Celebrating AIMCo's First Mover Status?
Alberta’s $124 billion investment manager is looking to build ties with sovereign wealth funds in Abu Dhabi as the Canadian firm looks to expand outside its home market and diversify its portfolio.
Alberta Investment Management Co. Chief Executive Officer Evan Siddall said he’s met officials at some of the city’s largest funds to identify opportunities for joint investments in the region and around the world.
“We’re building relationships with the big funds,” Siddall said in a recent interview, declining to name the funds he met. “Infrastructure is one [area] where we’re quite active, and in real estate.”
Aimco, which invests on behalf of 32 pension, endowment and government funds in the oil-rich Canadian province, named Siddall CEO in 2021 after it lost C$2.1 billion ($1.6 billion) on a bet against market volatility that blew up when the pandemic hit. Siddall, former head of Canada’s housing agency, has since overhauled the executive team, including a new chief risk officer and a new investment head.
Largest Funds
Abu Dhabi has some of the world’s largest sovereign wealth funds, with about $1.2 trillion in combined assets. The Abu Dhabi Investment Authority is the city’s largest with $790 billion, according to the Sovereign Wealth Fund Institute. Mubadala Investment Co. and newcomer ADQ, hold $285 billion and $159 billion in assets respectively, according to the institute.
Siddall said that while investing in the United Arab Emirates is an attractive proposition due to the country’s dollar-pegged currency and investor-friendly regulations, Aimco’s focus isn’t limited to the Gulf area.
“Our scope is global in these conversations,” he said. Aimco’s new investment strategy “is to rely on our own expertise where we have it and on the expertise of partners where we don’t.”
Green Transition
Siddall said Aimco and the regional wealth funds agree on how to transition to cleaner energy, adding that out of eight large funds in Canada, only two have so far pledged to divest from oil and gas or to stop adding investments in that area.
“Divestment of oil and gas companies and abandoning the energy sector is short sighted,” he said, adding the world needs more energy. “If you think about who most needs capital, it’s the companies who are either producing energy or are the heaviest emitters, and value is created by helping those companies move from gray to green.”
Aimco is also looking to invest more in emerging markets like India, the Middle East and China, undeterred by some investor concerns that China is uninvestable. The fund is opening an office in Singapore as it increases its allocation to Asia-based investments.
“We are right now far too exposed to Canada, the US and Western Europe, which are going to be lower growth economies and therefore lower returns,” he said. “For someone like us over the long term, who can diversify the risk associated with that, it makes sense to be in emerging markets.”
Benefits Canada also reports that AIMCo is looking abroad for growth opportunities:
During an annual investment conference in Abu Dhabi, Evan Siddall, chief executive officer of the AIMCo, participated in a panel about growth opportunities in today’s economy. According to a press release covering Investopia 2023, he said the AIMCo is looking to diversify its portfolio on a geographic basis.
The move comes in response to what he views as historic over-investment in the Canadian economy. The investment organization is particularly interested in expanding its presence in Asian markets, said Siddall, adding the firm is considering opening a satellite office in Abu Dhabi.
AIMCo's President and CEO Evan Siddall is on record stating fossil fuel divestment is not their strategy:
For Edmonton-based AIMCo, concentrating on a specific net-zero goal would be a distraction from what’s needed to balance energy supply and emission reduction, CEO Evan Siddall said. He believes in the concept but said he can’t make the commitment on behalf of clients if he can’t see a clear path to get there.
“Use of energy is going up, and net zero doesn’t mean zero. The initial reaction of a lot of people in the investment world was to jump on a net-zero bandwagon that was divestment-driven. We think that is ill-advised for a bunch of reasons,” Mr. Siddall said in an interview.
“The world is going to need hydrocarbons. We need to make the ‘net’ big enough to be net zero. It’s not just about eliminating the gross, it’s also about increasing the net. If we don’t attend to the oil and gas industry and help them invest in that decarbonization, we will not get to net zero.”
Divestment of fossil-fuel companies robs them of the ability to make the capital investments needed to cut greenhouse gases and raises the risk that producers will be acquired by buyers with no interest in cleaning up operations or even by “unfriendly regimes,” he said.
i recently discussed how CPP Investments) has agreed to purchase a 49% stake in US-based oil and gas producer Aera Energy from German asset manager IKAV and went over how the world really works.
As I stated there, everyone thinking about climate change needs to read this excellent and rare interview with Vaclav Smil, economist and professor emeritus at Canada’s University of Manitoba who says rapid decarbonization is a fantasy.
