Alberta Investment Management Corp. (AIMCo) is opening its first Asian office, but the Edmonton-based fund manager says it will steer well clear of China to focus instead on markets with less geopolitical risk.
The official opening Tuesday of AIMCo’s new Singapore office marks the first foray into the Asia-Pacific region for what is one of Canada’s largest institutional investors, with $158 billion of assets under management as of 2022.
CEO Evan Siddall said AIMCo, which invests on behalf of 17 pension, endowment and government fund clients in Alberta and manages more than 30 pools of capital, has up until recently been missing out on some of the investment opportunities that exist within the large, fast-growing economies of the Asian continent.
“We really are very under-represented in Asia. You know, we have less (investment) in Asia than we do in Alberta,” Siddall said in an interview.
“I don’t want to look in the rear-view mirror, but we’ve missed opportunities for sure.”
Siddall said the Singapore office opening is part of a larger push by AIMCo towards greater diversification globally. The fund manager — which invests in public and private markets, real estate and infrastructure — already has offices in Calgary, Toronto, London and Luxembourg, in addition to Edmonton, and will be opening a New York City office soon.
But Siddall said Asia is important, as many countries there have economic growth that’s outstripping that of the U.S and Europe.
“In many of them, we just don’t have any experience. But on a risk-adjusted basis, we think we can and we should do more (in Asia),” he said.
“We have no rule of thumb, we have no target … but it’s more than we’re doing now, and it’s a fair bit more.”
AIMCo is lagging behind many other Canadian institutional investors when it comes to establishing a foothold in Asia. A report by the Asia Pacific Foundation of Canada found that between 2003 and 2017, Canadian pension funds invested $25 billion in the region.
The Ontario Teachers’ Pension Plan Board has had an on-the-ground presence on the continent for over a decade, and currently has offices in Singapore as well as Hong Kong and Mumbai. The Canada Pension Plan Investment Board also has offices in Mumbai and Hong Kong.
However, Canadian pension funds have also been under scrutiny recently for their exposure to China, particularly given questions around the health of that country’s economy as well as its ongoing tensions with the West.
According to a Reuters report earlier this month, the Canada Pension Plan Investment Board has laid off at least five employees at its Hong Kong office as it steps back from deals in China.
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Last spring, representatives of the Ontario Teachers’ Pension Plan and the British Columbia Investment Management Corporation told a parliamentary committee studying Canada-China relations that they had paused new direct investment in China because of the increasing risks associated with that country.
Siddall said geopolitics is a significant risk factor in investing, and is the reason AIMCo has chosen to focus on the comparatively safe Singapore market rather than setting its sights on the world’s second-largest economy.
“We’re not rushing into China. We basically have almost nothing (invested) in China and really only in passive instruments,” Siddall said.
“There are some countries, where the rule of law and corruption are concerns, that we would rather just avoid, frankly.”
After reporting a loss of 3.4 per cent for 2022, AIMCo says its performance has improved significantly in 2023. The fund manager said for the six-month period ending June 30, its net investment return was 4.5 per cent.
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