Discussing AIMCo's 2026 Mid-Year Results With CIO Justin Lord
Alberta Investment Management Corp. surpassed $200 billion in assets under management with a 7.1 per cent net investment return in the first half of the year marked by conflict in the Middle East, U.S. trade policy uncertainty and evolving inflation expectations.
The provincial Crown corporation that invests on behalf of pensions, endowments and government funds had $210.7 billion in assets under management as of June 30.
Chief investment officer Justin Lord said the trade situation and other geopolitical and macroeconomic developments are front and centre for the globally invested fund, which has a strong presence in North America. About 40 per cent of AIMCo’s assets are invested in Canada.
“A prolonged dispute, whether it’s in the Middle East (or) whether it’s trade-related, certainly could create headwinds for the Canadian economy, for the equity market,” he said. “And that’s something we’re monitoring closely.”
Public equities were the strongest contributor to AIMCo’s performance in the first half of the year, benefiting from resilient corporate earnings and continued strength in AI-related sectors and global equity markets. The results were moderated, however, by private equity, where there was lower transaction activity and valuation pressure in software-related investments.
“Private equity, perhaps even more so today, is playing a vital role in diversification across our equity exposures,” Lord said.
“A number of of equity markets, be it global or emerging markets, are really reliant on a couple of very similar underlying themes with respect to where we’re seeing earnings growth and price appreciation contributing to that strong performance,” he added.
AIMCo’s private equity program is focused on fund and co-investment, and Lord said the team is seeing a number of opportunities that align with the fund’s strategy, as well as an increase in secondary deal flow.
Public equities and absolute return strategies make up the bulk of AIMCo’s portfolio, at 38 per cent. The balance is split between private markets and money market and fixed income.
Lord said he plans to connect next month with “peers” and “partners” attending the Canada Investment Summit on Sept. 14 and 15, a conference convened by Prime Minister Carney that has a guest list of large global investment funds.
“We do have a significant amount of our assets invested here across a number of different asset classes and, should compelling opportunities arise, we’d be happy to … underwrite those transactions, much like we would in any other jurisdiction,” he said.
Lord said there are no hard targets or caps on AIMCo’s investments in Canada.
“We have a strong interest in seeing, obviously, a competitive and attractive investment environment here in our own backyard,” he said, “but we do invest globally on behalf of our clients and … ultimately, our responsibility is to deliver that long-term return for clients, and that means investing where we see the best opportunity to create value over time.”
Today, AIMCo issued a press release stating it has surpassed $200 billion in assets under management:
AIMCo reached a significant milestone in the first half of 2026, surpassing $200 billion in assets under management while continuing to deliver strong long-term investment results for clients.
At the halfway mark of 2026, AIMCo’s Balanced Fund earned a 4-year annualized net investment return of 9.9% and a 10-year annualized net investment return of 7.8% for clients.
For the six-month period ending June 30, 2026, the Balanced Fund’s net investment return was 7.2%.
Chief Investment Officer Justin Lord shares more details on the results (watch below and here).
You can also read the brief report AIMCo put out at the bottom of the page under Justin's video here.
Below, I provide the details:
Some quick points. Overall, the results are solid and better than most of its peers, reflecting AIMCo's higher exposure to public markets.
Public Equities led the gains but there were positive contributions from Public Fixed Income, Private Mortgages, Private Debt and Loan, and Infrastructure.
Performance in private market portfolios, particularly Private Equity, moderated overall results amid lower transaction activity and valuation pressure in software-related investments.
Discussion With Justin Lord, AIMCo's CIO, On Mid-Year Results
Earlier today, I had a chance to catch up with AIMCo CIO Justin Lord to go over mid-year results.
I want to begin by thanking him as well as Sabrina Bnaghoo and Alexandra Zabjek for setting up this Teams meeting, sending me material and assisting the meeting.
Keep in mind, I spoke with Justin in late March when I covered AIMCo's 2025 results here.
At the time, AIMCo's corporate annual report was not available, but it has since been released and is available here.
Justin began by giving me an overview of the results:
Yeah, certainly a couple of main points: Our mid-year updates tend to focus on the broader portfolio, the amalgamation of the client portfolios across the balanced fund. As you'll see, the net investment return was 7.2% for the first half of the year. That's $13.6 billion in net investment return across our client accounts.
Our four-year annualized number is 9.9%, reflecting that strong long-term performance that our clients depend upon and certainly positively impacting the 10-year annualized net return of 7.8%. As a long-term investor, we’re focused here with respect to fulfilling our mandate and meeting clients' needs. The other point to note, AIMCo did surpass $200 billion in assets other management as well, just reflecting that continued growth and collective scale of our clients across pension, insurance and government funds that are entrusted to us to manage.
But just owing to that scale that does position us to continue to access compelling investment opportunities that enhance that ability to deliver the long-term value on behalf of our clients and all Albertans. This is really key to our mandate, and I think we're demonstrating that we're achieving that successfully. One thing to note, our pension clients, for example, are currently fully funded, which should give all Albertans with a public pension plan a great deal of comfort regarding their financial futures.
