‘What's really changed is the conditions that are being created are much better,’ CEO tells the Globe and Mail
Right off the heels of Prime Minister’s Mark Carney announcement of the Canada Investment Summit, scheduled later this year, the Ontario Municipal Employees Retirement System (OMERS), plans to add at least $10 billion in new Canadian investments to its portfolio over the next five years.
The pension fund, which manages approximately $145 billion in assets, currently holds about 18 per cent of its portfolio - roughly $26 billion - in Canada. OMERS’ CEO Blake Hutcheson told The Globe and Mail he intends to grow that share to 25 per cent, making OMERS the first major Canadian pension fund to set a specific target for meaningfully increasing its domestic allocation.
"What's really changed is the conditions that are being created are much better," Hutcheson said in an interview with The Globe and Mail. "There's more in the window. In recent months, my whole posture has changed, and we are very open to a lot more in Canada,” he added.
The plan's investment teams are actively pursuing more Canadian assets, particularly in infrastructure and real estate, according to the report. OMERS is also growing more confident about deal-making potential in the defence sector and in growth capital for Canadian startups.
OMERS’ current Canadian holdings include a significant interest in Bruce Power, the nuclear energy company, as well as ownership of land registry business Teranet. Its domestic real estate assets also feature high-profile properties, including Yorkdale Shopping Centre in Toronto and the Fairmont Banff Springs in Banff.
Additionally, the pension plan indirectly owns a five per cent interest in Maple Leaf Sports and Entertainment, which controls the Toronto Maple Leafs, Raptors and other professional sports teams.
Yet, roughly three-quarters of the $2.6 trillion managed by Canada’s largest pension funds remains invested outside the country, despite ongoing pressure from governments for those institutions to put more money to work domestically.
Pension fund leaders, including Hutcheson, have said they are willing to increase Canadian exposure, but have also pushed back at times.
They have argued that their primary responsibility is to deliver strong returns for members while avoiding excessive risk, which means investing wherever the best opportunities exist globally. Several pension executives have also maintained that Canada still lacks enough large-scale investment opportunities to absorb significantly more capital.
As a result, Ottawa has been in ongoing discussions with pension fund executives about ways to improve Canada’s appeal as an investment destination. As part of that effort, the federal government created the Major Projects Office to help speed up approvals for key developments.
While that broader concern remains, Hutcheson has become the first head of a major Canadian pension fund to establish a concrete target for increasing the portion of assets invested in Canada, signalling a notable shift in approach.
If OMERS leverages borrowing to support new infrastructure and real estate investments, the fund could deploy up to $20 billion in Canadian assets “under the right conditions,” the Globe and Mail reported.
OMERS has also adjusted the internal models it uses for global asset allocation, making them more favourable to Canada. The fund's leadership has communicated to its board that conditions are ripe for greater domestic capital deployment.
Canada's relative attractiveness has also improved as geopolitical risks — including wars, inflation and political instability — have increased the risk premium on investments in other countries, including the United States. OMERS also anticipates a stronger Canadian dollar, which would further incentivize investing at home.
“We are in the room, and I’ve personally been in the room more in the last six months than I have been in the last six years,” Hutcheson told the Globe and Mail. “The message that I’ve repeatedly shared is, stop mixing and start painting. In recent months, we’re seeing the painting.”
