OMERS Chief Executive Officer Blake Hutcheson told The Globe that investment returns can still be found when the broader economy is hobbled.Supplied
The Ontario Municipal Employees Retirement System, which manages a pension investment fund for 1,000 employers, is not fazed by the uncertain economic backdrop and remains optimistic about delivering solid returns, its chief executive officer and chief financial officer said in an interview Wednesday.
Buoyed by a 3.1-per-cent net investment return in the first half of the year, the two OMERS leaders said they are not overly concerned about mixed economic signals that include a souring Chinese economy, disinflation in the United States and Canada, and a chaotic commercial real estate market. Instead, they expressed confidence in the fund’s prospects for finding pockets that can deliver good returns.
The threat of economic pain “is so nation, and even market, specific,” CEO Blake Hutcheson said, adding that investment returns can still be found even when the broader economy is hobbled. “Markets are very different from the economy.”
OMERS is particularly optimistic about private credit, which resembles traditional bank lending and makes up 18 per cent of its total portfolio. In the aftermath of the U.S. regional banking crisis this spring, many lenders have had to pull back on credit because the deposits they relied on to fund such loans have been drying up, chief financial and strategy officer Jonathan Simmons added.
“It’s the best opportunity we’ve seen in 20 or 30 years in that space,” he said.
Over the six months ended June 30, the fund’s largest gain came from public equities, with an exposure to major companies in the technology, communication, financials and consumer discretionary sectors delivering a 5.9-per-cent return. Private credit was the second-best performer, delivering a 3-per-cent return.
OMERS manages $127-billion worth of assets and has delivered annual net returns of 10.5 per cent over the past three years and 7.8 per cent over the past 10 years.