AIMCo is Alberta's pension fund, it needs to carefully map out its energy strategy across traditional, renewable and transition assets and make sure it's in the best long-term interests of its members and province.
The fact remains that transition assets offer the greatest potential for returns and achieving net-zero over the long run for Canada's large pension funds.
AMCo's President and CEO Evan Sidall is also traveling to the Middle East, attending conferences and building relationships with large Gulf funds which AIMCo can invest alongside with on major deals in Asia Pacific, a region they're looking to expand in.
In other related news, Florence Chong of IPE Real Assets reports on how AIMCo is: Canada’s ‘renewable resources’ first mover, having first invested in Australian forestry more than a decade ago and now has a C$3bn ‘renewable resource’ portfolio:
No doubt, AIMCo is doing great things in its timberland and farmland portfolio but the leader in this area remains PSP Investments.
AIMCo's new CIO, Marlene Puffer, has just recently arrived at the organization and she is getting a first-hand look into a diverse investment portfolio which is best served by a diverse investment team:
Marlene Puffer grew up in a household where her parents instilled the value of hard work and an entrepreneurial attitude.
“My parents grew up on farms in Saskatchewan and Alberta, and my dad didn’t even finish high school,” Puffer says. “But I was brought up in a way that I felt I had opportunity. Whether I had the means or not, I felt I had it.”
Now, as the chief investment officer at the Alberta Investment Management Corporation (AIMCo) where she oversees a team that manages more than $155 billion in assets, Puffer wants to ensure that others in her organization feel the same way.
“It matters to me that those who have a lot more struggles in their own way deserve the same outreach and opportunity.”
AIMCo strives to assist its clients in safeguarding the financial futures of the people they serve. The team does this not just by managing the investments of 16 clients — which include pensions, endowments and government funds within Alberta — but by fortifying a culture of diversity, equity and inclusion (DEI) within the organization.
“In the institutional investment business, we know that diversifying a portfolio is a smart thing to do, so it makes sense that we should be getting the diversity of opinion, attitude, background and perspective all around the table,” says Puffer. “And it’s obvious and self-evident that the D of DEI matters, but you don’t get the diversity in a sustainable way if you don’t have the E and I — equity and inclusion.”
As a chartered financial analyst with a PhD in finance and statistics, Puffer came to AIMCo in January with more than 25 years of experience in the investment industry, including board positions and senior roles at major Canadian pension funds. She now oversees and manages AIMCo’s investments while also ensuring she’s an approachable leader for all up-and-comers.
“One of the reasons I took this job is I’m able to be a very visible role model in a senior role at a large organization that’s one of the Maple 8 in Canada,” says Puffer, referring to a group of the country’s eight largest public pension investment managers. “There’s only a handful of women at this level, and most of us are new to our roles.”
PSP Investments is led by a female CEO, but Puffer is the only female chief investment officer among the Maple 8. She notes that AIMCo’s leadership team also includes women who hold some of the most high-profile, technical roles, such as chief risk officer and chief technology officer.
She credits AIMCo CEO Evan Siddall for leading the change by recruiting team members who have historically been underrepresented at senior leadership levels.
“Evan walks the walk with DEI in a way that I’ve rarely seen any leader walk, let alone a white male cisgender leader. And he’s proven that with who he’s recruited at the senior leadership level in this organization,” says Puffer.
“It was a big attraction to me, to be part of a team that he’s purposely, consciously created, that has gender diversity, ethnic diversity, and a dynamic diversity of perspective and opinion because of different backgrounds.”
The workplace culture at AIMCo is also unique in that the company has embraced employee autonomy. Allowing for flexibility in terms of where and when people work benefits all team members but particularly women, who still bear the brunt of home-management responsibilities in addition to their paid employment.
Policies like this can help create societal changes to improve gender equity, as can robust parental leave benefits.
“I think that’s often overlooked in the dynamics of advancing gender equity in businesses like ours,” says Puffer. “Both sides need support. We need to be encouraging men to take parental leave, too. The more we normalize that, the less it becomes something that’s a women’s issue and that, in and of itself, will help us advance gender equity.”
I'm a big stickler for Diversity, Equity and Inclusion and unfortunately, more has to get done.
Evan Siddall is right to offer his employees full flexibility, treating them like adults at work.
Evan is open about having Parkinson's Disease just as I am open about having Multiple Sclerosis and I'm sure this factors into his thinking on flexible work arrangements.
The toughest thing about having a neurological disease is dealing with overt or covert discrimination.
