That question began plaguing one of the province’s largest pension managers last year, when the Ontario Municipal Employees Retirement System reported a multibillion-dollar loss for 2020, even as its public-sector peers posted healthy gains, many in the double digits.
A few months after OMERS reported its 2020 results, the Canadian Union of Public Employees Ontario, which represents 125,000 active members of the plan, called for an external review of the fund’s investing practices. Yet, a close look at information the fund has been willing to disclose suggests that in a volatile year where lots could go wrong, many things did in fact go wrong for OMERS.
“Anybody with consumer-facing businesses — and we at OMERS have a fair number of them — felt the pain immediately as legislators shut down our office buildings, retail outlets, some of our infrastructure assets, including airports.” HOOPP’s real estate business was largely flat and Ontario Teachers’ actually lost almost 14 per cent, or $3.5 billion, on real estate in 2020. But both saw big gains on stocks, and private-equity stakes in pandemic-friendly businesses paid off.
Following the wipeout on foreign currency hedging, the fund has re-evaluated its approach to this practice. The first months of the pandemic showed just how expensive it can be to maintain hedges in the face of massive demands for cash.