BCI Gains 6.7% in Fiscal 2026
British Columbia Investment Management Corp. made a record $35.7-billion of new investments in private assets last fiscal year, leaning into market turmoil that has strained companies’ valuations and debts.
Victoria-based BCI earned a 6.7-per-cent return on its investments in the fiscal year that ended March 31. That fell short of its internal benchmark of 7.6 per cent.
The pension fund’s performance largely tracked the same themes that shaped annual results from other large Canadian pension investors. Stocks produced strong gains, private assets underperformed and benchmarks were hard to meet because they are heavily tilted toward the largest U.S. technology companies that have soared in value.
But BCI treated a tough year in private markets as an opportunity to buy assets at a discount as inflation, tariffs and wars slowed dealmaking and amplified many investors’ thirst to raise cash.
“We’ve been preparing for chaos, so chaos is good,” executive vice-president of investment strategy and risk Ramy Rayes said in an interview. “We appreciate periods of stresses because others panic, and we get to be aggressive in those environments.”
BCI manages investments for 33 clients including B.C. public-sector pension plans, and insurance, government and institutional funds. All of those pension plans are fully funded as of March 31.
The fund’s gross assets increased to $313.7-billion, up from $295-billion a year earlier. After subtracting real estate debt and other liabilities, BCI’s net assets are $265.4-billion.
BCI received $26.6-billion of distributions in the fiscal year, in part by selling assets as well as $1.9-billion in private equity fund stakes through the secondary market.
That helped the pension fund maintain the highest level of liquidity it’s had in years, Mr. Rayes said, and be a buyer when others were forced to sell.
The pension fund has been more active in structured credit as well as continuation vehicles, where some investors look to cash out as private equity assets are rolled over to new funds with longer time horizons.
“We’re coming in, being strategic and opportunistic, and we’ve been very nimble,” he said.
At the same time, BCI has taken a step back from active stock picking in public markets. Managers have struggled to add value as the tech companies at the forefront of a boom in artificial intelligence grow increasingly dominant.
BCI wound down two global equities strategies that made up more than 7 per cent of its public stock portfolio. Instead, its equities team is putting more emphasis on an absolute-return strategy with a larger indexing component.
It was a year “when markets rewarded concentration and punished caution,” BCI said in a news release. The fund still had strong returns from its stock portfolio, with Canadian equities up 22.9 per cent and its global shares gaining 16 per cent, while emerging markets equities increased by 28.6 per cent.
But increasingly, traditional stock picking is “not our competitive advantage,” Mr. Rayes said.
The pension fund is looking to add more Canadian assets, but is leaning toward infrastructure such as airports, energy and transportation. Any future deals will have to meet BCI’s test for risk and return, and skew toward completed assets that are already earning income, rather than new builds.
BCI has $116-billion invested in Canada, or nearly 37 per cent of its assets. “We think by 2030 we’re going to have another $30-billion out there,” Mr. Rayes said.
Higher inflation put pressure on bonds, leading to more muted returns, with BCI’s short-term bond portfolio up 2.1 per cent.
Private equity investments earned 8.1 per cent, and BCI made $6.7-billion in new investments, which was nearly three times the amount from the previous year.
Private credit earned 6.1 per cent, adding $2.7-billion of net new loans. As the market has become more crowded, with stiffer competition, BCI responded to clients’ requests for steadier returns with lower risk by making $1.8-billion of investment-grade private loans, and will launch a new strategy on July 2 to make about $10-billion of such loans over the next three years.
The infrastructure and renewable resources portfolio gained 7.6 per cent and made $4.7-billion of new commitments.
BCI’s equity investments in real estate lost 4.9 per cent as valuations continued to tumble. But its real estate lending arm gained 5.3 per cent and had its highest transaction volume to date.
