The Alberta Investment Management Corp. is opening its first Asian office, but the Edmonton-based investment organization says it will steer well clear of China to focus instead on markets with less geopolitical risk.
The official opening of the AIMCo’s new Singapore office marks the first foray into the Asia-Pacific region for one of Canada’s largest institutional investors, with $158 billion of assets under management as of 2022.
Evan Siddall, chief executive officer of the AIMCo, says up until recently, it has been missing out on some of the investment opportunities that exist within the large, fast-growing economies of the Asian continent. “We really are very under-represented in Asia. You know, we have less [investment] in Asia than we do in Alberta. I don’t want to look in the rear-view mirror, but we’ve missed opportunities for sure.”
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Siddall says the Singapore office opening is part of a larger push by the AIMCo towards greater diversification globally. The fund manager — which invests in public and private markets, real estate and infrastructure — already has offices in Calgary, Edmonton, Toronto, London and Luxembourg and will be opening a New York City office soon.
The AIMCo is lagging behind many other Canadian institutional investors when it comes to establishing a foothold in Asia. A report by the Asia Pacific Foundation of Canada found that between 2003 and 2017, Canadian pension funds invested $25 billion in the region.
The Ontario Teachers’ Pension Plan has had an on-the-ground presence on the continent for more than a decade and currently has offices in Singapore, as well as Hong Kong and Mumbai. The Canada Pension Plan Investment Board also has offices in Mumbai and Hong Kong.
However, Canadian pension funds have also been under scrutiny recently for their exposure to China, particularly given questions around the health of its economy as well as its ongoing tensions with the West. According to a Reuters report earlier this month, the CPPIB has laid off at least five employees at its Hong Kong office as it steps back from deals in China.
Read: CPPIB laying off staff in Hong Kong as it steps back from China deals: report
Siddall notes geopolitics is a significant risk factor in investing and is the reason the AIMCo has chosen to focus on the comparatively safe Singapore market rather than setting its sights on the world’s second-largest economy.
“We’re not rushing into China. We basically have almost nothing [invested] in China and really only in passive instruments,” he says. “There are some countries, where the rule of law and corruption are concerns, that we would rather just avoid, frankly.”
After reporting a loss of 3.4 per cent for 2022, the AIMCo says its performance has improved significantly in 2023. The fund manager said for the six-month period ending June 30, its net investment return was 4.5 per cent.
Read: AIMCo reporting 4.5% return in first half of 2023, lifted by global equities