OMERS prepares for purchases, showing preference for North American investments

OMERS, under the guidance of Ralph Berg, its chief investment officer for the past two years, is undergoing significant changes in its investment approach. Berg, whose background and upbringing differ from traditional Canadian investment executives, has brought a fresh perspective to the C$138.2 billion ($97.2 billion) pension fund’s investment strategies.

With a diverse career in investment banking at institutions like Deutsche Bank and Credit Suisse, Berg transitioned to Borealis, OMERS’ infrastructure arm in 2013, where he managed global infrastructure and capital markets. Since assuming the role of CIO, Berg has restructured OMERS’ investment model from an unwieldy collection of independent platforms to a streamlined system of six distinct programs.

In an interview, Berg discussed the inefficiencies of the previous model, highlighting the lack of a centralized team to manage the fund’s risk exposure and asset allocations. By consolidating programs into three public and three private investment streams, OMERS has achieved a more efficient and coordinated investment approach.

Under Berg’s leadership, OMERS now boasts a single equities program based in New York, a unified global credit group managing various credit styles, and a global multi-asset strategies group that facilitates agile adjustments to the fund’s asset mix. Additionally, a total portfolio management unit has been established to oversee trading activities and advise Berg on optimal asset allocations to achieve desired returns.

Despite having more liabilities than assets, OMERS has maintained a significant stake in unlisted assets, with approximately 55% of the fund allocated to infrastructure, real estate, and private equity investments. Berg credits the fund’s success in infrastructure and real estate to its early entry into the market and strategic partnerships with municipalities, emphasizing the stable, high-quality returns generated by these assets.

OMERS’ infrastructure investments, which date back 18 years, have evolved from small-scale projects to large, efficient asset management endeavors. With a diverse portfolio of infrastructure assets across multiple international markets, OMERS has established itself as a leader in the infrastructure investment space.

In real estate, OMERS’ Oxford Properties division has demonstrated consistent growth and cash generation, aligning well with the fund’s long-term investment objectives. Similarly, OMERS’ private equity arm focuses on buyout investments, consolidating its operations in North America to capitalize on the region’s strong deal flow and performance metrics.

Overall, Berg’s strategic vision for OMERS prioritizes efficiency, risk management, and asset diversification to ensure sustainable, long-term returns for the pension fund. By emphasizing structured, data-driven decision-making and aligning investments with the fund’s strategic objectives, OMERS is poised for continued success in the evolving investment landscape.