Earlier today, BCI issued a press release stating it delivered 6.7% annual return in fiscal 2026:
Fully funded pension clients and record private markets deployment define a resilient year
VICTORIA, BC – British Columbia Investment Management Corporation (BCI) today announced an annual combined pension plan return of 6.7% for the fiscal year ended March 31, 2026. The combined pension plan return represents the performance of BCI’s six largest pension clients by assets under management (AUM). The return exceeded the average client actuarial return objective of 6.0%, and all pension plans remain fully funded, ranging from 100% – 124%.
Gross AUM grew to $313.7 billion, compared to $295 billion the prior year, with net AUM totalling $265.4 billion. Investment income contributed $16.6 billion to AUM growth, a resilient result in a year that began and ended with significant market turbulence.
“Fiscal 2026 was bookended by volatility, tariffs and market disruption at the start, and renewed geopolitical stress and inflation pressures at year-end. This is the kind of environment BCI is built for. Our portfolio is broadly diversified, our liquidity is carefully managed, and we were never forced to react. Market stress creates opportunity, and we chose when and where to move,” said Gordon J. Fyfe, BCI’s Chief Executive Officer and Chief Investment Officer.
Solid performance across asset classes despite market turbulence
In a year when markets rewarded concentration and punished caution, BCI stayed true to its mandate, generating investment returns that meet clients’ risk and return objectives over time, protecting and growing the value of their funds. The result was positive performance across all asset classes except for Real Estate Equity, and record private markets deployment activity that positions clients well for the years ahead.
Global equity markets delivered strong absolute returns, though an increasingly narrow band of stocks at the top of major indices created headwinds for active managers. BCI’s diversified approach was well-suited to this environment, with Canadian Public Equity delivering 22.9%, Global Public Equity 16.0%, and Emerging Markets 28.6%. Within the Global Partnership Fund, absolute return strategies have been the largest driver of outperformance since their inception. Absolute return commitments in fiscal 2026 totalled $6.4 billion gross, with $4.9 billion deployed across co-investments and fund investments.
Elevated inflation and shifting portfolio allocations defined the fixed income landscape, leaving active managers with limited opportunities. Despite this, all actively managed pooled funds delivered strong results. The Funding Program had its strongest year yet, with three successful debt offerings bringing outstanding issuance to $10.25 billion. The January 2026 offering of $2 billion was more than 2.5 times oversubscribed, attracting orders from over 70 high-quality global investors, reflecting the program’s growing credibility in international capital markets.
As competition in North American direct lending intensified, BCI’s scale and agility allowed the team to be selective and move quickly on high-quality opportunities. BCI underwrites most of its private debt investments directly, giving it greater control over quality and terms. Private Debt returned 6.1%, with the Principal Credit Fund deploying $2.7 billion net while continuing to expand into Europe and Asia-Pacific. BCI also seeded $1.8 billion to a new investment-grade private credit strategy in response to client demand for greater portfolio diversification and resilience.
Private Equity returned 8.1%. The team deployed $6.7 billion in new investments, nearly three times last year’s level, and completed $1.9 billion in secondary sales. The Venture & Growth strategy delivered a return more than double the broader program, highlighted by Photonic Inc., a Vancouver-based quantum computing company, which closed its latest financing round at a $2 billion valuation, generating significant value since our initial investment.
Infrastructure & Renewable Resources returned 7.6%, deploying a record $4.7 billion in new commitments, led by the $1.9 billion acquisition of BBGI Global Infrastructure, new sustainably managed timberland investments in southern Brazil, and the team’s first direct investment in the Philippines, Frontier Towers. Most recently, BCI co-founded Northview Energy, a new North American renewable energy platform anchored with 22 high-quality, utility-scale solar and onshore wind energy assets.
As QuadReal Property Group (QuadReal), a wholly owned subsidiary of BCI, approached its 10-year anniversary, market conditions created headwinds for Real Estate Equity and drove record deployment opportunities for Real Estate Debt. Real Estate Equity returned -4.9%, reflecting the challenging development market, while Real Estate Debt returned 5.3% and achieved its highest transaction volume to date. For more on BCI and QuadReal, visit Quadreal.com/built-together.
