 | A forward-looking investment approach and a team of industry leading investment professionals are tempering the impact of the 2008 economic downturn. Here, OMERS President and CEO, Michael Nobrega addresses concerns raised by plan members, and he explains how OMERS is well positioned to ride out the current storm. |
2008 was a year of significant upheaval on the investment front around the world. What would you say to OMERS members about the status of the Fund at the end of 2008?
I know that the global financial downturn has raised concerns among some of our OMERS members, especially those approaching retirement as well as retirees who are now relying on their pension income to make ends meet. The first and most important thing I want to do is to assure all members that their pension benefits are secure. They are based on an individual’s years of service and earnings – not on the performance of the stock market.
Second, OMERS did not have any significant investments in asset-backed commercial paper or any of the other investments that have crippled several large investors. That said, we have been caught in the downdraft that has impacted all investors to one degree or another. Our investment results will be in the negative range for 2008. But let’s remember that our returns during the three years prior to 2008 topped the list among Canadian pension funds. This has been a major factor in helping us to withstand the pressure of this downturn in the economy, and has contributed to the health of the Fund going forward.
And third, I want to remind our members that OMERS is in the process of shifting our asset mix to have more exposure to the less volatile private markets through our investments in real estate, infrastructure, and private equity holdings. Our progress in this shift has tempered the negative impact of the recent downturn in the public markets.
What steps are you taking to keep the fund in good shape?
Number one, we will continue the shift to get a better balance between our investments in public and private markets. We have launched a new investment arm, OMERS Strategic Investments, which will better position OMERS to enter into partnerships with other like-minded investors, and it will enable us to take advantage of larger private-asset investments. We will be aggressively pursuing opportunities around the globe that will provide stable, long-term returns to the Fund.
Coupled with this, our capacity to directly manage our investments will be expanded to ensure we have a greater say in how a growing number of our investments are managed. We are a leader among pension funds in moving from being passive investors, where outside professionals manage a fund’s investments, to taking direct control over the management of our investment assets. We have grown to become very effective asset managers, and we will continue that trend over the coming years.
Any final words for OMERS members?
Yes. I have personally spoken recently with concerned members and retirees and I said to them what I say now: don’t be alarmed by what is going on around us. We have a long-term global vision when it comes to our investments, and we’re sticking to it. We have a top-notch team of professionals running both our investment activities and the management of the pension system. This team will see us through these difficult times. The year 2008 is behind us, and I offer my best wishes to all our members for a healthy 2009.
