The Ontario Municipal Employees Retirement System has the potential to beat the markets by an average of 3 percent a year by investing in assets beyond stocks and bonds, said Satish Rai, the Canadian pension fund’s chief investment officer for public markets.
“We think the opportunities outside of public markets are enormous, and we think the opportunities are growing,” Rai said Thursday in Toronto at the Sohn Canada conference presented by Capitalize for Kids. “We believe that the gap between public markets and some of the things we’re doing is approaching 300 basis points,” he said, pointing to investments in loans and structured transactions.
OMERS has built a book of C$7 billion ($5.23 billion) in debt financing for private equity partners in a period of 12 months, providing second mortgages on high-profile real estate in Manhattan, San Francisco and in the U.K., Rai said. Those investments are part of a longstanding push by the pension fund away from traditional assets. The plan has also sought opportunities in bridge-equity financing and areas where regulations have made it difficult for global banks to provide financing.
“Well over 50 percent of OMERS’s balance sheet is not subject to day-to-day fluctuations in financial assets,” Rai said.
OMERS oversaw C$77 billion ($56.6 billion) in net assets, including liabilities, for Ontario government employees, retirees and their beneficiaries as of Dec. 31, according to its website. It invests in real estate and infrastructure through its subsidiaries, Oxford Properties Group Inc. and Borealis Infrastructure Corp.
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