Invested in Canada
With $116 billion invested domestically, representing 36.9% of gross AUM, Canada remains a cornerstone of BCI’s portfolio. A long-standing contributor to the provincial and national economies, BCI is actively seeking to grow its Canadian presence by pursuing opportunities that meet its risk and return criteria, with particular interest in infrastructure investments, including airports, energy, and transportation, where stable, long-term assets align directly with clients’ needs. During the fiscal year, BCI participated in consultations on making Canada a more attractive destination for institutional investment capital, covering infrastructure investment, asset recycling, and the mobilization of long-term capital.
For more on performance and corporate highlights, read the 2025-2026 Corporate Annual report released today.
Take the time to read BCI 2025-2026 Corporate Annual Report here (click on PDF icon to get PDF file).
I will quickly cover some items from the annual report below.
First, BCI's client profile and annualized returns:
Not surprisingly, the bulk of the assets remains pension assets, but insurance and special purpose funds now make up over 20% of the total assets.
The 5 and 10-year annualized returns of 7% and 8.1% are what count more than the one-year return of 6.7%, which was in line with what other peers reported even if it underperformed the benchmark return of 7.6% (their relative performance was better than most peers; however, worth noting they changed their PE benchmark because concentration risk was too high in previous benchmark).
As always, whenever you look at the performance of any pension fund, you need to understand the asset mix:
As shown above, 58% of the gross assets are in public markets, 42% in private markets and there's almost an equal weighting between Canadian and US assets (which benefited the fund last fiscal year on a currency and public equities basis).
However, on a net basis, the split between public and private assets is a lot more even now than it was 10 years ago (from page 12 of the annual report; this factors in leverage):
I note the following:
Our annual strategic retreat centred on compensation and benchmark governance, potential strategic projects, and BCI’s long-term direction. Benchmark governance was a key focus, and we worked with management to evolve BCI’s performance measurement framework to better reflect market conditions and the growing complexity of our investment program. Those discussions informed the annual benchmark review, which produced targeted updates to the Private Equity and Real Estate Equity benchmarks to enhance client communication and reporting. We also established a benchmark for the newly launched Investment Grade Private Credit Fund.I was honoured to be reappointed as Chair of the BCI Board this year. It is a privilege to serve alongside such a thoughtful and committed group of Directors and to support a leadership team determined to deliver on BCI’s strategic ambitions. We welcomed new colleagues to the BCI Board — Wendy Strugnell and Geraldine Hutchings. We also extend our sincere thanks to Gayle Gorrill and Weldon Cowan, whose terms concluded this year, for their many years of dedicated service to BCI and its clients.
Looking ahead, our priorities are clear. We will support innovation that improves client outcomes and maintain disciplined oversight of AI, cyber, and geopolitical risks and opportunities to ensure our governance and talent frameworks enable sustainable growth. On behalf of the BCI Board, I thank our leadership team and every BCI employee for their hard work and commitment to putting our clients’ interests at the centre of every decision.
The change in benchmarks at BCI is critically important to understand.
From page 13 of the annual report:
The Benchmark Governance Policy contains BCI’s benchmarking principles and is supported by accompanying directives, guidelines, and procedures which cover the selection, monitoring, and evaluation of benchmarks and performance objectives, as well as the broader benchmarking framework and specific considerations for private markets. Benchmarking private market investments against public markets has long been a challenge, and two significant market developments in recent years have brought that challenge to the forefront.
The first relates to public equity markets. Over the last three years, continued investor confidence and enthusiasm for artificial intelligence-related investments have concentrated returns in a small number of large-cap technology companies, driving public equity indices such as the MSCI All Country World Index and S&P 500 to all-time highs. In addition, with upcoming mega-cap initial public offerings from large private AI firms, and increased earnings expectations, these indices may continue to rally even further. While this benefits clients’ overall portfolio growth and funded status, it poses a challenge for private market investments benchmarked to these indices. The outsized returns driven by a handful of technology stocks are not an appropriate comparison to the diversified, operationally focused businesses that make up a typical private equity portfolio, making it harder to assess whether the program is creating genuine value.
