The Ontario Municipal Employees Retirement System (OMERS) reported a 2008 net investment loss of approximately C$8 billion. Its private equity rate-of-return was -13.7 percent.
Today OMERS announced a negative 15.3 per cent total rate of return for 2008, compared with a positive 8.7 per cent total rate of return in 2007. In spite of the negative results in 2008, a positive average rate of return for the past five years of 6.9 per cent was realized which is in excess of OMERS five year average funding requirement and benchmark.
Net investment loss for 2008 totaled $8,013 million in 2008, compared with net investment income of $3,938 million a year earlier. The 2008 results place OMERS in the top quartile, both this year and over the past five year period according to a recent RBC Dexia Investor Services survey covering pension plans with assets in excess of $1 billion.
“The financial crisis that devastated world markets in 2008 happens once in a lifetime” said Michael Nobrega, OMERS President and CEO. “It drove stock markets to levels not seen in many years. Global equity markets fell by 30 to 40 per cent. OMERS did not escape the downturn, though we believe we fared relatively well as a result of the performance of our fixed income, real estate and infrastructure assets and our decision not to invest in certain high-risk financial products.”
“Since the adoption of our asset mix policy in 2003, we have reduced our exposure to public market investments from 82.2 per cent to 60.2 per cent,” said Patrick Crowley, OMERS Chief Financial Officer. “We’re getting a better balance between our public and private investments, and although we have experienced losses in 2008, they were lessened by the shift toward private market assets.” The shift from public market investments to private market investments accelerated in 2008 with the acquisition of several private market assets and the sharp reduction in the global equity markets, which significantly reduced the value of public market investments.
OMERS avoided significant exposure to certain high-risk investments such as sub-prime mortgages, collateralized debt obligations and over-leveraged assets which contributed to the crisis that directly impacted many financial institutions and created a “downdraft” felt by investors around the world.
“We’re in this for the long-term, and the results of any one year will not determine the future of the Plan,” said Nobrega. “Our members can remain confident their pensions are secure.”
OMERS introduced a five-year strategy in 2008 to create wealth for the Funds by establishing an active management approach to a growing number of its assets and through increased capital growth and global expansion. This led to the introduction of the OMERS Worldwide brand and the creation of OMERS Strategic Investments, a new investment entity with a mandate in part to build long-term strategic relationships with like-minded global institutional investors and business partners. OMERS Strategic Investments will provide access to capital to invest and grow the funds managed by OMERS.
“We must be ahead of the curve in our strategy to generate wealth for the Plan while continuing to diversify both by asset class and geographically,” said Nobrega. “In this way we will maintain the kind of strong and stable fund that will continue to meet the pension promise to OMERS members.”
OMERS is one of Canada’s largest pension funds with an established track record of strong and steady performance and with investments in a wide range of companies and assets around the world. OMERS provides retirement benefits to over 390,000 members from the local government sector in the province of Ontario, Canada.
For a more detailed breakdown of OMERS financial results, see the attached fact sheet.
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This news release contains the year end financial results of the OMERS Administration Corporation. The 2008 Annual Report will be available through OMERS.com in the spring of 2009 and will include the financial statements of both the OMERS Administration Corporation and the OMERS Sponsors Corporation. Forward-looking statements are subject to inherent risks and uncertainties, general and specific, which may cause actual results to differ from the expectations expressed in these statements.
Vice President, Corporate Communications
OMERS Administration Corporation
Ph: (416) 350-6784
OMERS 2008 Returns
Investment returns for the OMERS Primary Pension Plan and RCA by asset class for 2008 and 2007
|Rate of Return||Benchmark||Rate of Return||Benchmark|
|Total OMERS Primary Pension Plan (i)||-15.3%||-13.2%||8.7%||5.6%|
|RCA Investment Fund (ii)||-26.1%||-27.3%||8.7%||5.6%|
(i) Results of the OMERS Primary Pension Plan’s currency overlay hedging program and the costs of hedging certain private market investments are included in the total return only. Where applicable the 2007 returns have been restated to conform to the current year’s presentation.
(ii) Excludes the RCA refundable tax balance with the Canada Revenue Agency. Including the refundable tax balance the RCA 2008 rate of return was -12.6%
OMERS Primary Pension Plan rate of return over one, five and ten years
|1 Year||5 Year||10 Year|
|Rate of Return||Benchmark||Rate of Return||Benchmark||Rate of Return||Benchmark|