A Discussion With AIMCo's CIO Going Over Their 2025 Results
Alberta Investment Management Corp. aims to take advantage of pressure in private credit and infrastructure, positioning itself as a buyer when some fund managers sell off assets to raise cash.
The Alberta-based pension fund manager made a 7.5-per-cent return last year as stocks did well and private assets struggled, according to a news release.
The diverging performance of public and private markets was a key reason why AIMCo fell short of its internal benchmark by 2.7 percentage points. More than a third of its assets are private, but those portfolios are generally measured against stock indexes that surged in value last year.
AIMCo’s balanced fund – which reflects a typical mix of assets held by its 17 core clients – earned 7.6 per cent in the year that ended Dec. 31, and missed its benchmark by the same margin.
The balanced fund has an average annual return of 7.2 per cent over 10 years.
After a tough start to the year, when tariff threats and policies shocked markets and AIMCo earned 2 per cent through the first six months, the fund’s full-year performance was “a nice improvement,” chief investment officer Justin Lord said in an interview.
AIMCo invests on behalf of pension, endowment, insurance and government clients in Alberta. Total assets increased to $194.7-billion, compared with $179.6-billion a year earlier.
AIMCo’s portfolio of publicly traded stocks gained 19.4 per cent, propping up the fund’s performance. But its private equity portfolio earned just 3 per cent, while infrastructure increased by 3.3 per cent and real estate lost 2.2 per cent.
“It was a challenging year for private asset classes,” but those investments “offer important diversification within our clients’ asset mix over a longer period of time,” Mr. Lord said.
At a bleak moment in private markets, however, AIMCo is spending more time looking at potential deals, “in infrastructure in particular,” Mr. Lord said.
Upheaval in regulatory policies drove down valuations for some assets, he said, and as the market adjusts, some of the deals available now offer more attractive rates of return.
“There’s a fairly extensive opportunity set in the infrastructure asset class right now that the team is focused on,” Mr. Lord said.
That could include infrastructure assets in Canada if they meet the bar for expected risk and return, he said.
AIMCo also sees an opportunity in private credit, a market in turmoil after several large funds faced a rush of redemption requests from investors. The pension fund earned 7.9 per cent on its private debt and loan portfolio last year, and “we’re of the view that this asset class will continue to grow,” Mr. Lord said.
The gloomy sentiment stems mostly from liquidity issues some funds are having as nervous clients try to pull money out, he said. And that gives an advantage to funds with cash to deploy and patience to wait for loans to be repaid.
AIMCo is in a position “to take advantage of dislocations should they present themselves,” he said.
So far, AIMCo hasn’t seen a change in the rate of defaults or loans showing signs of strain, he added, “but we’re certainly spending time stress testing the book.”
The losses in AIMCo’s real estate book reflect “a slow bottoming process for the real estate market in general,” Mr. Lord said. But AIMCo is “seeing attractive deal flow,” especially in residential and industrial properties, as well as retail outlets that sell necessities.
He also said it is a priority to name a new head of the pension fund’s real estate arm, a role that has been vacant since last summer, and overseen by global head of real assets Peter Teti in the meantime.
Since Mr. Lord was named CIO last summer, he has reviewed AIMCo’s investment strategy. Rather than making any major pivot, he said he focused on centralizing key functions and on managing risk and liquidity to allow the fund to be flexible.
AIMCo’s annual report, which breaks down the fund’s performance in more detail, will be released in June.
The Canadian Press also reports Alberta Investment Management Corp. earns 7.5 per cent total fund return for 2025:
The Alberta Investment Management Corp. reported a total fund return of 7.5 per cent for 2025.
The investment manager says the gain came as its public equity investments gained 19.4 per cent, while its money market and fixed income portfolio returned one per cent.
AIMCo’s investments in mortgages earned 5.8 per cent and its private debt and loan portfolios earned 7.9 per cent.
Its infrastructure portfolio returned 3.3 per cent, while private equity investments earned three per cent. The fund’s real estate portfolio fell 2.2 per cent.