The second relates to real estate markets. Following the low-interest-rate environment of the COVID-19 era, central banks implemented some of the most rapid and significant interest rate increases in decades. This created capital structure dislocations across real estate markets where debt financing costs rose sharply, property valuations declined, and in many cases, debt began yielding more than equity, inverting the return relationship that had defined the real estate market for years. This environment placed significant pressure on cost-of-capital benchmarks, as the long-term assumptions embedded in them no longer reflected market reality.
In fiscal 2026, to address the ongoing benchmarking challenges impacting private markets, the BCI Board drew upon the existing benchmark governance framework and transitioned to a more adaptable and robust approach to measuring the success of private markets, referred to as Measures of Success (MoS). As part of BCI’s annual benchmark review, coupled with the launch of MoS for Real Estate Equity, the BCI Board approved two updates. For Private Equity, the benchmark was transitioned to an index with reduced concentration risk, providing a more balanced profile for evaluating the program’s long-term performance. For Real Estate Equity, a new custom benchmark based on institutional private market data was added alongside the existing long-term cost-of-capital benchmark. Together, the two benchmarks better reflect historical and current market conditions, giving clients a clearer picture of how the portfolio is performing.
As markets evolve, BCI will continue applying this disciplined, governance-led approach to ensure clients have a better picture of private market performance. A complete listing of approved benchmarks is available in the Appendices.
So what are these new benchmarks? From the Appendix on page 87:
The private market benchmarks are all custom benchmarks or cost of capital.
I downloaded the Pooled Funds Performance Report here to find out exactly what these new benchmarks are. For Private Equity:
The Private Equity Program Benchmark consists of two components which are combined using actual weights: (i) Private Equity Fund Investments are benchmarked to the MSCI ACWI plus a 200 basis point risk premium. (ii) Private Equity Direct/Co-Investments are benchmarked to their historical Cost-of-Capital, a stable long-term benchmark, most recently 8.5% in FY2026.
In addition, from January 1, 2023 onward, for reporting purposes, the MSCI ACWI Equal Weighted Country and Sector Neutral Index ("MSCI ACWI EW CSN") plus a 200 basis point risk premium is adopted for Private Equity Fund Investments while the Private Equity Direct/Co-Investments benchmarking remains unchanged.
The previous Custom Benchmark consists of (i) and (ii) only, with no reporting application of the MSCI ACWI EW CSN Index. The returns for the previous Custom Benchmark as of December 31, 2025 are as follows: 1Y: 14.0%, 5Y: 12.8%, 10Y: 12.1%, 15Y: 13.2%, 20Y: 13.0%.
And for Infra/ Natural Resources and real Estate, here are the benchmarks:
Note the following:
Market Benchmark: Effective April 1, 2025, the BCI QuadReal Real Estate Equity Program adopted the Custom MSCI Private Real Estate Equity Index as a Market Benchmark alongside the existing Cost-of-Capital benchmark (renamed Long-Term Benchmark). The Custom MSCI Private Real Estate Equity Index comprises the MSCI Canada Annual Property Index with portfolio AUM greater than C$5 billion, and the MSCI Property Index Regional Composite consisting of the United States, Europe including the U.K., and Australia. The historical Canada/Regional Composite allocation was established using actual weights; the index construction further incorporates leverage, cost of borrowing, taxes, currency hedging and fees.
Now, why is it so important to understand benchmarks and changes to benchmarks and how performance is being evaluated?
Well, the short answer is if you're going to pay your pension fund managers big bucks, you need to properly evaluate their performance.
Critics will claim all these changes to their custom benchmarks were to lower the bar so they can easily outperform on a relative basis, but BCI will claim they needed to implement changes to better reflect market conditions and risks embedded in old benchmarks.
I don't have any issues with the changes in benchmarks. I think BCI could have made it clearer in the annual report instead of citing another document but they're not hiding or obfuscating anything.
In fact, except for the negative performance in Real Estate Equity (-4.9%), the results were decent all over, including private equity.
The only thing I question is how much opportunistic real estate risk QuadReal was taking and how much of that was written down because of higher rates.
