week.

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“We’re still in discussions with regulators and various other officials to get this thing approved,” de Bever said.

“Part of the rationale for the whole thing was that an exchange that would have a lot more traffic going through it would be inherently better positioned to serve all interests better.”

In January, AIMCo, announced it would team up with Australia New Zealand Forest Fund to acquire 2,500 square kilometres of forest and farm land across six Australian states. AIMCo is shouldering 80 per cent of the $408.7 million pricetag.

The deal was meant to capitalize on growing Asian demand for a variety of resources.

In recent years, AIMCo has delved into the resource space by buying stakes in grain handler Viterra Inc. (TSX:VIT) and oilfield services firm Precision Drilling Corp. (TSX:PD).

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