Wiseman Joins AIMCo Board
Mark Wiseman will become a director and chair of the board of directors at the Alberta Investment Management Corporation (AIMCo), effective July 1. Most recently, he was a senior managing director and global head of active equities at BlackRock. He will chair the pension fund as it considers at a time when Alberta is considering breaking away from the Canada Pension Plan and take control of its own pension assets. He steps in for chair Richard Bird who is completed his second three-year term as a member of the AIMCo board.
UN Updates PRI Reporting
The United Nations’ Principles for Responsible Investment will update the way signatories report progress in 2021. In January, it will release new reporting requirements for signatories that are more focused on “real-world” outcomes. The group has been consulting with its signatories since 2019 on revising its reporting requirements. The updated reporting requirements will include mandatory questions on processes used for identifying investment outcomes. There will also be additional, voluntary questions on how signatories are trying to shape outcomes and how progress at these firms is being measured. At present, PRI signatories are required to report data on their investment activities, including sharing their responsible investment policy, which must cover more than half of assets under management.
OCIO Struggles To Outperform
Outsourced chief investment officer clients in the U.S. are struggling to outperform benchmarks, even as an increasing number of institutions are embracing the model. Aggregate data for the Alpha Nasdaq OCIO Index shows that for the one-, three-, five-, and 10-year periods ending March 31, the index underperformed a 60/40 portfolio made up of the Standard & Poor’s 500 stock index and the Bloomberg Barclays US Aggregate bond index. The data show that endowment and foundation OCIO clients lost 6.43 per cent on average for the one-year period. Over the 10-year period, these clients have returned 5.66 per cent. Compared with the 60/40 benchmark, the endowment and foundation index underperformed over the one-year-period and just barely beat the 10-year period index. Defined benefit pension plan OCIO clients, which tend to take on less risk, returned 0.07 per cent on average for the one-year period and 7.14 per cent for the 10-year period. This index outperformed the 60/40 benchmark.
Group Benefits Industry Concerned
The unprecedented number of layoffs across Canada due to COVID-19 has many within the group benefits industry concerned. Feedback to NMG Consulting from group insurance advisors suggests that this concern is widespread, particularly in regard to client related staff layoff and affordability challenges. The consequential result will be a fall in group benefits revenues and growth prospects, it says. However, advisor feedback suggests that insurers have responded well with proactive and open lines of communication along with flexibility around premium holidays. Insurers have mostly outperformed expectations when supporting intermediaries through this crisis. Insurers that have exceeded expectations focused on proactive and transparent communication, responsiveness, flexibility in approach, and premium relief. Insurers who have struggled to impress have been very reactive in regard to communication while being slow to respond to client needs.
Dedicated Policies Needed On Biodiversity Loss
Asset managers have a lot more to learn about systemic risk related to biodiversity loss, says a report by responsible investment organization ShareAction. Among the world’s largest asset managers, it found none have a dedicated policy on how they address the risk of biodiversity loss and only 11 per cent have policies requiring portfolio companies to mitigate harmful impacts on biodiversity. It also found that 39 per cent of the asset managers make no mention of climate change in their investment policies, while 84 per cent have no policies to exclude coal companies from their investment portfolios. Asset managers’ understanding of the systemic risk posed by biodiversity loss to their portfolios is critically underdeveloped, it says, with roughly half of managers identifying examples of it, typically related to environmental regulation. Roughly one-third of managers identify any positive and negative impacts of their investments on biodiversity. The World Economic Forum has identified the loss of biodiversity as a serious risk to companies and to ecosystems, with consequences for human health, global food security, and the efforts to contain climate change.
COVID-19 Has Limited Impact On VC
The first quarter of 2020 has seen 126 venture capital (VC) financings, raising $1.36 billion, says the ‘Canadian Venture Capital Report.’ As deals had already closed or were in the process of being closed prior to the outbreak of the pandemic in Canada, COVID-19 had limited impact to activities to start the year. However, VC investment activities in the quarter represent decreases of 26 per cent and 10 per cent respectively in the number of financings and total amount compared to the first quarter of 2019 and the total amount was down 36 per cent from $2.05 billion recorded in the last quarter of last year. As well, taking into account that the last two quarters of 2019 were on record to be the best quarterly disbursement in Canadian history means the decrease is not that dramatic. Based on incomplete data, investment activity for April 2020 is on its way to overtake that of April 2019 while May and June are way down. The full impact of COVID-19 will likely manifest itself in the second quarter and beyond.