This is your daily pension announcement: The Pension War Room™️ is diving in to the slime that is the Heritage Fund Annual Report and press conference!!!! #ABLeg #fail #cabinetreshuffle
Get your copy here:
open.alberta.ca/publications/0…
Get your copy here:
open.alberta.ca/publications/0…
Start on Page 11 of the Annual Report:
It isn't accurate to use 1 year numbers. So I will use the 5 year numbers in my example. Funnily enough that about equates to Kevin's time at the helm of AIMCO. #ABLeg
It isn't accurate to use 1 year numbers. So I will use the 5 year numbers in my example. Funnily enough that about equates to Kevin's time at the helm of AIMCO. #ABLeg
Fund Rate of Return- that is self explanatory and we are comparing to this number the fund earned 5.2% annualized over the last five years. Is that good or bad?
The next line: Benchmark returned 5.0%. This is what an indexed portfolio with the same asset mix would have returned.
The next line: Benchmark returned 5.0%. This is what an indexed portfolio with the same asset mix would have returned.
*despite what Athana said earning above benchmark should be a given. If you can't, then fire all your managers and index the lot.
Because, on the next line, you see that active investment management (buying and selling securities) added 0.2% (5.2%-5.0%) to the return. #ABLeg
Because, on the next line, you see that active investment management (buying and selling securities) added 0.2% (5.2%-5.0%) to the return. #ABLeg
Is that good? No.
Look at the next line: the "Active Management Target" is 1.0%.
So the expectation for "good" performance would be benchmark plus active management. For this 5 year period the fund would have had to return 6.0% per year for "good" returns.
Look at the next line: the "Active Management Target" is 1.0%.
So the expectation for "good" performance would be benchmark plus active management. For this 5 year period the fund would have had to return 6.0% per year for "good" returns.
This is also how bonuses for investment staff are decided.The total fund component would be benchmark plus some threshold (maybe 0.75%) before anyone gets and investment bonus.
This is the relative (to the market) performance metric. #ABLeg
This is the relative (to the market) performance metric. #ABLeg
They have also included the absolute performance metric of CPI plus 4.5%. Against which the fund has done better over the different time frames. I don't know how AIMCO picks that as an absolute target, nobody should be paid a bonus based on it. #ABLeg
To quote the Heritage Fund:
"Against the policy benchmark, the Fund outperformed by 20 bps, although this did not surpass the value-added
target of 1 per cent."
...and that value add target is why we paid Kevin $2.976 million dollars last year. #ABLeg
"Against the policy benchmark, the Fund outperformed by 20 bps, although this did not surpass the value-added
target of 1 per cent."
...and that value add target is why we paid Kevin $2.976 million dollars last year. #ABLeg
The press conference is usually filled with softball questions lobbed with great deference to Travis and Kevin.
Not so much this year. #ABLeg
Not so much this year. #ABLeg
Kevin did say that comparing investment funds is "hard". I will take that as the closest thing to an admission that he shouldn't have written the business case for ATRF investment management to be subsumed by AIMCO. #ABLeg #betterlatethannever
