Alberta Investment Management Corporation was created for Alberta in 2008. Its objective then, and to this day is to provide the Province’s pension plans, endowments, government accounts and specialty funds with an institutional investment platform that could compete among the very best – for investments, for investment returns, and for proven knowledge and expertise. To achieve this, the Province adopted a governance model that was globally recognized for its ability to achieve sustainable performance, while reducing costs to generate maximum value. Eight years in and going strong, it is evident that the Province’s vision of AIMCo is being realized.
As a founding member of the AIMCo Board of Directors, I have enjoyed the unique privilege, alongside my fellow Directors, to help shape the organization on its path toward becoming the high calibre, world-class investment management organization it is today.
2015 was a year of significant transition. AIMCo welcomed its new CEO, the province elected a new Government, and the Alberta economy faced its most daunting challenges in recent memory; spurred by a precipitous fall in the price of oil. It is this environment where an organization like AIMCo, one that is focused on long-term performance and has the ability to quickly and decisively move when investment opportunities arise, can realize maximum value for its clients.
In 2015, AIMCo’s assets under management increased to $90.2 billion. On a total fund basis, AIMCo earned a return of 9.1%, or $7.5 billion of investment income, net of all costs and fees. While our assets under management represent all Albertans, the majority are contributed by pension plans, and we are particularly mindful of the trust that pension beneficiaries have placed in us to ensure their retirement needs will be met.
Of the many accomplishments achieved, we are particularly proud of the meaningful relationship we have developed with government leaders over the years. Built on a commitment to develop a robust collaborative relationship, and supported by open, transparent communication, we deeply value the spirit of our relationship. AIMCo set out to be a leader among Alberta’s Agencies, Boards and Commissions, and I believe our professionalism and the success that our team has demonstrated has earned the respect of the Province, allowing us to continue to operate autonomously, and in the best interest of our clients.
The Canadian pension plan model, which AIMCo embraces, represents a commitment to building highly competitive, multi-asset management capabilities that necessitates attracting and developing deep in-house talent. Our ability to do so reduces overall costs for our clients, by keeping outsourced investment management to a minimum, thereby maximizing net risk-adjusted investment returns.
We were pleased to welcome two new Directors to the Board in 2015: Helen Kearns, President and Chief Executive Officer of Bell Kearns & Associates Ltd., and Tom Woods, former Vice-Chairman of CIBC. Their experience and acumen will serve the board well.
Finally, on behalf of the Board, we would like to congratulate Kevin Uebelein on a successful first year as CEO, and we applaud the entire AIMCo team for their poise and perseverance through difficult market conditions to earn the strong returns it achieved on behalf of its clients.
On behalf of the talented team of professionals at AIMCo, it gives me great pleasure to share an update on our annual progress against our long-term performance objectives. For the calendar year ending 2015, the team at AIMCo combined to generate significant absolute and value add returns for AIMCo’s clients.
Last year, AIMCo delivered more than $1.5 billion in value add for our clients. I am particularly proud of our team’s accomplishments against the far from placid investment waters of the year just behind us. At the mid-point of 2015, the investment environment required our investment managers to balance caution with an opportunistic eye for investment upside. In August, we experienced a full-blown market correction and the associated increase in market volatility continued through the remaining months. And yet despite those challenges, AIMCo finished the year very strong.
Fortunately for AIMCo’s clients, their investment horizon far exceeds that of even the longest market downturns. From an investment management perspective, our focus on the long-term allows us to weather poor market conditions, even years of under-performance. However, it also puts into context the fact that we are ultimately not measured against how well we did last year – or any year for that matter – but rather how well we do over a much longer time frame in meeting our clients’ objectives. It is a humbling reality that permeates our culture at AIMCo, and keeps us driven to continue to perform and improve.
Recognizing that the beta return provided by investment markets is beyond our control, we focus on those items we can manage: delivering alpha value add, and at a reasonable cost. In 2015, AIMCo was again recognized as a relatively low-cost provider of investment management services by the independent benchmarking firm CEM. This outcome is the result of a strict budgeting process and the success that AIMCo has had in attracting top investment talent to the organization. This continues to allow us to take responsibility internally for many investment strategies that otherwise would have been managed externally, and at significantly greater expense.
Overarching all of this effort is our commitment to our clients and their satisfaction with AIMCo as their investment manager. We are working to build a constant, multi-faceted dialogue with our clients, creating optimal transparency to them regarding what we are doing and affording us with the best possible understanding of their needs and opinions. This is used to inform our strategy and prioritize our initiatives each year. I am confident that we are becoming better aligned on matters of greatest impact and I look forward to earning even greater trust in the years to come.
I wish to extend my gratitude, on behalf of the entire AIMCo team, to the many individuals who share their time and wisdom in ensuring our client Boards and Investment Committees are well-informed to meet the long-term needs of their constituents. I also want to thank the Province of Alberta for putting its trust in our team, and to all who supported our efforts in 2015.
Finally, I would personally like to thank AIMCo’s clients, our Board of Directors and the talented team of AIMCo professionals for their commitment to serving the needs of all Albertans. During these times of intense challenge for the province, it is especially gratifying to be able to deliver considerable over-performance against our benchmark returns.
Chief Executive Officer