BC Business
BCI's Victoria head office
Executive vice president Ramy Rayes talks about the organization's big year and its future.
A lot of people were hired by British Columbia Investment Management Corporation (BCI) during the mid-2010s. The organization, which manages some $211 billion through investment services to B.C.’s public sector, was in the process of diversifying its assets.
“Not that we knew a market correction like COVID was going to take place,” says Rayes, who was one of those hires that brought the Victoria organization’s head count from just over 200 in 2015 to 620 today.
“But we knew it would happen at some time. Our clients were well positioned, so it was time to take a look at diversifying. You fix the roof when the sun is shining, right? The sun was shining for many years, so we made that call.”
Which isn’t to say that BCI eschewed a steady, patient strategy in favour of jumping into risky plays. Instead, the organization just sought to broaden its reach with the same type of long-term investments that its client profile (BCI manages many pension funds through its agreements with the public sector) typically aligned with. But increasing its capacity allowed BCI to dictate its investments more closely.
“We sit on boards of private companies and we can guide them in the direction that we want them to go,” says Rayes. “Rather than managing quarter-to-quarter like public companies may need to, we get to sort of sit back and watch the markets play out a bit.”
This year, BCI saw returns of 7.4 percent during its fiscal year—which ended on March 31, 2022. That’s not an easy trick to pull in what many has been described as a bear market of late. Indeed, BCI’s performance paled in comparison to the 16.5 percent return it pulled off for the year ending in 2021.
But with Russia’s invasion of Ukraine and other global factors impacting results, alternate investments have shone through the uncertainty, as BCI’s $24.8 billion private equity portfolio generated returns of 29.7 percent, while its $41.6 billion real estate portfolio returned 14.9 percent and its $24.8 billion infrastructure portfolio saw a 12.1 percent return.
Moving forward, Rayes thinks that a continued focus on smart investing is the way to go for BCI. “There’s more uncertainty in front of us,” he notes. “Stock markets haven’t performed very well. We have to keep it up, be rigorous, and not be tempted by the short term. People see markets fall, they see it as a good time to go in. For us, we maintain our outlook and the original plan in place.”
He continues, arguing that a hands-on approach is going to be more necessary than ever. “Without active management, the market wouldn’t have delivered [this increase]. But with our management, they were able to. In our opinion, this is going to become more obvious. A lot of money is being moved to passive investments, ETFs. In our opinion, it’s the other way that’s going to be successful.”