IMCO Gains 9.9% in 2024, Its Best Year Since Inception
Investment Management Corporation of Ontario’s first five years in the market included a global pandemic, war in Ukraine and high inflation – and even after that, chief executive officer Bert Clark said it feels “jarring” to watch the current chaos and uncertainty gripping investors.
On Wednesday, IMCO reported an average gain of 9.9 per cent for its clients in 2024, which was the pension fund manager’s best single-year performance since it was created to consolidate public-sector fund assets in Ontario in 2017.
Yet the wild swings in public markets over the past week – as U.S. President Donald Trump surprised investors with the severity of tariffs imposed on trading partners – had Mr. Clark looking nostalgically back to a calmer time last year.
“None of us have been in an environment where it feels like the stock market is being driven entirely by one person’s pronouncements,” Mr. Clark said in an interview. “That’s quite unusual.”
The challenge, he said, is how to test the pension fund manager’s portfolios against conditions that are constantly changing. Within hours of the interview, Mr. Trump announced a 90-day pause on reciprocal tariffs he announced one week earlier, but doubled down on his trade war with China.
Trade upheaval is prompting IMCO – and other major Canadian pension funds – to reassess how much exposure they want to the United States and the U.S. dollar. IMCO has 52 per cent of its $86-billion of assets invested in the United States.
“The U.S. is currently signaling that it wants to play a fundamentally different role in the international community, and as regards international trade,” he said.
“Does that mean you need to fundamentally rethink the role the U.S. and the U.S. dollar play in your portfolio?” he added. “Those are exactly the questions that we’re asking ourselves, and we haven’t come to any conclusion yet.”
Last year, IMCO’s publicly-traded stock portfolio gained 24.2 per cent, and private equity investments were up 16.4 per cent. Infrastructure and credit assets returned 8 per cent, while real estate lost 0.8 per cent.
Over its first five years of investing, IMCO’s average annual return was 4.2 per cent, which fell short of IMCO’s long-term targets. That is partly a result of a tumultuous half-decade for investors that included IMCO’s 8.1-per-cent loss in 2022.
But it is also an offshoot of the years of work IMCO has been doing to knit together the disparate collection of legacy assets it inherited when its clients joined to form a portfolio with a more coherent strategy.
IMCO has eight clients, the largest of which are the Workplace Safety and Insurance Board and the Ontario Pension Board.
“This is a year we’re proud of, and we’re particularly proud of it because it reflects a lot of work over the last five years to reposition every one of the strategies and the client’s total portfolios,” Mr. Clark said. “These are returns that feel like our returns, and they reflect our approach to investing.”
Mr. Clark said the major work to revamp IMCO’s portfolio is done, and that recent returns – this year’s 9.9-per-cent gain, and last year’s 5.6-per-cent return – are a better reflection of what clients can expect in the future.
To be sustainable over the long run, IMCO needs to earn 6.5 per cent to 7.5 per cent per year, on average, he said.
In pursuit of steadier returns, Mr. Clark said IMCO aims to avoid “unnecessary complexity,” does not try to time the market, and steers clear of big bets that could punch a hole in its returns.
After European battery maker Northvolt AB filed for bankruptcy protection last year, IMCO marked down its US$400-million investment in the company, as did other major investors. “That was of a size where it didn’t impact overall good returns,” Mr. Clark said.
Layan Odeh of Bloomberg also reports IMCO gained 9.9% last year, fuelled by stocks and private equity:
Investment Management Corp. of Ontario returned 9.9% last year, driven mainly by gains in stocks and private equity holdings.
The results for the Canadian pension manager “reflect the strength of our disciplined, long-term approach to investing,” Chief Executive Officer Bert Clark said Wednesday in a statement.
IMCO’s stock holdings gained 24.2% and private equity investments returned 16.4%, while the real estate portfolio declined about 1%.
As of July, IMCO discontinued its public market alternatives strategy, which employed active and niche strategies uncorrelated to the equity markets — such as mortgages, structured credit and risk transfers. The asset class returned 6.2% last year and comprised 2% of the total portfolio. The strategy is now pursued in IMCO’s public equities and global credit.
Canadian pension fund managers are dealing with a different reality since US President Donald Trump launched tariffs globally, wreaking havoc on markets. “Our portfolio is constructed and managed to be resilient to volatility,” Chief Investment Officer Rossitsa Stoyanova said in an emailed statement to Bloomberg. “In private markets, our approach has always been to avoid investments with ‘stroke of the pen’ risk.”
Assets under management rose to C$86 billion ($60.6 billion) at year-end. The US accounted for 52% of that total — up from 42% in 2021, while Canada made up about a third of the portfolio and Europe 11%.
Stoyanova said that IMCO doesn’t time the markets or make adjustments based on near-term market events, and instead focuses “on the things we can control – managing costs and liquidity effectively; and systematically rebalancing our portfolio,” she said.
