P3 PUBLIC PENSIONS FUND PRIVATE PROFIT

Ontario Pension Taps Antares to Invest in Private Credit Deals

Esteban Duarte
Thu, October 28, 2021, 
(Bloomberg) -- Investment Management Corp. of Ontario, a money manager for pension funds in the Canadian province, tapped Antares Capital LP to invest $500 million in loans to be used by private equity firms to finance transactions.

The portfolio will target between 75 and 100 transactions U.S. and Canadian issuers operating in the mid-market, according to an emailed statement seen by Bloomberg. IMCO selected Antares as its private debt manager after a competitive process.

“We are building out the global credit strategy for the long term,” Jennifer Hartviksen, IMCO’s managing director of global credit, said in an interview. “As we surveyed the landscape, we identified Antares as being the best fit for us because of that superior performance generated by a demonstrated low loss rate over many cycles.”

Pension funds and other large institutions are deploying more capital to private credit as they seek higher yields to shield themselves from the accelerating inflation. Antares’s mandate will be followed by others at IMCO that will be focused on real estate debt, emerging market debt and other asset classes, Hartviksen said.

Early this year, IMCO assigned a separate $500 million mandate for Ares Management Corp. to invest in a diversified multi-strategy credit portfolio. The firm’s credit portfolio is expected to grow to C$8 billion ($6.5 billion) by 2025 from C$4.6 billion at the end of 2020.

IMCO was created about five years ago to consolidate several public-sector funds in Canada’s largest province under one manager. IMCO managed C$73.3 billion in assets as of the end of 2020. It posted an overall gain of 5.4% for 2020.

US Pensions Should Stop ‘Hibernating’ Investments, JPMorgan Says

Max Reyes
Thu, October 28, 2021, 


(Bloomberg) -- Pensions should change the de-risking strategies they’ve pursued since the 2008 financial crisis to embrace a wider array of investments, JPMorgan Chase & Co.’s asset-management unit said in a report.
be

Equities, hedge funds, real estate and emerging-markets sovereign debt are among the investment categories that can help pensions “fine-tune the level of risk relative to the expected return,” the asset manager said Thursday in its report. Defined-benefit employee retirement plans have leaned on long-duration fixed-income securities for too long, according to the report.

“The pension community has been sold a story by insurance companies and low-skilled fixed-income managers that hibernating their pension plan and ultimately terminating it is the best use of that capital, and that is false,” Jared Gross, the head of institutional portfolio strategy at the asset manager, said in an interview. He co-wrote the paper with Michael Buchenholz, who heads pension strategy for the business, which has $2.7 trillion of assets under management.

Back-to-back financial market crashes in 2001 and 2008 prompted pensions to aggressively de-risk, Gross said. Plans previously had much more equity exposure, and the shift into fixed-income securities was a natural response to the ravages of the dot-com crash and the Great Recession. Plan sponsors should now seek out opportunities to develop a more robust and diverse portfolio, he said.

Funding levels for plans sponsored by S&P 1500 companies stand at 94%, according to data from pension-advisory firm Mercer. That makes it an opportune time for companies to offload obligations through a pension risk transfer. The market for such transactions is on track for its busiest year since 2012.

Gross said the JPMorgan report isn’t meant to warn companies away from the pension risk transfer market, which he said has a role to play in managing liabilities. Rather, the goal is to make sure pensions aren’t making de-risking decisions that don’t add up.

“Funds that stabilize will still make use of the pension risk transfer market. They should,” Gross said. “But only when it makes economic sense. They shouldn’t push themselves to a point of inefficiency,” where a more-efficient solution suddenly becomes appealing, he said.