> OMERS - Home > Public markets

Public markets

OMERS Capital Markets manages public market investments, which include Canadian and non-Canadian investments in bonds, other interest bearing assets and publicly traded equities. These investments are often made in combination with a variety of derivative financial instruments.

The decline in the worldwide public equity markets that began in 2007 continued and accelerated in 2008. During this time, the public markets exhibited unprecedented volatility as a result of the global financial crisis and the beginning of a recessionary period which generated losses not seen in a generation. Even for experienced investment professionals, 2008 represented uncharted waters.

Given this economic backdrop, OMERS Capital Markets’ return on public market investments, excluding the impact of currency hedging, was –19.5 per cent, consistent with the benchmark and compared to a positive return of 2.6 per cent in 2007. In 2008, OMERS Capital Markets generated a net investment loss of $7,192 million compared with net investment income of $782 million a year earlier. The decrease from the prior year is attributable primarily to significantly lower returns in Canadian and non-Canadian public equity markets. In 2008, our Canadian public equities returned –33.7 per cent compared with 12.8 per cent in 2007, while our non-Canadian public equities returned –25.7 per cent compared with –5.6 per cent in 2007.

At December 31, 2008, public market investment assets (interest bearing investments, real return bonds and public equities) were $28,763 million, a decrease of $14,528 million from $43,291 million at the end of 2007. This decrease is due to the decline in global equity markets impacting the value of our investments and the continued efforts to build our private market investments. As a result, our asset mix exposure to public market investments decreased from 70.2 per cent in 2007 to 60.2 per cent at the end of 2008 and is approaching our long-term asset mix target of 57.5 per cent.