AIMCo invests on behalf of pension, endowment, insurance, and government clients in Alberta that each determine their own long-term asset mix according to its objectives and risk profile. It says its balanced fund return, which reflects a typical client mix of investments across all asset classes, earned 7.6 per cent for 2025.
AIMCo says total client assets under management amounted to $194.7 billion at Dec. 31, 2025, up from $179.6 billion at the end of 2024.
Earlier today, AIMCo issued a press release stating it delivered a 7.6% return in 2025:
Public Equities and Fixed Income Portfolios Drive Solid Performance
Edmonton – The Alberta Investment Management Corporation (AIMCo) today announced a Balanced Fund net investment return of 7.6%, or $13.1 billion, for the year ended December 31, 2025.
AIMCo is a long-term investor focused on multi-year timelines. Annualized long-term results were as follows:
5.7% over a four-year period, or $31.7 billion
7.2% over a 10-year period, or $76.5 billion
AIMCo invests on behalf of pension, endowment, insurance, and government clients in Alberta. Each client determines its long-term asset mix according to its objectives and risk profile, which is a key determinant of potential returns alongside AIMCo’s execution. AIMCo’s Balanced Fund reflects a typical client mix of investments across all asset classes. AIMCo’s Total Fund reflects aggregated results of all client accounts. In 2025, AIMCo’s Total Fund returned 7.5%.
In 2025, AIMCo’s Balanced Fund and Total Fund both underperformed their respective benchmark returns by 2.7% largely reflecting a challenging year for private markets and the use of public market-linked benchmarks within private asset classes.
Total client assets under management were $194.7 billion as at December 31, 2025, compared to $179.6 billion at year-end 2024.
“AIMCo has remained focused on our clients’ long-term objectives and delivered a solid result despite a year marked by geopolitical tension and market volatility,” said Ray Gilmour, Chief Executive Officer, AIMCo. “The $13.1 billion net investment return over the past year is a testament to the team’s discipline and execution during an unprecedented period.”
In 2025, Public Equities generated a robust gain of 19.4%. The Money Market & Fixed Income portfolio achieved a return of 1.0%, along with returns of 5.8% and 7.9% for the Mortgages and Private Debt & Loan portfolios respectively. AIMCo’s Infrastructure portfolio returned 3.3%, and the Private Equity portfolio generated a return of 3.0%. The Real Estate portfolio was down 2.2% in 2025.
“Public Equities maintained impressive performance in 2025, buoyed by investor confidence in artificial intelligence-related capital investments and increased earnings expectations. Meanwhile, Fixed Income returns remained steady across all portfolios,” said Justin Lord, Chief Investment Officer, AIMCo. “Despite the challenging year for private markets, these asset classes continue to offer important diversification for our clients over the long term.”
Investment Performance*
Investment Performance by Asset Class
*All performance results are unaudited and net of fees and costs. Detailed performance information will be available in AIMCo’s 2025 Annual Report, which will be released in June 2026.
About Alberta Investment Management Corporation (AIMCo)
AIMCo is one of Canada’s largest and most diversified institutional investment managers with more than CAD$194.7 billion of assets under management as at December 31, 2025. AIMCo invests globally on behalf of pension, endowment, insurance, and government funds in the Province of Alberta. With offices in Edmonton, Calgary, Toronto, London, and Luxembourg, our more than 200 investment and risk professionals bring deep expertise in a range of sectors, geographies, and industries.
¹Public Equities, excluding direct client holdings of Absolute Return, delivered a one-year return of 19.4%, and 11.9% and 11.1% over 4- and 10-year terms respectively.
Alright, it's time to cover AIMCo's 2025 results and not surprisingly, they were solid despite some issues in private markets and underperforming their benchmark by 2.7%.
Remember what I keep telling you, pension funds that were more exposed to public markets fared better last year.
A brief recap:
- OMERS gained 6% in 2025 (see my coverage here)
- La Caisse gained 9.3% in 2025 (see my coverage here)
- OTPP gained 6.7% in 2025 (see my coverage here)
- HOOPP gained 7.7% in 2025 (see my coverage here)
- OPTrust gained 4.2% in 2025 (see my coverage here)
And now we know AIMCo gained 7.5% and 7.6% for its total fund and balanced fund in 2025.