And last but not least, the investment strategy that we put in place at the beginning of the year or at the end of 2025 has thus far proven to be moving in the right direction, with a focus on our core strategic capabilities, our competitive advantage from both structural and developed perspective, focusing on the strategic capabilities from a liquidity management portfolio construction perspective as it relates to our client portfolios overall.
Perhaps I'll leave it there, Leo, and we can jump into what you have with respect to asset classes, just noting that we'll keep some of the asset class level comments high-level. Again, we don't publish the underlying performance at mid-year and happy to go into much more detail once annual results are available, as we did last time.
I told Justin that I don't know what the (blended) actuarial hurdle rate is at AIMCo (6% or 6.3%?), but I said any time you're delivering above 7% on mid-year results, that is very strong and I especially noted the 9.9% annualized return over the last four years because that's excellent.
I asked him if they beat their benchmark in the first half and he replied:
I don't believe as a part of the mid-year results we focus on or provide those additional details, Leo. So I can't comment specifically given that at the total client portfolio level, we have a number of asset classes that will have various valuation schedules throughout the year.
Perhaps what I can comment on is that across public markets, despite the continuing concentration that we're seeing in underlying performance in equity indices, both certainly, when looking at global and emerging market indices as a whole, the team has been able to, through portfolio construction exposures, absolute return exposures and various active mandates, keep up with or outperform their benchmarks year to date. That's a big mid-year number and I certainly wouldn't want to get ahead of ourselves until annual results are out.
Fair enough. I asked Justin about their new strategy and whether or not they are taking more risk in public or private equities. He replied:
It really impacts each asset class to ensure alignment with our overarching strategy and leaning into the structural development sources of edge across the AIMCo platform.
Where we've made a few changes in public markets are really to ensure that we're providing the beta across our portfolio that our clients expect as efficiently as possible with a, I guess, renewed or refocused mandate from liquidity, collateral balance sheet management perspective.
And then the second part of that is ensuring the consistency of alpha generation across those mandates. So where we're taking active risk has evolved slightly with a focus on areas internally that we have a demonstrated capability or a proven track record and then certainly partnering with our external managers in areas where we feel active risk is attractively priced overall as we've seen, probably a slight reduction in active risk taking through security selection across the portfolio and an increase or maintain level of active risk and exposure through absolute return strategies internally and externally, both for direct client allocations to the absolute return product in their asset mix and/or portable alpha exposures on top of our synthetic beta within the equity platform.
I noted AIMCo uses a portable alpha structure to add alpha over their beta exposure and that absolute return strategies (hedge funds) have done well for all major pension funds over the last few years.
He replied:
Yes. And I think we're in an environment where that can potentially continue as we see increasing dispersion between asset classes, certainly a higher base rate of interest rates that creates a return profile that should be a spread above those fixed income rates of return that tends to meet clients return expectations not only from a direct allocation perspective, but certainly as a very efficient form of active risk at the total client portfolio level.
I agree with that assertion and will add that higher interest rates also mean a higher hurdle rate for internal and external absolute return strategies as the T-bill rate has risen.
We moved on to private markets, where I noted that some headwinds are impacting private equity returns. I noted that certain segments of real estate seem to be turning the corner and infrastructure remains steady, providing pension funds with solid, long-dated, inflation-adjusted returns.
Justin responded:
We spend a lot of time working with our clients and their respective asset class teams to really, I guess, hone in and define the role that those asset classes play in our clients’ portfolios.
When thinking about what we need exposure to in this environment, obviously, we're looking for growth from a portfolio building block perspective, income, inflation protection, and broader diversification impacts or contribution at the client portfolio level.
Specifically, infrastructure right now is fulfilling a number of those needs from a growth exposure to a degree, but primarily income and inflation protection as a function of the underlying quality of the portfolio, the quality of cash flows that are underwritten across the portfolio of assets. We're continuing to see attractive opportunities in infrastructure globally, both domestically and globally as it relates to our underlying product strategy. We're spending probably more time in the core-plus sub-segment of the market. There's a lot of competition for traditional core infrastructure assets, much like we had seen private credit over the last number of years when capital flows to parts of these markets, it can compress returns, and our view is that that sometimes creates opportunities where you might be not be fairly compensated for the overall risk that you're taking.
So really with an overarching philosophy of looking for those opportunity sets across our asset classes where risk is attractively priced, let’s call it part art and science from a portfolio construction perspective.
And we’re seeing attractive deal flow there, pockets of private credit as well, despite valuations and credit spreads that are still slightly elevated. This just puts more importance on the underlying underwriting and structuring of this exposure in general.
And then last but not least, you had mentioned private equity. And our private equity platform and strategy has been in place for over a decade now under Peter's leadership with , as you'll be familiar with, a fund and co-invest model overall. Certainly, we are seeing some green shoots as it relates to liquidity with capital markets activity and the IPO pipeline really coming to fruition. It feels like the market's been waiting for this for a number of years, and this amount of deal flow has been well received. That is a positive. We'd like to see that continue. We're assessing opportunities across certainly our manager and co-investment network, a growing secondary opportunity set in general and a broader capital solutions or strategic capital solutions opportunity set, which almost fits in between a private equity or private credit allocation, which we think is attractively priced risk exposure in general that is generated by our partnership network with both GPs and issuers.
