Alberta Investment Management Corp. (AIMCo) plans to invest more in private equity, infrastructure assets and hedge funds in an effort to boost returns.
“In recent years, returns on traditional interest-bearing investments, such as bonds and money market funds, have fallen,” said AIMCo chairman Charles Baillie, in a speech to the Calgary Chamber of Commerce Thursday.
“There is a growing body of opinion that fixed-income investments will deliver relatively low returns for the next decade. This is partly why large institutional investment funds around the world are reviewing their investment strategies and considering less traditional investment options.”
He believes that the tightening of credit markets after the collapse of the U.S. subprime market is reducing competition for alternative investments. “As long as you have the gumption, this is an ideal time to be going into solid projects where there are fewer buyers than there were before,” said Baillie. “I would hope in five years from now you would see that we have a much higher content in alternative assets.”
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A group led by Macquarie Infrastructure Group—which includes AIMCo and the CPPIB—received approval on Thursday to purchase Puget Energy, owner of Washington state’s largest utility. The deal was announced last year.
“We eliminate a lot of intermediary costs if we do it ourselves so it should be much more economical to invest in infrastructure ourselves or in conjunction with other funds,” Baillie said.
AIMCo was created in January and manages six public sector pensions and four endowment funds including the $16.6 billion Alberta Heritage Savings Trust.
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