Ontario Municipal Employees Retirement System, Toronto, returned 6.5% on its investments in 2013, vs. a 10% return a year earlier.
Investment income for 2013 totaled C$4 billion (US$3.6 billion), helping raise its overall assets to C$65.1 billion as of Dec. 31, up 7.1% from a year earlier, according to a news release. The pension fund's five-year rate of return was an annualized 8.4%, and its annualized 10-year return was 7.6%, both as of Dec. 31.
OMERS' funded status in 2013 was 88%, up three percentage points from the previous year.
The pension fund's public markets investments, comprising 57.3% of assets, returned 0.5% in 2013. Public market equity returns of more than 20% were offset by a -9.1% return for inflation-linked bonds and a -5.6% return for commodities, Neil Hrab, OMERS spokesman, said in an e-mail.
OMERS Capital Markets, which oversees the pension fund's public market investments, last year completed the transition to a diversified risk-balanced portfolio.
“It is difficult to pick a perfect time to undertake such a major portfolio restructuring, but the timing of implementation is not critical to earning long-term returns from the beta portfolio. A balanced beta portfolio is designed to outperform a less diversified one over time, but market shocks (such as the sudden and unexpected interest rate spike in 2013) will cause underperformance until markets return to underlying economic fundamentals that drive investment returns,” Michael Nobrega, president and CEO, said in the release.
Its public markets investments, which had been 60% equity and 40% fixed income, returned 7.5% in 2012.
OMERS' four private market investment subsidiaries returned a cumulative 15.5% for the latest year. OMERS Private Equity, with 10.8% of assets, returned 23.6% vs. 19.2% in 2012; Oxford Properties, at 13.9% of assets, returned 14.3% in 2013 vs. 16.9%; Borealis Infrastructure, at 14.2% of assets, returned 12.4% vs. 12.7%; and OMERS Strategic Investments, at 3.8% of assets, returned 9.1% vs. a loss of 10.1% in 2012.