The Toronto-based fund manager wrote down its $400 million investment in Northvolt AB, the electric vehicle battery maker that filed for bankruptcy protection last year.
IMCO was founded in 2016 to consolidate the management of a number of retirement funds for government workers in Ontario, Canada’s most populous province.
Earlier today IMCO issued a press release stating it achieved a 9.9% return in 2024:
Strong returns driven by disciplined, long-term investment approach
2024 HIGHLIGHTS
- Delivered positive absolute returns across all asset classes, except real estate
- Grew assets under management (“AUM”) to $86 billion, up from $77.4 billion in 2023
- Over five years, grew AUM to $86 billion from $73.3 billion and distributed over $7 billion to clients
- Became Strategic Asset Allocation advisor to clients
- Recognized as a Greater Toronto Top Employer for a second consecutive year
TORONTO (April 9, 2025) – The Investment Management Corporation of Ontario ("IMCO") announced today that the weighted average net return of its clients’ portfolios was 9.9 per cent for the year that ended Dec. 31, 2024. This was IMCO's strongest performance since inception. Assets under management ("AUM") rose to $86 billion.
"While we don't measure success based solely on one-year returns, we are pleased with our 2024 results. They reflect the strength of our disciplined, long-term approach to investing," said Bert Clark, President and Chief Executive Officer of IMCO. "We avoid unnecessary complexity and focus on building well-diversified, cost-effective portfolios for our clients, with strong liquidity management."
Except for real estate, IMCO delivered positive absolute returns across all asset classes in 2024, led by public equities and private equity. In public equities, IMCO’s mix of passive, factor and focused fundamental investment strategies delivered strong absolute returns of 24.2 per cent. Private equity’s 16.4 per cent return was driven by solid operating performance across a diversified set of portfolio companies. Total returns also benefited from the appreciation of the US dollar.
"We believe that helping our clients select the optimal asset mix, while avoiding market timing, big bets and unnecessary complexity, and pursuing outperformance in a very targeted way, positions us to effectively navigate an uncertain environment for our clients," said Rossitsa Stoyanova, Chief Investment Officer of IMCO.
Over the last five years, IMCO has adjusted asset class strategies and helped clients modify their target asset mixes, with a view to generating better long-term investment results. IMCO results now reflect that work at the asset class and client portfolio design level.
ADDITIONAL BACKGROUND
ABOUT IMCO
The Investment Management Corporation of Ontario ("IMCO") manages $86 billion of assets on behalf of its clients. Designed exclusively to drive better investment outcomes for Ontario's broader public sector, IMCO operates under an independent, not-for-profit, cost recovery structure. We provide leading investment management services, including portfolio construction advice, better access to a diverse range of asset classes and sophisticated risk management capabilities. As one of Canada's largest institutional investors, we invest around the world and execute large transactions efficiently. Our scale gives clients access to a well-diversified global portfolio, including sought-after private and alternative asset classes. Follow us on LinkedIn and X @imcoinvest.
Also today, Bert Clark, IMCO's President and CEO posted this comment on LinkedIn:
A MILESTONE YEAR FOR PERFORMANCE
2024 marked a pivotal year for IMCO. It was our fifth year executing on our investment strategies (giving us a five-year track record). I’m proud to share that this was our strongest year ever, with a one-year weighted average net return of 9.9 per cent. While we don't measure our success based on one-year results, we were very pleased.
Public markets outperformed significantly this year and apart from real estate, we delivered positive returns across all asset classes. These results underscore the effectiveness of our disciplined, long-term approach to investing.
We focus on building cost-effective, well-diversified, growth-oriented portfolios that are tailored to our clients’ objectives and risk tolerances. We maintain adequate liquidity to avoid being a forced seller during times of market stress and we look to outperform only in areas where we have a real comparative advantage. Our strategy also avoids unnecessary complexity, large concentrations and outsized risk-taking. We don’t pursue short-term tactical changes in asset mix, and we don't believe in trying to time the markets.
This steady, measured approach positions our clients well to achieve their long-term goals.
Our overall results have continued to improve as we have shifted more clients into our recommended asset mix in recent years. However, our current range of client results shows that some client asset mixes don’t yet fully reflect our advice. As we continue transitioning more clients to our recommended Strategic Asset Allocations (“SAAs”) and disposing of off-strategy investments, we expect the range of performance among clients to narrow and overall results to improve further.
CLIENT SUCCESS AT THE FOREFRONT
Our clients remain at the heart of everything we do. This year, we achieved our highest-ever client satisfaction survey results, resulting from increasing service levels, capabilities, and dedication of our team. We also welcomed four new clients, bringing our total to eight.
A major milestone in 2024 was becoming the primary asset mix advisor for our clients. This shift represents a critical step forward in aligning our clients’ portfolios with their long-term goals and IMCO’s recommended SAAs.
