Alberta Investment Management Corp.

‘s new chief investment officer says the $183-billion pension and endowment manager is keen to do due diligence on potential investments in energy and utility corridors being pitched by

Prime Minister Mark Carney

and his government.

“The possibility of a energy/utility corridor across Canada, enabling diversification of the Canadian economy, enabling a diversification of egress routes from an energy perspective, would be of interest for the team,” Justin Lord said in an interview as AIMCo posted a net return of two per cent for the first half of the year.

“We do have a well-seasoned infrastructure team that’s connected with a number of local partners,” he said.

The idea of nation-building corridors — such as an energy partnership in Eastern Canada and connected infrastructure that could include roads, rail, power generation, transmission

and pipelines

in Western Canada and the Arctic — has been embraced by Carney’ government, which has committed to reduce economic dependence on the United States and mitigate damage from tariffs levied by

U.S. President Donald Trump

’s administration.

Carney is also hoping to use government funds to trigger tens of billions of dollars in investment by Canada’s large globe-trotting institutional investors, primarily an informal group of pension funds including AIMCo dubbed the Maple Eight.

Lord, who became AIMCo’s CIO in July, said he could not comment on whether there have been any “interactions” directly with government to discuss such investments. Nor would he weigh in directly on the fund’s potential interest in the

Trans Mountain Pipeline,

which Ottawa purchased in 2018 to salvage a multi-billion-dollar expansion, or when it might be put on the block. But he said Canada, where AIMCo had 40.5 per cent of its assets as of Dec. 31, remains attractive so long as investments are competitive relative to what’s available around the world.

“We look at all opportunity sets on a global basis, and those opportunities as they would present themselves to invest in Canada, or any infrastructure related projects in Canada, would have to be competitive from a risk-reward perspective as it relates to our overall deal pipeline,” he said. “Canada is our backyard. Alberta is our backyard.

Certainly in a period of time where we have heightened geopolitical and trade risk, there is a an attractiveness to being able to invest at home and in your home currency as well.”

In the first half of this year — which Lord described as “a long six months” that featured a volatile first quarter for equities after Trump unleashed tariffs on trading partners — returns were driven primarily by public assets. Public equities, money market, fixed income, mortgages, private debt and loans all contributed.

The performance of illiquid asset classes such as private equity, infrastructure and real estate was more muted due in part to the geopolitical landscape and trade tensions with the United States. But Lord said that picture could change when private valuations are updated, a process that takes place at the end of the year.

“We expect some positive trends, given the backdrop of increased earnings and stability across the public market landscape overall, and certainly on the trade and tariff front,” he said.

“From a valuations perspective, we’re seeing … private equity have a more difficult time keeping up with public equity comparables and then from an infrastructure perspective, we’re seeing solid operating results across the across the portfolios.”

Lord said some of AIMCo’s clients, which include the pensions funds of teachers, judges and public servants, are coming close to their allocation on illiquid asset classes. But where such private investments can be made, the expected focus will be on infrastructure, private credit portfolios and, perhaps, real estate.

Some segments of the real estate sector have been hard hit over the few years by factors including rapidly rising

interest rates

, the COVID-19 pandemic and trade tensions, but he said there have been “some green shoots” recently.

 

“Increasing liquidity … would lead us to think that we are close to bottoming in a number of some of the sub-sectors in the real estate market,” he said.

 

Lord has been with AIMCo, a Crown corporation designed to operate at arm’s-length from the Alberta government, since 2012. He took over as chief investment office on July 11, following a tumultuous year in which the board of directors was jettisoned and then reconstituted, and chief executive Evan Siddall was dismissed and replaced by former senior bureaucrat Ray Gilmour.

 

The provincial government called the moves a necessary “reset,” blaming increases in operating costs and management fees “without a corresponding return on investment.” However, this rationale was later challenged by former acting chair Kenneth Kroner in a detailed letter to Nate Horner, Alberta’s minister of finance and president of treasury board.

  • AIMCo stops non-essential business trips to U.S.
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The November 2024 shakeup came less than two months after AIMCo’s chief investment officer Marlene Puffer left. Her job was then divided: Lord was promoted to oversee global public markets, and David Scudellari appointed to an expanded role as global head of private assets and strategic partnerships. Scudellari left AIMCo in February, at the same time international offices in New York and Singapore opened during Siddall’s tenure were closed.

The 10-year net annualized return for AIMCo’s balanced fund, which is reported to strip out clients that are invested heavily in fixed income, is seven per cent. The four-year net annualized return is 6.3 per cent. As of June 30, the balanced fund’s net investment return was 2.1 per cent compared to two per cent for the total fund.

• Email: bshecter@postmedia.com