Deep Thoughts by Michael Nobrega

This blog is movingNot to worry: same blogger; same content; same price (free).

Michael Nobrega is an interesting personage within the pension community. He’s been the CEO of the Ontario Municipal Employees Retirement System since 2007. And, prior to that, he was the President, CEO (and one might say Founder) of OMERS wholly-owned infrastructure manager Borealis (which he launched in 1998). In short, Nobrega has been an instrumental figure at OMERS during a time period when the Toronto-based pension fund was (as it continues to be) one of the single most innovative pension funds in the world. As you can imagine, then, those of us in the pension community generally pay attention when Mr. Nobrega offers some insight into what he’s thinking and doing. And, significantly, Benefits Canada has just published an interview with, and an article on, the innovative OMERS CEO. So I thought I’d share some of Nobrega’s ‘deep thoughts’ with you here:

The rationale for OMERS shifting its assets into illiquids: “The principal reason it was done was to reduce our exposure to the volatility of the capital markets, especially public equity. The second reason was to acquire assets that would give us as predictable as possible long-term cash returns to fund the pension plan.

The practical challenges of OMERS focus on illiquids: “It’s not an easy exercise. You want assets you can live with for 25 years…To do that, you have to keep your investment criteria in place. It’s easy to go and buy assets, but it’s a question of buying them at the right price, managing them properly and adding value to them later on.”

The importance of talent within a pension fund: “A pension fund makes money in two ways: it leverages its capital, and it leverages its people. And the best leverage is to have people with ownership responsibility [to leverage the capital].”

The importance of local knowledge in making investment decisions: “I think we made a good decision to open our offices in New York and London. That has really helped us in terms of sourcing investments…To get to where we want, we need to do two things: find the right people, and deploy the capital. Those two offices have helped us attract people we couldn’t attract to Toronto, because they want to live in New York or London. And they’re also part of the networks in those locations, which gives us an advantage in getting to the assets.”

Why OMERS is moving into Venture Capital: “It’s our intention to be the parent for some of the serious innovation in the country. And we hope the [venture capital investment] ecosystem will go from $1 billion to $10 billion annually over the next five years. That’s what we need in this country. Our intention in making this step is to encourage others to join us.”

Fascinating stuff!

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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