Coming back to the role that private equity plays in the portfolio and the roles we're looking for from our asset classes as they contribute to our clients’ total portfolios, the one of diversification stands out as well, given the underlying concentration across not only public equity markets but you're seeing a fair amount of underlying macro drivers, obviously associated with the proliferation of artificial intelligence and capex, impacting not only public equities, but investment-grade public fixed income, public credit, private credit exposures, and to a degree some infrastructure and real estate exposures as well. So looking at the role that private equity plays in diversifying the growth factor in portfolios in general, it's likely to be as important in the next five to 10 years as it has been over the last decade.
Justin kept hammering the point of why private equity remains an important asset class from a diversification perspective and he's right. When growth-oriented public equity indexes finally suffer a protracted bear market, whenever that happens, many value-oriented segments of private equity will finally outperform (stale pricing also adds to diversification).
I asked him if co-investments figure prominently in infrastructure at AIMCo as they do in private equity and he replied:
Our infrastructure portfolio is actually broad, and we do have obviously fund and co-investment relationships as well. Direct investments are a much smaller part of the private equity strategy at AIMCo and owing to the strategic tilt a little over 10 years ago with the refocus of the program on the fund relationship and co-investment model.
I asked Justin what he sees in Real Estate because from my discussions, it seems like there is an inflection going on there. He replied:
I would agree. Perhaps inflection is maybe too strong of a word. We are seeing attractive deal flow across a number of geographies and sectors within real estate as the industry recovers. At different places, there's a lot of differentiation, be it office, grocery, retail, multifamily, or industrial exposures, and also depending on geography. We do have a view that there are attractive opportunity sets today and we expect to be active in real estate over the coming quarters and years. And perhaps more of a continued gradual recovery than an inflection point or something that we would see a sharp reversal.
I asked him if it's fair to say AIMCo has more exposure to Canadian real estate than its peers and he replied:
I'm not sure comparing to the other funds. We have a Canadian and a global real estate product. Our Canadian product is larger than our global product and the two strategies have a bit of a different focus. Global product being traditionally more opportunistic and Canada being more focused and really aligned with where we're evolving our real estate program to ensure that those roles of income generation and inflation protection are present for our clients’ allocations.
I noted AIMCo's allocation to public markets is roughly 70% and asked him if they are happy with the current allocation to privates. He responded:
We're comfortable with current allocations as it stands. We do have, where we would be under allocated in private markets, those risk exposures are represented by public markets. So to the degree that we are allocating additional capital across infrastructure, real estate, private credit and or private equity, there could be small reductions in public market allocations. You're correct in your analysis, Leo, I believe as of mid-year, we’re just under 70% of public markets as a whole. We do include absolute return allocations, those direct allocations in the public equities illustration as you'll see in the report also.
I also noted some of their peers have increased their allocation to Canadian equities (notably OMERS) this year and asked him if they did so too. He replied:
Our allocations to Canadian equities are going to be a combination of what our client allocations are and any broader views from a diversification or active risk-taking perspectives that AIMCo is managing.
We do have a fairly large allocation to Canadian (public) equities as we haven't seen any large shifts, either from client allocations or from our broader active risk-taking environment. Canadian equities do represent over 5% of the total portfolio.
We don't necessarily set a target allocation based on geography; that's all going to be a function of really risk pricing, coming back to the overarching investment philosophy and that's underpinned by fundamentals and valuation.
We certainly, we deal with a different type of concentration in the Canadian equity markets, and it has benefited client accounts given the relative pricing of that exposure and the performance over the last couple of years.
I asked if they hedge their US dollar exposure and he replied:
It depends on the product, Leo. We do hedge most of our US dollar exposure at the product level and at the benchmark level, but perhaps we can follow up on something more granular, if you'd like as well.
Lastly, I noted AIMCo resides in Alberta and there are many geopolitical and trade currents right now in the background, so I asked him how they are reacting, if at all. He responded:
That's a good question. And I probably come back to the overarching philosophy that we're global investors. As we talked before, it really comes down to where we're finding the best opportunities from a risk-pricing perspective that align with our products and our client allocations as a whole. We have approximately 40% Canadian exposure across our broader product mix in general, and certainly to the extent that there are additional opportunities to allocate capital in Canada that are competitive from a risk-return perspective, then our teams are certainly engaged and looking for those opportunities as well.
We left it at that, covered quite a bit for the mid-year results.
Once again, I thank Justin Lord for taking the time to chat with me and I also wanted to thank Alexandra Zabjek for sharing the transcript with me because some of Justin's replies came out muffled on my end.
Still, great interview, always enjoy catching up with Justin.
Below, AIMCo CIO Justin Lord shares more details on mid-year results (also see clip here).
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