OMERS targets overseas bond markets and sustainable investing to drive long-term pension growth
OMERS’ global diversification strategy stands out as a defining feature for institutional investors seeking stability and growth in today’s uncertain markets.
Brandon Weening, executive vice president, Corporate & Capital Markets Finance at OMERS, shared insights into the Canadian public pension fund’s investment priorities during a discussion with Bloomberg’s Chunzi Xu at the 2025 Bloomberg Canadian Finance Conference in New York.
The conversation highlighted OMERS’ approach to bond issuance, currency strategy, and sustainable investing, all of which are shaping the fund’s long-term performance.
OMERS, one of Canada’s largest defined benefit pension plans and a member of the Maple Eight, manages about $140bn in assets for approximately 600,000 municipal employees in Ontario.
The plan’s investment portfolio is truly global: about 20 percent of assets are in Canada, half in the US, 15 percent to 20 percent in Europe, with the remainder in Australia and other regions.
This global balance sheet, backed by a AAA rating, provides investors with exposure to a diverse range of markets and asset classes.
The fund’s bond issuance strategy is designed to enhance returns by borrowing at a AAA rate and investing at a long-term return of about seven percent, capturing the spread through a lower cost of capital.
OMERS issues debt primarily in US dollars, euros, and Australian dollars, aligning with where its investment teams find the most attractive opportunities.
The programmatic approach in US dollars includes a benchmark issuance every spring, typically in the three to five year range, while euro and Australian dollar issuances occur less frequently.
OMERS’ approach to currency management is rooted in maintaining a natural hedge.
The fund keeps debt in the same currencies as its investments, reducing risk and supporting global deployment.
Canadian dollars are not a primary focus for new issuance, as the plan already receives contributions, cash inflows, and liquidity in Canadian dollars, and leverage is capped at 10 percent of net assets.
Investor sentiment, according to Weening, is increasingly focused on certainty.
While OMERS cannot provide certainty in the markets, it offers a AAA rating and a fair spread, along with the reassurance of a globally diversified balance sheet.
Investors have shown appreciation for the diversity and stability OMERS brings to its Term Note program.
When selecting banking partners for overseas fundraising, OMERS prioritizes those with strong investor relations capabilities, primary market expertise, and robust secondary market performance.
Canadian banks are always considered first, but must demonstrate these capabilities to earn a mandate.
All major Canadian banks have participated in OMERS’ mandates over the past six years.
Sustainable investing remains a key area of interest.
OMERS maintains a sustainable bond framework and reports annually on its sustainable bonds, last issued in 2022.
While investor conversations have shifted from labelled bonds to broader sustainable investing practices, OMERS continues to update its framework and policies to reflect evolving expectations.
The fund is also prepared to issue in British pounds if compelling opportunities arise, and maintains a presence in Asia through Australian and US dollar issuances.
Decisions on whether to issue debt at the plan or company level depend on leverage limits and specific investment needs, with a $5bn commercial paper program complementing fixed-rate funding.
OMERS’ hedging strategy for term notes has evolved, with occasional hedging of rate exposure to optimize the overall portfolio as the allocation to fixed income increases.
Treasury and portfolio management teams make these decisions based on current market conditions.
Collaboration among the Maple Eight pension funds is characterized as collegial but independent.
OMERS describes itself as a fast follower, learning from peers’ experiences while maintaining its own objectives and parameters.
The fund’s disciplined, globally diversified approach continues to position it as a leader in the Canadian pension landscape.
