The Investment Management Corp. of Ontario is reporting a net return of 5.6 per cent for 2023, with net assets increasing to $77.4 billion.
The investment organization’s year-end report found public equities returned 18 per cent in 2023, followed by global credit (7.7 per cent), fixed income (5.9 per cent), private equity (5.7 per cent), global infrastructure (4.9 per cent), public market alternatives (1.4 per cent) and real estate (negative 13 per cent).
In an emailed statement to Benefits Canada, Rossitsa Stoyanova, chief investment officer at the IMCO, said heightened periods of volatility in recent years have pushed investment organizations to better manage liquidity. “The continued market volatility has challenged all investors to remain disciplined and focused on their long-term investment strategy and resist the temptation to time the markets.”
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Investment organizations have increasingly looked for opportunities in the private equity market. In 2023, the IMCO increased its private credit allocation to 46 per cent, up from 37 per cent the previous year. It completed 11 direct and co-investment private equity deals amounting to $988 million. The investment organization is targeting an increase to its private credit allocation to 70 per cent by 2025, she said.
In 2023, the IMCO elected to re-position its global credit portfolio to contain more high yield, private credit and floating rate exposure. The decision was informed by long-term trends including an increasing turn “to private market-based financing over traditional banking sources.”
In terms of sustainability-driven investments, Stoyanova said the IMCO is a firm believer in electrification as one of the leading energy transition categories moving forward. The investment organization is planning for increased demand for the materials required to produce, store and transmit renewable energy. “Manufacturing industries across batteries, solar panels, inverters, cables and hydrogen electrolysers will materially increase and we will also see the creation of new and novel technologies to store and capture carbon dioxide.”
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