Fiscal 2026 CEO/CIO Letter

Gordon J. Fyfe
Chief Executive Officer/Chief Investment Officer

This year was bookended by volatility. Fiscal 2026 began with the United States’ imposition of broad tariffs in April, unsettling global markets and clouding the growth outlook. The shock moderated, and markets recovered through much of the fiscal year. That calm ended in late February with the onset of conflict in the Middle East, renewed pressure on energy prices, and a fresh uptick in inflation expectations.

This is the kind of environment BCI is built for. Our portfolio is broadly diversified, our liquidity is carefully managed, and our investment teams include veterans of the 2008 Global Financial Crisis and the COVID dislocation. We were never forced to react. Market stress creates opportunity, and we chose when and where to move. The structural picture, however, has shifted.

Geopolitical risk, once largely confined to emerging markets, has become a defining feature of the developed market landscape. The risk of stagflation – weak growth alongside persistently high inflation – is more present than it has been in years, even as public equities flirt with all-time highs. We are factoring these risks into our underwriting and into our investment strategy advice to clients.

Performance

Against that backdrop, the combined pension plan delivered a one-year return of 6.7%, above the average client actuarial return objective of 6.0%, and plans remain fully funded with funding ratios ranging from 100 to 124%.

Most investment programs delivered solid results, but Real Estate Equity returning -4.9% is the exception, and it warrants direct discussion. Over multiple cycles and across global markets, this program has delivered consistent long-term returns — that track record is the right lens for what happened this year. Vancouver’s condominium market was hit by a confluence of factors softening demand: interest rates, foreign-buyer taxes, and vacancy taxes, prompting QuadReal to take a write-down on the Oakridge development. The opening and near-full leasing of the shopping centre move it from a construction asset to an income-generating investment in the year ahead.

The rest of the portfolio performed well. Public Equities led headline performance at 18.8%. Our Funding Program had its strongest year yet, significantly oversubscribed and continuing to attract international capital, including from banks, insurance companies, and asset managers.

Private Equity returned 8.1%, strong relative to industry. The team deployed $6.7 billion in new investments, nearly three times that of the prior year, while also completing $1.9 billion in secondary sales and exiting our stake in Hayfin Capital Management at attractive terms. Within Private Equity, our Venture and Growth program generated a return more than double the broader program. It surpassed $1 billion in assets and will continue to scale through direct investments in high-growth technology companies and commitments to leading venture & growth funds. Among our direct investments, Photonic Inc., a Vancouver-based quantum computing company, recently closed a financing round at a $2 billion valuation, reflecting significant value creation since our initial investment.

These results were delivered at low cost and in service of clients. Overall client satisfaction reached 98% in our latest survey. Independent benchmarking from CEM put our operating costs at 56.2 basis points against a peer median of 65.2.¹ On our asset base, that represents nearly $300 million in annual savings, all of which flows through to clients.

The organization itself is healthy. Employee engagement reached 8.2 out of 10, a third consecutive annual increase and above the financial services industry benchmark, and BCI was again recognized as one of Canada’s Top 100 Employers.

Strategic highlights

Disciplined liquidity management is a competitive advantage in stressed markets. This year made the case plainly. As some retail credit funds sold assets to meet redemptions, they brought private loans to institutional investors like BCI; our underwriting capacity let us choose the best of what came available on attractive terms.

The same long-horizon discipline shaped our largest transaction of the year: our $1.9 billion acquisition of BBGI Global Infrastructure, our first take-private as sole investor. BBGI owns stakes in the physical assets of hospitals, schools, housing, bridges, and roads across seven countries. A separate platform open to third-party capital, BBGI gives us a new way to deploy capital at scale, generating long-term, inflation-linked income from government-backed contracts. That is exactly what our clients need.

Shortly after fiscal year-end, we launched our new Investment Grade Private Credit Fund, developed in consultation with clients seeking reliable income at higher credit quality and well-suited to be resilient under a stagflationary environment. Several clients have notionally allocated already, and the fund rounds out a private credit platform that has delivered strong performance.

Through the year, BCI also participated in federal consultations focused on how to make Canada a more attractive destination for investment capital, so that more capital naturally flows here. The discussions ranged across infrastructure investment, asset recycling, and the mobilization of long-term institutional capital. We approach those conversations as we approach every investment decision. Any opportunity we ultimately pursue will need to clear the same bar: delivering risk-adjusted returns for our clients.

Looking ahead

We are continuing to invest in the things that have always been part of our edge: our people and how we work.

We completed our post-quantum security assessment this year, ensuring the data we hold today will be protected against decryption as quantum computing matures. Over 90% of our people now use AI tools weekly, setting up the bigger shift we are starting: redesigning how work gets done.

Two executive appointments strengthen our leadership team for what lies ahead. Jon Salon was appointed Global Head of Private Equity, bringing more than three decades of investment and operational experience. Jeremy Trickett joined the Executive Management Team as Chief Legal Officer in an expanded role, bringing international experience that supports BCI’s global expansion.

We are seeding the next generation of BCI: our co-op program received over 14,000 applications for roughly 200 positions, and we more than tripled our Indigenous scholarships to nine this year.

I also asked twelve future leaders of BCI to imagine where this organization needs to go. Their work over the past year is shaping priorities this year and our planning beyond.

In closing

This was a year of volatility on the surface with steady results underneath. My thanks to the Board for their counsel, to my fellow members of the Executive Management Team, and to the people throughout BCI for all they delivered. We were ready for what this year brought. We will be ready for what comes next.