Picking up right where we left off in Part I… I need to note that there’s only a small amount of publicly available data in this matter, but those numbers show a case, albeit weak, for AIMCo being the better pension manager in terms of performance.

Pointers on Examining Returns

First of all, let’s take a quick look at a couple of key things to note when looking at returns:

  1. Examining the absolute return – this though does not take into account the amount of risk that was taken in seeking that return. Click here to read an article by my fellow financial planner Markus Muhs. It’s an example using real-world investments and shows the ineffectiveness of using past absolute returns as the deciding factor in investment selection.
  2. Examining excess return, aka, risk-adjusted returns – this compares the performance return to a similar benchmark like the Toronto Stock Exchange or S&P500.  Pension managers use a combination of benchmarks.

    For Example, here is the ATRF list of benchmarks they measure their performance against:
Source: ATRF 2018 Annual Report, Page 43

Now, while the AIMCo report seems to enjoy showing their value-added number in dollars, not percentages throughout their 2018 Annual Financial Report (their large numbers sound impressive… I guess?), if we are going to do our best to compare apples to apples, we should be looking at percentages.

There are a couple of limitations that I face in preparing this analysis, and I thought I would note them first:

  1. The fiscal year-end for the ATRF is August 31st, whereas the fiscal year-end for AIMCo is December 31st, therefore the data sets will never exactly overlap. 

    Not knowing this has caused some well-intentioned, but very misinformed return comparisons on social media, such as this post, left on a CBC news article about the pension change:
Screenshot from the comment section of this CBC article
  • No maximum drawdown numbers are provided in either 2018 Annual Report.  Maximum drawdown is a useful measure in examining something like an investment fund or pension as it documents the worst peak-to-trough performance.  In other words, what is the most the fund has dropped before turning around and growing again? These numbers would add another piece of valuable information to the performance puzzle.

Findings Based on Publicly Available Data

So, what can we examine? 

We can do an in-depth dive into the numbers we have, particularly comparing the performance of the funds, and the performance of the benchmarks they are measured against.

Absolute performance comparison is not effective in this case as the fiscal year ends of the pension managers do not line up.  I saw a post on social media yesterday where a man was frustratingly pointing out that for fiscal 2018 AIMCo only returned 2.3% on the year while ATRF returned 9.6% (failed to grab a screenshot, argh!).  He was comparing apples to oranges. 

That 5 months difference in the year-ends made a HUGE difference in performance numbers in 2018.  Especially since public stock markets saw a correction in December of 2018.  The AIMCO performance numbers would have included the drop in markets, the ATRF, not the case. However, now AIMCo’s has a low starting asset level to have started their 2019 fiscal year at and, as you can see in the chart below, giving them an expected boost when their 2019 earning report comes in.

I hope this helps the reader see that absolute return comparison should be given little weight, if any, due to the limitations of the information provided in the annual reports.

Toronto Stock Exchange Composite Index. Source.

This chart shows how this broad Canadian market index dipped exactly at AIMCo’s year-end.
  • In examining risk-adjusted returns, here are a few numbers to consider:

Absolute Value Added

(Calculated by taking the performance number, and subtracting the benchmark number).

  ATRF AIMCo Differ- ence Scenario Winner
1-year absolute value added (%) 1.1% 1.0% 0.1% ATRF
2-year absolute value added (%) Not available 1.0% ? N/A
3-year absolute value added (%) Not available 1.8% ? N/A
4-year absolute value added (%) 0.9% 1.1% 0.2% AIMCo
5-year absolute value added (%) Not available 0.7% ? N/A
10-year absolute value added (%) 0.5% Not available ? N/A

There is not enough information available to the public to make any strong conclusions regarding this metric. There are only two data points for which we can make a direct comparison, the 1-year added value in which the ATRF performed better and the 4-year added value in which AIMCo performed better. 

Which one holds more weight?  The 4-year number, as it shows the performance comparison over the longest period possible based on publicly available data (I would have much rather compared 10- and 15-year numbers for both).

No strong conclusion should be drawn from this data.

However, if you were to ask me to pick one or the other, I would say that there is weak evidence that AIMCo is the more effective pension manager when it comes to adding value above the benchmark.

Relative Value Added

(How much more than the benchmark did the pensions make as a ratio/ percentage?) 

This calculation shows how much performance is generated per unit of risk

It’s not enough that one pension has better absolute returns than the other.  What’s more important is how much return you are generating per unit of risk.  In the following chart, the higher the percentage, the more value pensioners have received per unit of risk.

  ATRF AIMCo Winner
1-year value added to
benchmark ratio
113% 177% AIMCo
2-year value added to
benchmark ratio
Not available 121% N/A
3-year value added to
benchmark ratio
Not available 116% N/A
4-year value added to
benchmark ratio
113% 120% AIMCo
5-year value added to
benchmark ratio
Not available 111% N/A
10-year value added to
benchmark ratio
107% Not available N/A

Once again, the data set is small.  However, we can observe a slightly stronger case for AIMCo being the superior fund manager. While the three available data points for the ATRF show performance in excess of benchmark of 7-13%, AIMCo’s five data points show performance in excess of benchmark of 11-21% (I consider the one-year number to be an outlier in this data set, so I left it out).


When looking at performance alone, limited publicly available data for both pensions shows a weak case that AIMCO achieves more return per unit of risk when compared to the ATRF.  When examining whether or not this is a prudent move by the Alberta government, this factor should tick the “there’s no real great evidence, but with the limited information I have I guess I’ll choose AIMCo” box.

Once again I sourced all my ATRF and AIMCo data directly from the ATRF Fiscal 2018 Annual Report and the AIMCo Fiscal 2018 Annual Report.

I hope you enjoyed this article. If you are interested in a free, no-obligation 30-minute financial consultation (provided virtually or in-person in the Grande Prairie and Edmonton areas, for your convenience), feel free contact at me at 780-357-1780, or kris@fpconnect.ca.