Be like OMERS not HOMERS - Invest Like a Pension Manager

"First you get the sugar,
then you get the power,
 then you get the women!" - Homer Simpson

An advisor at my bank's full service broker told me that his goal in managing money was to be like a pension manager - that is, forget the Homer Simpson get rick quick schemes or "swinging for the fences".  Instead, his style was to progress slowly and surely, not extending yourself too far out on the risk vs. reward curve.  Basically, be like OMERS and not HOMERS.

Nearly 1 in 20 employed Ontario residents is a member of the Ontario Municipal Employees Retirement Savings plan - that's over 400,000 people climbing their way up the sunshine list like spring-blooming clematises...clematii ...um, sun-loving vines.

OMERS' strategy for steady sustainable (and less volative) growth is to shift to more private equity, and less public equity.  For a large pension fund, public equity gives the portfolio that up and down motion that causes pension contributors to "toss their corn dogs" like kids on a state fair roller coaster.

OMERS' solution is to shift to 47% private equity in the portfolio saying this 'direct drive" ownership model provides greater control of investments with lower cost.  In some ways this is just like an individual investor trying to lower his management fees or seeking out private investments like MICs, mortgages or REITS.  The challenge for the individual is doing this with enough diversification.

"Forget the sugar (energy from ethanol is a waste of time),
then you get the uranium, then you get the power!"
 Borealis Infrastructure's Bruce Power nuclear generating station.

In 2012 OMERS posted these returns for parts of their portfolio:

OMERS Capital Markets    +7.5%
OMERS Private Equity   +19.2%
Borealis Infrastructure  +12.7%
Oxford Properties  +16.9%
OMERS Strategic Investments - 10.1%

Overall return 10.0%

The private equity components' weighted return was 13.8%, while the public equity (Capital Markets) was only 7.5%.  Many OMERS members can tap into this diversified, and private equity weighted investment portfolio at a nominal cost of only $35 per year through the relatively new AVCs additional voluntary contribution program.

Compared to my bank broker's management fee of 1 to 2% (on top of the underlying ETF fees in the holdings he favours) individuals in the AVCs program can easily be like OMERS and not like HOMERs when it comes to retirement investing.

PS - Unlike Homer's Springfield Nuclear Power company, Bruce Power has banned the use of Rubik's Cubes in all operator training.