The annual report doesn't come out till June, so I cannot delve into details here.
Discussion With AIMCo CIO Justin Lord covering 2025 results
On Monday, I had a chance to catch up with AIMCo's CIO Justin Lord to discuss their 2025 results.
I want to thank him for taking the time to speak to me and also thank Sabrina Bhangoo and Andrea Giacomelli for assisting the Teams meeting and sending me material on an embargoed basis.
Justin began by giving me an overview of the results:
Jumping into the results, AIMCo's Balanced Fund returned 7.6%, generating $13.1 billion in net investment gains in 2025. That on a 4-year and 10-year basis, is equal to 5.7% and a 7.2% return over those time periods, respectively.
The public equities portfolio led asset classes in 2025, returning 19.4%. We also saw strong performance across our fixed income portfolios, most notably the 7.9% return for private debt and loan credit exposure and a 5.8% return in private mortgage.
It was a challenging year in private markets. I do want to note that these asset classes continue to offer important diversification for clients over the long term within their portfolios.
Drivers of 2025 performance: global growth, strong earnings, easing fiscal and monetary policy as well as supportive regulation.
This was certainly challenged more so in the first half of the year by geopolitical tension and trade policy volatility that were in flux throughout 2025.
The 2025 benchmark underperformance is primarily attributable to a challenging year for privates, as mentioned, and certainly within private equity, the use of public market benchmark, we use the MSCI ACWI as an equity index.
Since starting my position as Chief Investment Officer last year in Q3, the focus has been on the portfolio, current positioning, deal flow, and conducting a review of investment strategy.
We want to focus on and enable structural and develop the capabilities that we have at AIMCo, really leading into our edge. This speaks to the platform and team to best meet clients' investment objectives. This includes initiatives like centralizing functions across the organization to manage risk, giving us the flexibility to allocate control when we need to.
I asked him why the press release states 18.6% in public equities and absolute return and he clarified:
19.4% were the returns from the equity composite: Global equities, global small cap, emerging markets and Canadian equities. The 18.6% return includes the absolute return portfolio as well.
I asked him if the absolute return portfolio is done through a portable alpha structure and he replied:
Yes, there's exposure to those strategies, both within the global equities product, from a portable alpha perspective, but we also have a couple of clients with standalone absolute return allocations. Absolute return strategies generated a very solid return in 2025.
I then moved on to private markets, focusing on real estate where I noted there was a negative return over the last four years. I asked Justin if this is because AIMCO has more exposure to provincial office space, particularly in Alberta, or if it is due to something else. I also noted that many people I talk to say real estate is turning the corner and wondered what his thoughts are.
Justin replied:
We are focusing more on realigning the strategy. We are seeing some attractive deal flow in the space relevant to our Canadian and global real estate portfolios in general.
The drivers of performance across the space are not sector-specific. You know, we had something missing in Canada from a residential perspective, certainly in Ontario and BC.
Within real estate in general, the team is focused on adding high-quality residential exposure, necessity-based retail exposure, as well as industrial exposures and managing the portfolio mix from a core plus perspective, really to align the clients' needs from real estate. It's a key source of inflation protection in their asset mix, and certainly to achieve that, focus on portfolios, positions within portfolios, being return-generating cash flow, generating exposure to key sectors.
I asked if they use operating partners to acquire real estate assets. He replied:
We do, we do partnerships and leverage our relationships with our partners. It can be in the form of a direct investment, fund investment or something the team has been lining as they're reviewing their portfolio strategy.
As far as a new head of real estate, he shared this:
At this time, Peter Teti, who is in charge of private markets, is overseeing the real estate team in conjunction with the leadership group in the class. It's something to complete this year; we will be making a key leadership decision.
In private equity, I told him through my discussions, vintage years 2021, investors got too much exposure there and it's starting to bite. You saw, some funds are actually reporting a lot worse returns in that asset class.
I asked him if he can give me a little bit of flavor of what he's seeing going on in private equity, in particular to how AIMCo is approaching that asset class.