That is something PSP's CEO Deb Orida and I discussed last week when I went over their fiscal 2026 results.
By the way, BCI never contacted me, didn't schedule an interview with Ramy Rayes or Gordon Fyfe so I couldn't ask them a bunch of questions on benchmarks and a lot more.
The articles with the Globe and Mail James Bradshaw are good but they're basically puff pieces, there's no in-depth coverage of results there (and that's not James Bradshaw's job nor is he trained to do this properly).
I read Ramy's comments and wasn't particularly impressed (I like Ramy but come on, when I read “we’ve been preparing for chaos, so chaos is good,” I laugh because BCI and others haven't seen real chaos yet, nowhere close).
Anyway, I am going to leave the last word to Gordon Fyfe, BCI's CEO/CIO who wrote this in his letter:
This year was bookended by volatility. Fiscal 2026 began with the United States’ imposition of broad tariffs in April, unsettling global markets and clouding the growth outlook. The shock moderated, and markets recovered through much of the fiscal year. That calm ended in late February with the onset of conflict in the Middle East, renewed pressure on energy prices, and a fresh uptick in inflation expectations.
This is the kind of environment BCI is built for. Our portfolio is broadly diversified, our liquidity is carefully managed, and our investment teams include veterans of the 2008 Global Financial Crisis and the COVID dislocation. We were never forced to react. Market stress creates opportunity, and we chose when and where to move. The structural picture, however, has shifted.
Geopolitical risk, once largely confined to emerging markets, has become a defining feature of the developed market landscape. The risk of stagflation – weak growth alongside persistently high inflation – is more present than it has been in years, even as public equities flirt with all-time highs. We are factoring these risks into our underwriting and into our investment strategy advice to clients.
Performance
Against that backdrop, the combined pension plan delivered a one-year return of 6.7%, above the average client actuarial return objective of 6.0%, and plans remain fully funded with funding ratios ranging from 100 to 124%.
Most investment programs delivered solid results, but Real Estate Equity returning -4.9% is the exception, and it warrants direct discussion. Over multiple cycles and across global markets, this program has delivered consistent long-term returns — that track record is the right lens for what happened this year. Vancouver’s condominium market was hit by a confluence of factors softening demand: interest rates, foreign-buyer taxes, and vacancy taxes, prompting QuadReal to take a write-down on the Oakridge development. The opening and near-full leasing of the shopping centre move it from a construction asset to an income-generating investment in the year ahead.
The rest of the portfolio performed well. Public Equities led headline performance at 18.8%. Our Funding Program had its strongest year yet, significantly oversubscribed and continuing to attract international capital, including from banks, insurance companies, and asset managers.
Private Equity returned 8.1%, strong relative to industry. The team deployed $6.7 billion in new investments, nearly three times that of the prior year, while also completing $1.9 billion in secondary sales and exiting our stake in Hayfin Capital Management at attractive terms. Within Private Equity, our Venture and Growth program generated a return more than double the broader program. It surpassed $1 billion in assets and will continue to scale through direct investments in high-growth technology companies and commitments to leading venture & growth funds. Among our direct investments, Photonic Inc., a Vancouver-based quantum computing company, recently closed a financing round at a $2 billion valuation, reflecting significant value creation since our initial investment.
These results were delivered at low cost and in service of clients. Overall client satisfaction reached 98% in our latest survey. Independent benchmarking from CEM put our operating costs at 56.2 basis points against a peer median of 65.2.¹ On our asset base, that represents nearly $300 million in annual savings, all of which flows through to clients.
The organization itself is healthy. Employee engagement reached 8.2 out of 10, a third consecutive annual increase and above the financial services industry benchmark, and BCI was again recognized as one of Canada’s Top 100 Employers.
Strategic highlights
Disciplined liquidity management is a competitive advantage in stressed markets. This year made the case plainly. As some retail credit funds sold assets to meet redemptions, they brought private loans to institutional investors like BCI; our underwriting capacity let us choose the best of what came available on attractive terms.
