July 31, 2018
Generated an additional $1.9 billion in added value
and increased assets under management to $145.6 billion
Victoria, British Columbia — The British Columbia Investment Management Corporation (BCI) today announced an annual combined pension return, net of costs, of 9.0 per cent for the fiscal year ended March 31, 2018, versus a combined market benchmark of 7.4 per cent. This generated $1.9 billion in added value for BCI’s pension plan clients.
A key contributor was the outperformance of global equities relative to their benchmark. Strong performance in illiquid asset investments also provided value-add — infrastructure, private equity, and renewable resources outperformed for the calendar year and delivered above-benchmark returns.
As pension plans have long-term financial obligations, BCI focuses on generating long-term client wealth while protecting the value of the funds. Returns are important — for every $100 a pension plan member receives in retirement benefits, on average $75 is provided by BCI’s investment activity. Over the five-year period, the annualized return was 9.9 per cent against a benchmark of 8.7 per cent, adding $5.8 billion in value. For the 10-year period, the annualized return was 7.4 per cent against a benchmark of 6.8 per cent. BCI added $6.6 billion in value over this period.
BCI began our transformation of the investment strategy and business model in 2015. Now three years into the transition from a more passive investment model, that was historically able to generate the necessary returns, to an active in-house model with a greater probability of sustained long-term performance, the shift is positioning us to continue to deliver meaningful financial futures for our clients over the longer term.
“BCI has a proud history of investing for British Columbia’s public sector,” said Gordon J. Fyfe, BCI’s Chief Executive Officer and Chief Investment Officer. “Our transformation to an active in-house asset manager, diversifying globally and with a focus on illiquid investments, ensures that we continue to provide the returns our clients need.”
Fiscal 2018 Highlights
- Committed $11.5 billion to illiquid assets — infrastructure, mortgages, private equity, real estate, and renewable resources. Notable direct investments included: Hayfin Capital Management LLP, Refresco Group N.V., Nova Transportadora do Sudeste (NTS), and Endeavour Energy.
- Increased internally managed assets to 73.3 per cent from 63.5 per cent the previous year.
- Launched quantitative active funds for Canadian and global securities.
- Continued the transfer of property and asset management of real estate investments from BCI’s former external property managers to QuadReal Property Group.
- Expanded the team to a total of 413 employees and added expertise in portfolio management, asset management, risk management, information technology, investment operations, and finance.
BCI’s operating costs were 29.6 cents per $100 of net assets under management; compared to 24.2 cents in fiscal 2017. Costs incurred on our behalf by third parties and netted against investment returns are not included in operating costs. By increasing the percentage of assets managed by BCI’s investment professionals, we are transitioning from a reliance on third parties to a more cost-effective model of managing our clients’ illiquid assets. We realize the benefits of the transformation to an in-house asset manager using sophisticated investment strategies and tools, and BCI continues to build our global reputation as world-class investment manager — increasing our access to high-quality opportunities.
In fiscal 2018, BCI increased managed net assets to $145.6 billion, an increase of $10.1 billion from the previous year. BCI’s asset mix as at March 31, 2018 was as follows: Public Equities (44.3 per cent or $64.6 billion); Fixed Income (21.8 per cent or $31.7 billion); Real Estate (14.4 per cent or $21.0 billion); Infrastructure (8.0 per cent or $11.6 billion); Private Equity (7.1 per cent or $10.3 billion); Mortgages (2.5 per cent or $3.6 billion); Renewable Resources (1.8 per cent or $2.6 billion); and Other Strategies (0.1 per cent or $0.2 billion). BCI’s 2017–2018 Corporate Annual Report is available on our website at www.bci.ca.