AIMCo sees strong tailwinds in logistics, data centres, health centres and multi-family housing and has been shifting investment dollars there
CALGARY – Alberta’s public pension manager admits it is overexposed to both the oil and gas industry and Canada’s largest oil-producing province, but its chief investment officer said those weightings are coming down as strategies shift.
“We go where we see the best risk-adjusted returns and the exposure we have in Alberta is driven by our own views,” Dale MacMaster, chief investment officer of Alberta Investment Management Corp., said in an interview following the release of the public pension investment manager’s 2020 annual report on June 28.
“Let’s face it, for many, many years Alberta was Canada’s leading engine of growth. Alberta far outpaced the rest of the country and it had very strong attributes.”
MacMaster said that outperformance has led AIMCo, which manages $118.6 billion in assets, to being slightly overweight in Alberta, particularly in real estate and the energy sector, where it is invested in public equities and through its fixed-income portfolios.
AIMCo in the past year has participated in refinancing efforts at Calfrac Well Services Ltd. and Western Energy Services Corp. as those companies opted to delay bond payments and restructure in the face of sharp sector downturns.
But on the same day that AIMCo released its annual report, Calgary-based junior Razor Energy Corp. announced it was deferring a regularly scheduled interest payment on a $50-million term loan to AIMCo.
“The company is grateful to be partners with AIMCo and the continued support as both a major shareholder and senior lender,” Razor said in a press release.
Nevertheless, MacMaster said oil and gas equities have rebounded along with Alberta’s economy, and that AIMCo has been tilting away from investments in the province, particularly its real-estate market, for several years.
The exposure to the local oilpatch has led to criticism that the fund manager should be better diversified outside of Alberta’s biggest sector to insulate against oil and gas downturns.
MacMaster said AIMCo sees strong tailwinds in logistics, data centres, health centres and multi-family housing real-estate investments and it has been shifting more investment dollars into those asset classes in recent years.
Let’s face it, for many, many years Alberta was Canada’s leading engine of growth. Alberta far outpaced the rest of the country
Dale MacMaster
“The Alberta weight and the office and retail weight will come down over time with that repositioning,” he said.
MacMaster also pushed back on suggestions that AIMCo was too invested in energy, noting it is overweight by just 0.4 per cent and 0.5 per cent in the sector, “so not enough to make a huge difference.”
More broadly, he said a V-shaped recovery in both the markets and commodities have allowed AIMCo to sharply recover in the second half of 2020 after a volatility trading scheme impacted returns in the first half of the year.
AIMCo suffered a catastrophic $2-billion loss last year from a volatility trading scheme called VOLTS, which suffered major losses due to volatility caused by the outbreak of COVID-19.
“From an investment perspective, this past year began with a crash in March, where there was no place for investors to hide and where AIMCo sorely underperformed for our clients,” outgoing chief executive Kevin Ubelein said in the company’s annual report, published June 30.
Following the losses from the VOLTS program, AIMCo accelerated a leadership transition and new chief executive Evan Siddall, previously head of the Canada Mortgage and Housing Corp., began on July 1.
Despite those losses, which prompted a review of the Edmonton-based pension fund manager’s risk strategies, AIMCo managed to post a 2.5-per-cent return for the year, generating $3 billion in net investment income.
Financial Post
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
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