LAPP’s financial position continues to be healthy, and our progress is detailed each year in our audited financial statements, which are published as part of our Annual Report each July. Assigned by the Auditor General of Alberta, the most recent accounts available are for the year ended December 31, 2019. Financial statements for December 31, 2019 year-end are published and available for public review.
As an administrator of the Plan, LAPP Corporation establishes high-level investment principles for the Plan through the Statement of Investment Policies and Procedures (SIPP), and investment management of LAPP’s portfolio of assets is undertaken by Alberta Investment Management Corporation (AIMCo). By legislation, AIMCo is designated by the Government of Alberta to be the sole provider of LAPP investment management services.
After the market correction, the gradual reopening from the first wave of COVID-19, and the unprecedented monetary stimulus, the LAPP fund's rate of return decreased to +2.10% in Q3 from +5.22% in Q2. Compared to the policy returns, respectively, the return rate dropped to +2.26% in Q3 from +8.12% in Q2. As equity markets rallied to pre-COVID-19 levels and the need for LAPP’s Downside Protection Strategy (DPS) subsided, the LAPP custom-made measure started experiencing lower valuations. However, the DPS continued to make a positive contribution to the Plan’s return on a year-to-date basis of 0.5%.
LAPP’s SIPP specifies that AIMCo is expected to deliver a return of 0.85% above the return generated by the Plan’s policy benchmark asset mix over a four-year, annualized time horizon.
As of September 30, 2020, AIMCo generated a four-year, annualized return of 6.1%; this figure includes the positive impact of LAPP’s DPS. This return compares with a policy benchmark return of 6.6% over the same four-year, annualized time horizon. As measured by quarter ends, AIMCo has been short of LAPP’s SIPP-specified value-added expectations for 49 consecutive quarters, or 12.25 years.
Detailed 2020 quarterly investment results of the Plan are published below.
Visit the Funding & Investment page to see previous quarters' investment reports.