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By Alex McCuaig

AIMCo losses

City’s principle investment in AIMCo still safe despite reported losses in the billions

Apr 22, 2020 | 4:57 PM

MEDICINE HAT, AB – Questions are being asked about the province’s Crown corporation tasked with managing public sector pensions, the Heritage Trust Fund and $175 million in City of Medicine Hat investments after a pair of media reports showing more than $5 billion dollars in losses.

The Globe & Mail reported on Tuesday that a volatility-based investment strategy employed by the Alberta Investment Management Corporation (AIMCo) lost $4 billion dollars due to the double-whammy of falling stock prices and plummeting oil prices.

That was followed by Alberta-based PressProgress website on Wednesday stating there was $1.1 billion in losses by AIMCo from investment in junior oil and gas firms.

City of Medicine Hat commissioner of corporate services Dennis Egert says the city’s investments are still in the positive while the losses need to be put in perspective of a fund that manages nearly $120 billion.

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He added the city’s investments with AIMCo are still worth more than then its initial investment.

“The market value of our portfolio today is still in excess of what the initial investment was,” said Egert. “So in other words, the original capital is still safe and protected.”

Egert said AIMCo is regarded as a strong investment manager and while some of its investment strategies employed which have resulted in substantial losses recently they have provided dividend over the past six years prior to being hit by unprecedented volatility in the stock market.

“With that volatility, it puts pressure on some of the strategies that these investment managers employ in executing our investment policy,” said Egert.

He added that the city has realized a 6.5 per cent annualized return on its AIMCo investments in 2019.

The city began its relationship with AIMCo in 2017 with most of its investment coming from its oil and gas and electrical generation business unit profits with the remaining portion coming from the municipal Heritage Savings Reserve Fund.