As the administrator of the Plan, LAPP Corporation has developed an investment policy — known as the Statement of Investment Policies and Procedures (SIPP) — that establishes the investment principles, policy guidelines, and approach to investment management of the Plan’s assets.
Alberta Investment Management Corporation (AIMCo) is responsible for the day-to-day investment management of LAPP’s portfolio of assets in accordance with the SIPP, and legislated as the sole provider of investment management services to LAPP.
During the second quarter, the Plan’s investments generated a return of +1.46% — or about 0.04% better than the +1.42% return of the Plan’s policy benchmark. Remarkably, market sentiment remained buoyant despite numerous challenges during the quarter including continued elevated rates of inflation, tighter monetary policy from the world’s major central banks, a regional banking crisis in the U.S., and China’s disappointing post-COVID economic recovery.
On an absolute basis, Global Equities and Private Debt and Loan were two of the top performing asset classes in the LAPP portfolio during the second quarter. Global Equities were driven by strongly performing U.S. markets, most notably in large, megacap technology companies. Private Debt and Loan, an asset class which is characterized by leveraged loan investments with floating-rate exposure, benefited from a rising interest-rate environment.
As at June 30, 2023, the LAPP portfolio generated a four-year annualized return of +5.69%, outperforming the policy benchmark by 1.10%. Over a four-year period, Fixed Income, Inflation Sensitive and Alternative Investments, and Private Equity — or all of the major asset class categories except for Public Equities — posted positive excess returns. On an absolute basis, the best performing asset classes over four years were Private and Public Equities, Private Infrastructure. and Renewable Resources.
For detailed quarterly investment results of the Plan, visit Funding and Investment.