As a founding member of the Alberta Investment Management Corporation Board of Directors, I have watched AIMCo mature and evolve to an organization that ranks among Canada’s largest institutional investors and one that is continuing to strive to become world-class in every facet of its business. AIMCo is deeply committed to its stewardship role in managing what is now nearly $100 billion in assets. Since 2009 our team has earned more than $49.1 billion in investment income, adding more than $4.2 billion of value above the benchmark. From our humble beginnings in 2008 – a year of tumultuous markets and financial turmoil – AIMCo has demonstrated an ability to thrive in challenging environments.
Perhaps it was this growth from the fault lines of the 2008 collapse that prepared us well for the rocky 2016 that was a continuation of the year before. With the financial markets caught off-guard by the Brexit vote outcome, the election in the United States and the continued decline in the price of oil to its low in July, “difficult” and “surprising” would be just two of the words that could describe this year. Despite its many challenges, I am proud to report that AIMCo has stayed steady and focused on its long-term goals and on serving the best interests of its clients.
It is important to remember that there are always new fault lines and discontinuities ahead that will challenge our resources and ingenuity and risk overturning a successful record of performance. Sustained significant value creation and a high-quality positive experience for all involved are more rare than common. Directors and management must share a conviction among themselves that there is no room for complacency. At AIMCo, I can assure our clients and all our stakeholders that your Board of Directors is anything but complacent. We accept the challenge to apply our knowledge and experience as a leadership partner with management. We work hard to ensure the highest level of good governance and to exercise our influence and authority in a way that will increase the probability of sustained superior performance.
I am confident that my legacy as a Board member, and Chair, will be one that continues to demonstrate the highest level of Board responsibility and commitment. We understand that we need to embrace and stand firm in our compliance-based responsibilities. We also understand that we need to embrace a commitment to look deeply and thoroughly into the effects of our decisions and influence. We know that we play a critical role in ensuring that AIMCo remains committed to a powerful vision, and that it develops and implements strategies consistent with this vision. This includes a strong commitment to ethics and “doing business the right way.”
This year we welcomed two outstanding new Board members: Phyllis Clark, former Vice-President (Finance and Administration) and Chief Financial Officer at the University of Alberta, and Ken Kroner, former Senior Managing Director at BlackRock. Their understanding of our clients and of investment markets will be greatly valued.
On behalf of our Board, I also want to express our sincere appreciation to Andrea Rosen for her leadership of our Governance Committee from inception and more generally for her exceptional commitment and dedication to the building of AIMCo. Based on about 10 years of working beside Andrea, I believe her contribution has been remarkable and that the impact of her work will prove foundational for AIMCo as it moves forward.
As I leave my post later this year, as Chair and Director, I wish to express my sincere gratitude to my friends and colleagues on AIMCo’s Board of Directors, our executive and staff, the Government of Alberta, all our investment clients and indeed all Albertans, for entrusting me with this important role. It has been an absolute privilege to serve my province and fellow Albertans.
Mac Van Wielingen
Our team at Alberta Investment Management Corporation shares a common commitment to serving the best interests of our clients through every facet of our business. Over the years, that dedication has become a key tenet of our corporate culture. In a year that was punctuated by surprises, our thinking remained focused on the long term, and I am pleased to report that our progress in 2016 evidences that we remain on the right track.
Organizations like AIMCo, which are well-governed with established governance autonomy, operational independence and the ability to attract top professional talent from around the world, are the envy of the institutional investment space. In recent years, the ability of large institutional investors to outperform the markets through active investment strategies has come under intense scrutiny, with a commensurate increase in more passive strategies as a result. The AIMCo experience has been the realization of value-adding return generated by patient, smart and intense active management. This ability is directly related to and dependent upon those advantages identified above: excellent governance, great talent and independence.
For the calendar year ending 2016, AIMCo earned a net return of 5.8%, outperforming our benchmark by 0.3% and earning our clients more than $225 million in excess value-add return above the passive benchmark. For the five-year period ending on December 31, 2016, AIMCo has earned an annualized net return of 9.5%, outperforming our benchmark for the same period by 0.9%. Given the uncertainty that exists in investment markets during even the calmest periods, I am particularly proud of our team for staying disciplined and maintaining conviction in our strategies.
Our commitment to clients remains one of our highest priorities, and this year we welcomed the addition of a new client, the City of Medicine Hat. I thank our clients, old and new, for continuing to trust our steady and thoughtful approach to navigating the rough waters of 2016. It is sure thinking that has allowed us to not only endure, but to take advantage and find value even during a tumultuous year.
On behalf of the talented professionals at AIMCo, thank you to our Board of Directors for helping steer our ship through the storm. I am also excited to welcome our two new Board members, Phyllis Clark and Ken Kroner. I also extend a special and heartfelt thank you to our outgoing Chair, Mac Van Wielingen, and our Governance Chair, Andrea Rosen. Mac and Andrea’s leadership, thoughtfulness, innovation and dedication to AIMCo have truly made an impact that will forever shape us and help ensure our continued success.
Chief Executive Officer