Alberta pension fund loses $3B(US) on market volatility bet

[dapaterson]

Alberta's provincial pension fund lost over $3B this year due to a failed bet on market volatility.

The Alberta Investment Management Corp. — which manages pension assets, sovereign wealth, and other public money — lost billions of dollars on wrong-way volatility trades when markets crashed earlier this year, and then shut down the strategies, according to informed sources.

The now-defunct volatility-trading program cost pensioners and Albertans about $3 billion, the sources said. That’s on top of substantial, first-quarter losses to portfolio value that nearly all public funds are dealing with amid the coronavirus crisis.

https://www.institutionalinvestor.com/article/b1l9c8n9lgdj1r/AIMCo-s-3-Billion-Volatility-Trading-Blunder

Of interest: AIMCo has underperformed OMERS (Ontario's municipal pension plan) by over 1.5% per year for the last decade.

Canada boasts some of the world’s most sophisticated and best performing public investment funds, which essentially operate like Wall Street firms but siphon profits to ex-bus drivers and retired nurses.   

AIMCo is not among that top tier, experts and data suggest.

For example, the Ontario Teachers’ Pension Plan delivered 9.8 percent annualized over the last decade, whereas AIMCo gained 8.2 percent — a gap of more than 1.5 percentage points per year.

Even within its own province, AIMCo has trailed the smaller Alberta Teachers’ Retirement Fund. AIMCo is slated to vacuum up ATRF’s C$18 billion (about $13 billion) or so in assets, despite teachers’ and fund leaders’ protracted opposition. Had this already happened, AIMCo’s wayward volatility trades would likely have hit educators’ pensions. 

 

[mariomike]

Of interest: AIMCo has underperformed OMERS (Ontario's municipal pension plan) by over 1.5% per year for the last decade.

Regarding OMERS,

Feb 24, 2020

OMERS cut its stock holdings just in the nick of time

https://www.bnnbloomberg.ca/top-canada-pension-fund-cuts-stock-holdings-ahead-of-global-rout-1.1394822

Founded in 1962, Omers oversees the retirement savings for nearly 500,000 municipal employees, school board, emergency services and local agency members across the province of Ontario.