The same long-horizon discipline shaped our largest transaction of the year: our $1.9 billion acquisition of BBGI Global Infrastructure, our first take-private as sole investor. BBGI owns stakes in the physical assets of hospitals, schools, housing, bridges, and roads across seven countries. A separate platform open to third-party capital, BBGI gives us a new way to deploy capital at scale, generating long-term, inflation-linked income from government-backed contracts. That is exactly what our clients need.
Shortly after fiscal year-end, we launched our new Investment Grade Private Credit Fund, developed in consultation with clients seeking reliable income at higher credit quality and well-suited to be resilient under a stagflationary environment. Several clients have notionally allocated already, and the fund rounds out a private credit platform that has delivered strong performance.
Through the year, BCI also participated in federal consultations focused on how to make Canada a more attractive destination for investment capital, so that more capital naturally flows here. The discussions ranged across infrastructure investment, asset recycling, and the mobilization of long-term institutional capital. We approach those conversations as we approach every investment decision. Any opportunity we ultimately pursue will need to clear the same bar: delivering risk-adjusted returns for our clients.
Looking ahead
We are continuing to invest in the things that have always been part of our edge: our people and how we work.
We completed our post-quantum security assessment this year, ensuring the data we hold today will be protected against decryption as quantum computing matures. Over 90% of our people now use AI tools weekly, setting up the bigger shift we are starting: redesigning how work gets done.
Two executive appointments strengthen our leadership team for what lies ahead. Jon Salon was appointed Global Head of Private Equity, bringing more than three decades of investment and operational experience. Jeremy Trickett joined the Executive Management Team as Chief Legal Officer in an expanded role, bringing international experience that supports BCI’s global expansion.
We are seeding the next generation of BCI: our co-op program received over 14,000 applications for roughly 200 positions, and we more than tripled our Indigenous scholarships to nine this year.
I also asked twelve future leaders of BCI to imagine where this organization needs to go. Their work over the past year is shaping priorities this year and our planning beyond.
In closing
This was a year of volatility on the surface with steady results underneath. My thanks to the Board for their counsel, to my fellow members of the Executive Management Team, and to the people throughout BCI for all they delivered. We were ready for what this year brought. We will be ready for what comes next.
Again, I note the following:
Most investment programs delivered solid results, but Real Estate Equity returning -4.9% is the exception, and it warrants direct discussion. Over multiple cycles and across global markets, this program has delivered consistent long-term returns — that track record is the right lens for what happened this year. Vancouver’s condominium market was hit by a confluence of factors softening demand: interest rates, foreign-buyer taxes, and vacancy taxes, prompting QuadReal to take a write-down on the Oakridge development. The opening and near-full leasing of the shopping centre move it from a construction asset to an income-generating investment in the year ahead.
He's not hiding it, QuadReal took some opportunistic real estate risk (Oakridge development) which they needed to write down (was this risk reflected in their new benchmark?).
He also mentions why private Equity did well relatively speaking, completing $1.9 billion in secondary sales, exiting their stake in Hayfin Capital Management at "attractive terms" and how their investment in Photonic Inc., a Vancouver-based quantum computing company is doing very well.
Anyway, most people are off this week and next week but I am nice enough to cover BCI's fiscal year 2026 results here.
Maybe next year, BCI can significantly up its communications game and join the rest of the Maple 8 which take the time to talk to me so we can go over results properly.
Alright, let me end it there, take the time to read a lot more in BCI's annual report here.
Below, how did QuadReal get its name and what did it really take to build a global real estate company from scratch? This video goes back to the very beginning.
In 2016, a team set out to build a global real estate company from scratch in Vancouver, Canada, starting with $18 billion in assets and building toward what is now one of the world's leading real estate platforms. Featuring candid stories from QuadReal's founding team and early employees, this video captures the startup spirit and the conviction that made it all possible.
Despite the negative real estate equity returns during the last fiscal year, QuadReal remains the biggest success story since Gordon Fyfe took over the helm at BCI in July 2014.
Comments
Post a Comment