Quote:
Originally Posted by opendoor
AIMCo has still significantly underperformed the CPP. 10-year annualized returns:
AIMCo: 7.4%
CPP: 10.1%
Or put in terms of the increase in value for every $100 invested:
AIMCo: $104
CPP: $162
|
To me this isn’t really the same argument though, and perfectly illustrates why you want professionals making these decisions. Rate of return isn’t everything, particularly in pension management. The main metric for a pension is their discount rate and maintaining funded status. If that means for AIMCO and their mandates they need a 6% return to do that, then 7.4% is fine. You can’t just say “they should be earning as much as humanly possible” because that’s not how these things are managed at all.
This is just easy for the media to report and makes it easy to politicize. Think of it this way: you have a goal to meet and can get there with a 5% return. Today we could get that with a GIC and that’s the course we take. No risk, you meet the target and everyone’s happy. In the meantime the stock indexes go up 8% and people attack that strategy as leaving money on the table. It’s not really what happened, but it looks that way and plays well in the media.