I truly believe that people with disabilities are not treated properly at Canada's large public and private organizations and the proof is in the dreadful statistics
In fact, we should introduce a new term at Canada's Maple 8 -- disability diversification -- as it cuts across all other diversification including gender diversification (most disabled Canadians are women).
Still, I am the first to commend AIMCo for adjusting its parental leave and flexible working policies to make them more equitable for women employees:
Earlier this year, the AIMCo changed its corporate incentive plan, to no longer prorate performance pay during the supplemental employment benefits period for parental and maternity leave. Prior to the change, employees who took parental leave would have their performance pay prorated during the time they were on leave, which inadvertently penalized these workers, many of whom were women.
Ashton Rudanec, senior manager of environmental, social and governance stewardship and reporting at the AIMCo, is one of many employees who welcomes the change. When she took maternity leave for 10 months after the birth of her son, her performance pay period was prorated to the four months after she returned to work in August 2021. “The performance pay is a big component of people’s total compensation, so it was an economic barrier.”
In 2021, the investment organization changed its top-up for the employment insurance family leave benefit period to 90 per cent of an employee’s regular base salary, allocating eight paid weeks for parental leave, plus an additional 12 weeks of maternity leave for the birth giver.Despite the generous top-up, Rudanec says very few male employees at the AIMCo took paternity leave because it would impact their annual incentive plan, with most opting to use their paid vacation time instead. Since the policy change, she’s noticed more of her male colleagues taking advantage of the leave program. “From my understanding this positions us as one of the leaders in our Maple 8 space for offering this kind of incentive.”
Every year, the AIMCo examines its policies to ensure they’re not biased or inadvertently causing barriers for employees, says Janice Guzzo, managing director of global partnerships and total rewards. Last year, the AIMCo implemented a results-oriented, flexible working policy that allows employees to work when they want and where they want. She says the program allows working parents to continue along their career paths, while taking care of young children.
Rudanec says the flexible working policy made a world of difference while transitioning back to work after her maternity leave. “I think we all know the first year of daycare is pretty challenging, particularly when your [child] is being sent home for the newest illness of the day.”
She also volunteers on non-profit boards in her spare time, so she appreciates the ability to take an hour out of her day when she needs to to attend these meetings.
Guzzo believes this type of environment will be foundational to the future workplace, noting everyone’s a winner — while employees save on commuting costs and can work when it suits the needs of their families, employers gain access to a wider candidate pool when they’re no longer beholden to hiring from a small area tied to their office location. There’s also environmental benefits, due to fewer commuters producing carbon emissions.
The program is also boosting the AIMCo’s attraction and retention efforts. A recently-hired employee, who was coming off parental leave at another employer, told Guzzo that the flexible working program was a key factor in her decision to join the AIMCo. “Programs like this go a long way to restoring the pipeline of women in business and leadership roles, allowing them to truly have it all when it comes to balancing their work and personal lives.”
This program should be offered at every large Canadian pension fund, not just AIMCo.
I always found it absolute nonsense that a woman has to carry a child for nine months and then she's penalized at work for choosing to be a mother. That's just criminal!
So, I'm glad AIMCo treats its ladies fairly in this regard and invite others to do the same.
Below, Scott Rechler, CEO of RXR Realty, joins 'Squawk Box' to discuss the pressures in the commercial real estate market, why the real estate market was surprised by the higher rate environment, and more.
"After decades of free money, the day of reckoning is coming. There's $1.5T of commercial real estate loans that are coming due in the next three years," says Rechler.
I remember asking AIMCo's former CEO Leo de Bever what keeps him up at night and he told me flat out: "Bonds and real estate." There's a paradigm shift going on in both, and if you don't figure it out, you will be left behind.
Next, Bob Diamond, Atlas Merchant Capital CEO, joins 'Squawk Box' to discuss the recent sale of Credit Suisse, shareholder considerations in the UBS sale, and more.
Third, economist Dr Mohamed El-Erian told Sky's Ian King what is driving bank share prices even further down.
Fourth, Morgan Stanley Chief US Equity Strategist and CIO Mike Wilson says staples, utilities and health-care stocks are the place to be if economic conditions deteriorate during an interview on "Bloomberg Markets: The Close." Wilson also discusses why the end of the bear market isn't near.
Also, Eric Johnston, Cantor Fitzgerald, joins 'Closing Bell: Overtime' to discuss the market outlook after a volatile few weeks. He discusses why credit standards are tightening and will impact the economy.
Lastly, Michael Gapen, Bank of America Research head of U.S. economist, joins 'The Exchange' to discuss the Fed's next move saying he expects a 'dovish 25 bps hike' and maintained balance sheet runoff.
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