Victoria, British Columbia, Canada, June 27, 2024 (GLOBE NEWSWIRE) -- British Columbia Investment Management Corporation (BCI) today announced an annual combined pension plan return1 of 7.5 per cent. The combined pension plan return represents the performance of BCI’s six largest pension clients by assets under management (AUM).
Gross AUM2 grew from $233.0 billion last year to $250.4 billion for the fiscal year ended March 31, 2024, a year-over-year increase of $17.4 billion or 7.5 per cent. Net AUM totalled $229.5 billion, with investment gains contributing $16.5 billion net of all fees to this AUM growth.
“We delivered solid absolute results even through challenged markets this year,” said Gordon J. Fyfe, BCI’s Chief Executive Officer and Chief Investment Officer. “This was not a coincidence. Rather, it speaks to our team’s diligent risk approach and prudent liquidity management, which provided us with resilience and capability to capture market dislocations and deploy capital. Our investment teams continue to build a diversified portfolio, emphasizing direct and unique deals around the globe.”
All asset classes generated positive returns apart from real estate equity, where sustained market headwinds affected valuations. Liquidity management was a key focus, including $1.25 billion in capital raised from BCI’s inaugural bond issuance, with an additional $1 billion raised in the subsequent reopening of the same series. Asset classes focused on rebalancing across strategies to pursue opportunities in a muted deal environment. More than 10 direct deals were executed, further diversifying BCI’s portfolio with entry into new sectors and geographies complementing our strong Canadian footprint. Opportunities in infrastructure debt increased, and three transactions were closed, increasing European exposure. Private debt deployments were substantial at US$2 billion, focusing on differentiated opportunities in the middle and lower middle markets and expanding the program to Asia. Within the infrastructure & renewable resources and private equity programs, an increasing focus on asset management boosted portfolio valuations and created $17.6 billion in value over five years and returned $31.1 billion in cash distributions to clients.
Long term, BCI continues to deliver consistent annualized results, returning 7.5 per cent over a five-year period, representing a cumulative value add3 of $2.2 billion. As a result, BCI’s combined pension clients, with investment horizons extending many years, maintain a healthy position with funding ratios ranging from 103 to 133 per cent.
“Generating consistent long-term performance is imperative for our clients as they require greater cash flows for their obligations as pension plans mature,” added Fyfe. “Looking at our annualized 10-year return, for our combined pension plan clients, we outperformed the benchmark by 0.7 per cent, representing $8.3 billion of value add, consistently exceeding our clients’ nominal and real actuarial discount rates.”
“Our one-year relative performance lagged the benchmark this fiscal. This was no surprise as the exponential growth of the ‘Magnificent Seven’ tech stocks resulted in a very strong combined pension plan benchmark hurdle. We build portfolios that provide clients with the risk-adjusted returns they require over the long term, and that’s where we will continue to focus on adding value.”
RETURN SUMMARY FOR THE COMBINED PENSION PLAN CLIENTS
| Annualized Returns (%) | ||||||||||
| 1 Year | 5 Year | 10 Year | 15 Year | 20 Year | ||||||
| Combined Pension Plan Return | 7.5 | 7.5 | 7.8 | 9.0 | 7.7 | |||||
| Benchmark | 11.6 | 7.2 | 7.1 | 8.1 | 6.9 | |||||
| Public Markets | Annualized Returns (%) | ||
| 1 Year | 5 Year | 10 Year | |
| Fixed Income | |||
| Short Term | 5.2 | 2.1 | 1.7 |
| Nominal Bonds | 1.9 | 0.7 | 2.5 |
| Private Debt | 13.3 | 6.6 | - |
| Funding Program4 | 5.2 | - | - |
| Public Equities | |||
| Canadian Public Equity | 14.6 | 10.5 | 7.9 |
| Global Public Equity | 26.5 | 12.8 | 12.2 |
| Emerging Markets Public Equity | 10.1 | 4.5 | 6.2 |
| Private Markets | |||
| Infrastructure & Renewable Resources | 7.0 | 8.5 | 9.2 |
| Private Equity | 6.0 | 16.0 | 16.7 |
| Real Estate Equity | (5.0) | 4.8 | - |
| Real Estate Debt | 6.9 | 4.9 | 4.6 |
| An internal rate of return (IRR) methodology is used to calculate returns for infrastructure & renewable resources, private equity, and real estate equity. The assets and benchmarks are as at December 31, 2023. Benchmarks are presented on a time-weighted rate of return basis. | |||
HIGHLIGHTS
Corporate
- Expanded our total employees to 770, growing the global team year-over-year by 8.3 per cent, including 34 professionals in the London and New York offices, strengthening our physical presence in these financial centres.
