Public equities gains push IMCO's net return to 9.9 percent amid global caution
The Investment Management Corporation of Ontario (IMCO) reported a 9.9 percent weighted average net return for 2024—its strongest performance since inception.
This result reflects the impact of strategic asset allocation, targeted implementation of thematic investment strategies, and growing recognition of long-term global risks.
Assets under management rose to $86bn by year-end, supported by gains in public equities and private equity.
Public equities led performance with a 24.2 percent return, followed by a 16.4 percent gain in private equity.
IMCO also posted positive absolute returns in global credit (8.1 percent), infrastructure (8.0 percent), and public market alternatives (6.2 percent). Real estate declined by 0.8 percent, while fixed income remained flat at 0.0 percent.
Global investment strategy shaped by geopolitical caution
IMCO President and CEO Bert Clark, in a report by Benefits and Pensions Monitor, stated that while global investing can be beneficial to client portfolios, geographic diversification must be approached with a clear understanding of potential risks.
“It is important to ensure that geographic diversification is pursued for the right reasons and that all the implications of doing so are considered and planned for in advance,” said Clark.
According to Clark, the global market is increasingly shaped by higher geopolitical risk, deglobalization, and the growing importance of ESG, underscoring the need for a focused and selective international investment approach.
“Just as only a very few companies can operate effectively in many jurisdictions, most investors can only leverage real investment advantages in select geographies,” he added.
Clark also cited considerations such as operational leverage, sectoral expertise, scale, and the capacity for direct investment oversight as critical for foreign exposure.
Foreign currency fluctuations pose another challenge—while near-term gains or losses in developed market currencies can be hedged, emerging market currencies remain more volatile and harder to mitigate.
“Investing in Emerging Markets often brings both exposure to those asset classes, as well as local currencies, which can be more volatile than developed markets,” said Clark.
Clark also warned about political risks in frontier and emerging markets, noting weaker rule of law and less clear boundaries between government and private enterprise.
“Investors need to consider whether these geopolitical risks are ones they are willing to accept and are adequately compensated to take.”
Over the past five years, IMCO has adjusted asset class strategies and guided clients in revising their target asset mixes to pursue stronger long-term results.
In 2024, those changes were visible in the asset class returns and broader portfolio performance.
According to Chief Investment Officer Rossitsa Stoyanova, IMCO’s approach avoids market timing and “big bets,” instead focusing on disciplined positioning for uncertain environments.
IMCO’s World View 2024 report informed the investment strategy, considering themes such as rising geopolitical tensions, industrial policy shifts (including the Inflation Reduction Act and CHIPS Act), instability in the US regional banking system, and the rise of AI.
These macro-level dynamics helped guide allocation adjustments and emphasized the importance of risk-aware investing.
In addition to strong portfolio performance, IMCO expanded its client base significantly in 2024.
The Financial Services Regulatory Authority of Ontario (FSRA) selected IMCO to manage $1.2bn in assets for the Pension Benefits Guarantee Fund (PBGF).
According to Benefits and Pensions Monitor, Former FSRA CEO Mark White said the agency is confident that IMCO’s management will enhance returns for the PBGF, which protects certain benefits for Ontario’s defined benefit plan members in the event of employer insolvency.
IMCO also added three other institutional clients: Tarion Warranty Corporation, the City of Ottawa, and the Ontario Clean Water Agency (OCWA). Combined, these clients represent $2.6bn in additional portfolio assets. IMCO begun onboarding these clients last 2024.
By asset class, the largest AUM allocations included fixed income/government bonds (24 percent), public equities (23 percent), and real estate (14 percent).
Regionally, IMCO’s exposure remained concentrated in the United States (52 percent), followed by Canada (29 percent), Europe (11 percent), Asia Pacific (6 percent), and other regions (2 percent).
