LAPP maintains a solid financial position based on its diversified portfolio and long-term return objectives. Our progress is detailed in our audited financial statements, published as part of our Annual Report every July. Audited by the Auditor General of Alberta, the most recent statements available are for the year ended December 31, 2020.
As the administrator of the Plan, LAPP Corporation establishes an investment policy for the Plan through the Statement of Investment Policies and Procedures (SIPP). Alberta Investment Management Corporation (AIMCo) undertakes investment management of LAPP’s portfolio of assets in accordance with the SIPP. By legislation, the Government of Alberta designated AIMCo as the sole provider of investment management services to LAPP Corporation.
In the first quarter of 2022, Private Debt & Loan, Canadian Equities, Real Estate, and Private Infrastructure earned positive absolute returns in the LAPP portfolio. At the same time, capital markets and the Plan’s assets were impacted by energy and food price shocks turning into persistent rather than transitory inflation, the war between Ukraine and Russia, monetary contraction by central banks, and a low global growth outlook. There is a risk that these elements represent a perfect environment for stagflation. Overall, the LAPP fund returned -3.71% in Q1 relative to a policy benchmark return of -3.35%, resulting in -36 basis points of value-add from active management.
Private Mortgages, Private Debt & Loan, and Global Small Cap Equity were the only asset class portfolios that attributed to positive valve-add in Q1 of 2022.
In January of 2022, LAPP Corporation continued implementing the new asset mix and amended the Risk and Responsible Investment sections of the Plan’s SIPP. These updates directly address risk expectations arising from active management, total fund volatility, and climate change. The Plan’s asset mix is based on long-term risk, return, and correlation expectations among various asset classes and involves increasing allocations to private asset classes, such as Infrastructure and Renewable Resources.
As of March 31, 2022, the Fund posted a four-year annualized return (net of fees) of +6.97%, outperforming the policy benchmark of +6.37% by 60 basis points.
Detailed 2022 quarterly investment results of the Plan are published below.
Visit the Funding & Investment page to see previous quarters' investment reports.