AIMCo joins list of asset managers vowing to divest Russia holdings

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Alberta Investment Management Corporation, the provincial pension and government fund manager better known as AIMCo, said Tuesday that it would be divesting all holdings in Russia due to the country’s invasion of Ukraine and the ensuing humanitarian crisis.

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AIMCo, a Crown corporation with $160-billion in assets under management, said the decision to divest was “both values- and value-driven.”

The divestment will affect less than $99 million in direct and indirect exposure to Russian securities as of the end of February, which accounts for 0.06 per of assets under management.

The decision “reflects a change in the price of geopolitical risk and sustained impairment to the underlying value of the respective companies,” AIMCo said in a statement, adding that it has a fiduciary duty to clients to act in their best interests.

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“We believe this decision aligns with our investment discretion, policies and prudent investment of capital,” the asset manager said.

However, the statement acknowledged that selling Russian securities will have to be done “as conditions permit, recognizing that … trading in Russian securities has been curtailed by regulatory authorities.”

According to a U.S. regulatory filing made in February, AIMCo owned 500,000 shares of Van Eck Vectors Russia ETF (Exchange Traded Fund) worth US$13.3 million as of Dec. 31, 2021, as well as shares in sponsored American Depository Receipts (ADRS) of Moscow-based mobile network operator Mobile Telesystems PJSC and Ozon Holdings PLC, a Cyprus-headquartered e-commerce company with operations in Russia, that were worth about US$2.8 million.

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Dénes Németh, vice-president of corporate communications at AIMCo, said Tuesday evening that as of February 28 of this year, AIMCo’s exposure to Russian equities includes $63-million in securities “directly custodied” including American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and locally listed companies. A further $36 million is indirect Russian exposure from holdings in emerging market funds, futures and swaps.

In Tuesday’s statement, AIMCo said it would not purchase any Russian assets during the current conflict or so long as financial sanctions are being applied to Russia or its leaders.

Along with AIMCo CEO Evan Siddall, the CEOs of half a dozen asset managers and investment platforms including Purpose Investments and Wealthsimple have pledged to divest of holdings of Russian companies “for as long as the Russia invasion persists.”

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Wealthsimple is halting the purchase of stocks of Russian-listed companies and companies that derive more than 50 per cent of their revenue from Russia on its self-directed brokerage platform. In its managed investment portfolios, there is currently 0.2 per cent exposure to Russia through two ETFs. No new money is being invested in Russian securities and spokesperson Rachael Factor said Wealthsimple is “working with our index providers remove existing holdings and/or find replacement funds.”

A spokesperson for Purpose said the investment firm divested all Russian exposure from two of its funds Tuesday: equities in the emerging markets dividend fund, and Russian Ruble currency positions in the multi-strategy market neutral fund.

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Tuesday’s pledges to cut investment ties with Russia follows statements from the Caisse de dépôt et placement du Québec last week about selling off assets in response to the invasion of Ukraine. 

Officials at the Caisse, which reported annual financial results last week, told reporters the Quebec pension giant has sold off holdings in Russia as a result of earlier sanctions, and plan to further cut exposure to the country, including through index-based stock investing.

“We are very active to correct the situation, to replicate our indices internally and to leave Russia,” Caisse chief executive Charles Emond told Reuters.

The “disposal plan is well underway,” a Caisse spokesperson said Tuesday. “The positions we still hold are marginal, primarily held through index funds.”

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Canadian pensions have not been active investors in Russia over much of the past decade, despite outreach from Moscow.

In 2012, Russia offered incentives and partnerships to Canadian pensions to encourage investment in Russia’s infrastructure projects. However, there was not widespread uptake, particularly after Russia moved to annex Crimea in 2014.

A spokesperson for the Canada Pension Plan Investment Board said the organization “made a conscious decision years ago not to have Russia as one of our markets.”

As a result, he said, “we have made no acquisitions there and have no direct exposure to the country.”

He added that any indirect exposure to the country through passive investments is “de minimus.”

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While many companies and investors are pulling back from Russia, Magna International Inc., one of the biggest car systems makers in the world, is holding tight for now. 

The Aurora, Ont.-based company runs six manufacturing facilities and employs 2,500 people there.

“Our operations are currently running and we continue to monitor the very dynamic situation,” a Magna spokesperson said by email Tuesday. 

“We are liaising with our customers and suppliers on a daily basis in order to review individual programs – our focus is to maintain business continuity.”

— with additional reporting from Bianca Bharti