STRENGTHENING OUR CULTURE
The achievements of 2024 were only possible because of the incredible talent and dedication of our team. This year, we launched a comprehensive Talent Management Strategy to ensure IMCO remains a leading investment manager and an employer of choice in Ontario. We introduced new leadership development and people management programs to support our staff in their professional growth.
For the second consecutive year, IMCO was recognized as a Greater Toronto Top Employer. This honour reflects our commitment to fostering a purpose-driven culture and ensuring our people thrive both personally and professionally.
FINANCIAL STEWARDSHIP AND COST EFFICIENCY
Costs matter--especially in investment management, where they directly impact net returns for our clients. I’m pleased to report that IMCO achieved our 2024 investment results while keeping costs under budget, demonstrating the team’s focus on maintaining cost efficiency and scalability.
As we continue to scale our business, we remain committed to exploring opportunities to improve cost efficiency without compromising the quality of our services. This disciplined approach is integral to our five-year strategy and to supporting our clients’ fiduciary responsibilities.
LOOKING AHEAD
I want to thank our team for their hard work and commitment to our mission. Together, we are well-positioned to build on the successes of 2024 and continue delivering strong, sustainable outcomes for our clients.
Alright, what a day in the markets so I'm going to cover IMCO's results quickly and end with some clip's on today's market action.
First, not surprised, solid results reflecting an asset mix that is almost 50% in Public Markets (23% Public Equities, 24% Fixed Income) and global equities were on fire last year:
As shown below, Public Equities, Private Equity, Infrastructure and Credit led the charge with Fixed Income coming in flat and Real Estate down a little less than 1%:
Among the asset classes, the biggest underperformance relative to the benchmark was in Global Infrastructure (8% vs 16.4%) which tells me they have a listed Infrastructure benchmark with lots of beta but if you look at 5-year returns, they outperformed their benchmark there (6.8% vs 4.7%).
Real Estate still has ongoing issues with legacy assets in Office and Retail but it seems to be getting better there as they reposition that portfolio (takes time).
Bert Clark addressed the $400 million hit from Northvolt -- the biggest exposure there along with OMERS -- and said it didn't impact overall returns as they are diversified.
Some anonymous person emailed me to tell me the people in charge of Northvolt were given promotions but I can't verify any of these claims and again, Northvolt was written off and only made a small part of their overall portfolio.
Like I said, overall results were solid and to be expected given IMCO's asset class, nothing really earth shattering even if it was their "best year since inception."
Markets have shifted dramatically this year, so I expect large Canadian pension funds like IMCO who have more exposure to public markets to feel the pain if we see this volatility continues for the remainder of the year.
I leave you with the Q&A with IMCO's CIO Rossitsa Stoyanova from the Annual Report:
I would have liked to go over the results with Rossitsa but nobody from IMCO contacted me and to be honest today I was too focused on markets to talk pensions.
Also worth publicly sharing that IMCO and BCI are the only major Canadian pension funds that do not support this blog.
I invite both their CEOs to do the right thing by supporting this blog financially and sharing insights with my readers.
I work hard to cover all pensions fairly and appreciate all of you who support the work that goes into it.
Lastly, it was an insane day in the markets and let me quickly share with you what I think happened.
Trump blinked and caved but what led him to his decision to pause tariffs for 90-days, maintaining a 10% base tariff for all countries except for Canada and Mexico where he maintained the same tariffs and China where he increased the tariff again to 125% in response to their latest retaliation.
Put simply, he didn't seem to care much as stocks sold off but once Treasury Secretary Scott Bessent told him there were cracks in the bond market, and once he heard Jamie Dimon and Larry Fink say the US was likely in a recession, he wisely decided to pause the tariffs and work on negotiations.
Also, politically, he was losing Republican support and he needs to pass his tax cuts which stood little chance of passing as long as this tariff fallout kept going on.
His morning ‘buy’ call netted huge returns for those who listened as stocks shot up in a historic reversal in afternoon trading after he announced a walkback on some tariffs.
It was a day to remember but it's worth remembering this was mostly short covering, a massive short squeeze, and rates remain elevated as the bond market faces many headwinds, including rising inflation expectations.
All this to say we avoided total disaster but are not out of the woods by any stretch of the imagination and tariffs remain a problem, albeit much more predictable for now except for China where problems persist.
For now, investors are breathing a sigh of relief.
Below, Mohamed El-Erian, Allianz chief economic advisor, joins ‘Closing Bell’ to discuss Trump’s tariff pause on some countries and why he says more needs to be done.
Next, Dan Niles, Niles Investment Management founder, joins 'Closing Bell Overtime' to talk how to digest Wednesday's market rally.
Third, Stephen Roach, former Morgan Stanley Asia chair and Yale Law School’s Paul Tsai China Center senior fellow, joins 'Fast Money' to talk the escalating trade war between the US and China.
Lasrtly, NBC News goes over today's events and interviews former Ambassador to China Gary Locke to discuss how both sides will suffer if this trade war with China persists.
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