He replied:
Certainly. I would agree with your comments as it relates to the industry in 2021, that vintage year being more difficult working its way through the system, both from a fund and co-investment, or direct perspective.
As a reminder, AIMCo's private equity strategy has been focused on fund investments and co-investments over the last decade. Following this strategy, we've seen very solid long-term returns, but we are seeing some challenges within the industry, both from a valuation and liquidity perspective as well.
We are seeing some green shoots on that liquidity front, with larger IPOs, exits, the distribution increases. I would say a caveat to that comment is the current state affairs as it relates to the Iran war and global market volatility, potentially slowing that down. Again, we have some capacity to deploy capital. As per our strategy, from middle market and co-investment opportunities, we remain focused there.
Justin told me the ratio of fund investments to co-investments in their private equity portfolio is 60% fund investments, 40% co-investments which sounds about right to me as AIMCo's PE program isn't as mature as some of their peers.
I moved on to ask him about infrastructure and Justin shared these remarks on that asset class:
The portfolio was impacted by some regulatory volatility in 2025. This is an asset class that has performed very well from a total return, excess return perspective over the medium to long term.
We have some additional liquidity within the current allocation to infrastructure, and the team is excited about the current opportunity set that we are seeing with respect to current deal pipeline globally. We're assessing opportunities that are in line with strategy in infrastructure. We do manage a strategy that is a combination of both direct investments and co-investments as well as an allocation to funds.
I asked him if there was any investment in infrastructure like in renewable energy that hit that portfolio and he answered:
Some of the valuation changes impacted energy. We saw some of those first at the end of the year. It actually created an opportunity in deal flow, pricing in some additional return given the complexity navigating the current events as well.
I shifted my attention to private credit/ private mortgages which did well last year and asked Justin if he has concerns in that area.
He responded:
Certainly, speaking specifically about private credit, Peter Shen has done a fantastic job there.
We are generally constructive on the asset class, more so a few months ago than today given recent headlines.
The asset class will continue to grow, the need for credit, access to it, the regulatory environment is a tailwind. Our focus team has been buying senior security exposures and we'll continue to do that.
We haven't seen a change yet in defaults. We're spending time stress-testing the book as well as looking for opportunities that this potential shift in liquidity or volatility might bring to the asset.
We have a very diverse book that is focused on senior security with a protection structure.
Lastly, I noted that last year, pension funds that were more exposed to public markets fared better than the ones that were more exposed to private markets but this year could be a lot more challenging given heightened geopolitical tensions.
I asked Justin how he plans to take advantage of any opportunities and he will allocate between private and public markets, given the dislocations of markets right now.
He responded:
That's a great question, Leo, and we could probably take much more time to explore that. We're a long-term investor on that for our clients, and it is easy to get distracted by day-to-day headlines and volatility.
We need perspective. We built a team and process at AIMCo to be successful full cycle that ensures that our clients are able to meet the needs of their members of Albertans, and that's our focus.
As it relates to current market volatility, we are spending time stress-testing the portfolio for a global economic crisis, energy crisis, in each of our asset classes, looking for ways to insulate the portfolio with tail risk strategies to generate lots of returns in those downside environmental challenges
In particular, it goes without saying we are also assessing some of those sensitivities should we have a de-escalation of the conflict in the Middle East and may return to lower energy prices.
Justin did say over the short to medium term, they remain constructive but are obviously watching the fallout from the conflict in the Middle East to assess its longer-term impact.
Alright, we ended it there. I will review this post as the audio quality wasn't particularly good and I might have to edit some sections but I got the gist of our conversation.
Once again, I thank Justin for taking the time to speak with me and look forward to AIMCo's annual report in June to get more details on their annual performance.
Below, watch a clip going over AIMCo's 2025 results.
Also, Sarah Esler, Managing Director and Head of Mortgage Investments at Alberta Investment Management Corporation (AIMCo), provides an insightful overview of real estate market trends.
Sarah discusses the normalization of interest rates and credit spreads, the balance of supply and demand in capital markets, and the factors her team considers when evaluating new investment opportunities.
Additionally, she highlights the increased competition in the office sector and expects heightened competition from banks due to recent regulatory changes in capital charge requirements.
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