Ontario pension manager eyes expansion in Asia-pacific region

Ontario Municipal Employees' Retirement System almost quadrupled its stock holdings in Asia-pacific last year and plans to keep boosting its exposure to the fast-growing region over the next several years.

“We've seen a rebound quicker there in a lot of the sectors and markets than elsewhere globally,” Blake Hutcheson, who became chief executive on June 1, said in an interview.

The pension manager, known as Omers, deployed almost $4 billion in the region, up from about $1 billion, he said.

Lower-for-longer interest rates have pushed pension funds to cast their nets far and wide in search for returns over the last several years.

The $109-billion public-pension manager, one of Canada's largest, plans to deploy roughly 20 per cent of its capital in Asia-pacific over the next five to 10 years, with a focus on public equities rather than private assets, Hutcheson said.

Omers, which aims to double in size in the next eight to 10 years, had less than eight per cent invested in the region in 2019, according to its latest annual report. The MSCI Asia Pacific Index handed investors 17-per-cent returns last year.

PRIVATE MARKETS

In the private market, Hutcheson said he's seen a wide gap in buyers' and sellers' expectations in sectors hammered by the pandemic, such as retail, hotels and transportation. That's making it harder to do deals, he said.

“An owner can stay at the table,” he said. Meanwhile, potential investors want “to be discounted because of current valuations and current cash flow,” he said.

Toronto-based Omers is betting on an eventual rebound in demand for office space, Hutcheson said.