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Victoria-based company nets record return for B.C. pension investment in pandemic year

B.C. Investment Management Corporation gained 16.5 per cent in 2020 for civil service pension plan
B.C. Investment Management Corporation CEO Gordon Fyfe has led the corporation to achieve positive returns for the province’s civil service pension plan. (Kiernan Green/News Staff)

The Victoria-based company responsible for B.C.’s public-sector pensions saw its funds grow by 16.5 per cent during fiscal 2021 – one of the most positive pandemic-year returns for a provincial pension management company in Canada.

British Columbia Investment Management Corporation (BCI) increased its assets under management by $28.3 billion to $199.6 billion. The assets contribute three-quarters of every $100 spent on retirement benefits to the 690,000 pension-collecting retirees of B.C.’s public sector.

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By comparison, the Investment Management Corporation of Ontario and Alberta Investment Management Corporation saw increases of 5.4 per cent and 2.5 per cent, respectively, during fiscal 2020 according their annual reports.

The B.C. Investment Management Corporation has a prominent home in downtown Victoria across from city hall. (Kiernan Green/News Staff)

February and March 2020 – the early months of the pandemic – showed a worse national market downturn than that seen during the 2008-10 global recession, with over one million jobs lost in a one-month period, according to Statistics Canada.

Despite that performance, investment and management decisions committed at BCI in the last six years resulted in even higher returns done 2021 than the company achieved in 2015 (14.2 per cent) – along with the full funding of clients’ pensions throughout the pandemic.

The timing of some of those decisions, CEO/CIO Gordon J. Fyfe told Black Press Media, was nothing short of fate.

Victoria native Fyfe was appointed to manage BCI in 2014 and within months of his arrival, the board of directors greenlit a new strategy for managing their clients’ pensions. It drew on the federal government’s Public Sector Pension Investment Board, for which Fyfe was CEO for 11 years in Montreal.

The strategy, Fyfe said, began with expanding the company’s international portfolio. BCI’s investments in U.S. assets increased by 14.7 per cent since 2015, according to their annual reports.

“We’ve reduced our weighting in offices and our weighting in shopping centres (infrastructure investments), and we’ve increased significantly our weighting in things like warehouses,” he said. “So Amazon is a big partner of ours.”

According to StatsCan, online shopping, and thus, the use of warehouse distribution centres, has increased 94.8 per cent throughout the pandemic.

In 2015, Canadian investments made up over half of BCI’s portfolio.

“They’d done really well, but it was overweighted compared to the role of Canada’s economy in the world,” Fyfe said, noting that Canada comprises just 1.4 per cent of the world’s gross domestic product. Today, BCI’s Canadian investments account for just over a third of global assets, but remain their largest investment region.

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There was also the fateful decision to sell several airport and hotel investments in 2016, including the Delta Hotel brand name, which would go on to plummet in value with the onset of pandemic travel restrictions.

“In many cases, it’s not about what we owned but what we didn’t own,” Fyfe said with regard to their successful pandemic-year return.

The hiring of in-house asset management was the second half of BCI’s strategy half a decade in the making. Before 2016, nearly all of that work was given to outside financiers, Fyfe noted. Since then, he said, a team of newly hired asset managers has freed up $3 billion in fees back into investments and the payrolls of around 400 new hires.

“It certainly helps the economy. We now have 600 people managing $200 billion based here in Victoria. Rather than everybody around the world taking that money from our pensioners, that money’s staying here in the province.”

Evoking the words of Bank of Canada governor Tiff Macklem, Fyfe said it’s easier to shut down an economy than it is to start it up again.

“That’s exactly what’s happened,” he said. As the country begins its pandemic recovery and typical spending resumes, BCI intends to monitor the inflation of its investments.

“Large parts of our portfolio are inflation-sensitive and they’ll do fine with an inflationary environment,” Fyfe said.

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