- Moved to fully embed ESG into corporate reporting, including alignment with the IFRS Sustainability Disclosure Standards, and began development of an internal ESG data platform.
Public Markets
- Exceeded $5 billion in cumulative participation in sustainable bonds.
- Launched an unsecured debt program with an inaugural $1.25 billion senior unsecured 10-year bond offering, and a subsequent $1 billion reopening of the same series, with the highest possible long-term credit ratings.
- Acted as an anchor investor in Overland Advantage, a direct lending platform established by Centerbridge Partners in partnership with Wells Fargo, which will also yield co-investment opportunities.
- Executed $2.7 billion of deployments in Absolute Return Strategies, which delivered strong one-year performance exceeding 12 per cent.
- Deployed net US$2.0 billion for the Principal Credit Fund and achieved the strongest one-year performance since the fund launched with a 13.3 per cent annual return for fiscal 2024.
Private Markets
- Concluded the take-private of Costa Group, Australia’s largest produce supplier of fresh fruit and vegetables.
- Closed on three infrastructure debt investments, increasing capital deployment in high-conviction sectors that benefit from decarbonization and digitization in the U.S. and Europe.
- Committed US$300 million to Cube Highways Trust, the largest road platform in India consisting of 18 toll and annuity assets and made a separate commitment to the Cube Highways growth platform, CH5, which targets further investments in India’s transportation sector.
- Closed an investment in A2 Motorway, a leading European public-private partnership motorway.
- Participated in an additional financing round for British Columbia-based Photonic Inc., a quantum computing company, positioning BCI as one of their largest shareholders.
- Committed a total of $2.9 billion to the private equity program, including $2.2 billion to fund investments, reinforcing strategic relations with existing managers, and allocated the remaining $700 million to private equity direct investments, including additional investment to support the growth of our existing companies.
- Deployed $3.3 billion in the real estate equity program to high conviction and growth sectors such as data centres, student housing, residential, and industrial globally.
- Committed $3.2 billion in real estate debt investments, including Verve, an off-campus student housing and apartment, and a cold storage distribution facility.
The 2023-2024 Corporate Annual Report is available at BCI.ca.
All figures are in Canadian dollars unless otherwise stated.
ABOUT BCI
British Columbia Investment Management Corporation (BCI) is amongst the largest institutional investors in Canada, with C$250.4 billion in gross AUM as of March 31, 2024. Based in Victoria, British Columbia, with offices in Vancouver, New York, and London, U.K., BCI manages a portfolio of diversified public and private market investments on behalf of its 29 British Columbia public sector clients.
With a global outlook, BCI integrates ESG factors into investment decisions and activities that convert savings into productive capital to meet clients’ risk and return requirements over time. Founded in 1999, BCI is a statutory corporation created by the Public Sector Pension Plans Act. For more information, visit BCI.ca or LinkedIn.
Except as otherwise indicated, returns are time-weighted rates of return (TWRR) as at March 31, 2024. All returns are net of all costs and fees. Investments are reported by the program within the asset classes as set out in the clients' Statement of Investment Policies & Procedures (SIPP). Benchmarks represent a weighted combination of multiple indices specified in the clients' SIPP. The indices may vary over time.
1 The combined pension plan clients reflect the investments of BCI's six largest pension clients: BC Hydro Pension Plan, College Pension Plan, Municipal Pension Plan, Public Service Pension Plan, Teachers' Pension Plan, and WorkSafeBC Pension Plan.
2 Gross assets under management exclude market values for The Funding Program, which are clients’ investment liabilities achieved through government bond repurchase agreements and unsecured bond issuance.
3 Cumulative value-add is the additional dollar return that BCI generated for clients in excess of client benchmarks through active investments, excluding the impact of the centralized currency management program after all costs and fees.
4 The Funding Program includes clients’ investment liabilities achieved through government bond repurchase agreements and unsecured bond issuance.
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