BCI Annual Report


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Page 37 of 81

Public Equities Capitalizing on and contributing to sustainability with a $66.6 billion global portfolio OUR APPROACH Our internally managed programs include actively managed portfolios that seek to outperform their benchmarks, as well as cost-effective indexing strategies designed to track the performance of well-diversified equity indexes. Since 2018, we have developed new, diversified investment strategies that are more cost-effective for clients while improving prospects for risk-adjusted returns and delivering sustainable value. We continue internalizing active equities for the benefit of our clients, having increased the amount of actively managed internal equities by $10.5 billion since fiscal 2018, and will focus on opportunities to invest directly in public companies. Our diverse investment and risk management strategies and long-term investment horizon give us the flexibility to take advantage of opportunities in volatile markets. We use external managers where appropriate. PERFORMANCE ANALYSIS Public equities delivered strong performance in fiscal 2021 in an unprecedented volatile market environment. After a sharp plunge in March 2020, the S&P 500 Index posted a rapid recovery just five months after bottoming. We remained focused on our investment process and took advantage of the price dislocations and favourable conditions to buy quality assets at attractive prices for our clients. The Global Partnership Fund, launched in April 2019, provides exposure to global equities and absolute return strategies. We deploy these strategies through both direct investments and co-investment opportunities, with an inherently low correlation with equity markets. Over a one-year period, the fund returned a strong absolute performance of 35.8 per cent and a relative performance aligned with the benchmark 1 of 35.9 per cent. The absolute return provided strong performance to add to the fund. During the year, we took advantage of market dislocation opportunities, investing in six new funds and adding six co-investments in absolute return. In late 2020, the absolute return portion of the fund exceeded $1.5 billion in invested capital, with a further $1.2 billion in unfunded commitments. The Global Quantitative ESG Equity Fund uses proprietary factors based on measures from four different ESG data providers to identify the attractiveness of securities from an ESG perspective. The signals in the model include traditional sources and artificial intelligence techniques. The fund has outperformed its benchmark since its inception in November 2019 and generated a one-year return of 38.0 per cent, against its benchmark of 35.9 per cent. Notably, environmental- and governance-related factors were positive drivers. 1 MSCI World ex-Canada Index 2 0 2 0 - 2 0 2 1 C o r p o r a t e A n n u a l R e p o r t M a n a g e m e n t ' s D i s c u s s i o n a n d A n a l y s i s 3 5

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