The flags of Medicine Hat and Ukraine fly in front of city hall on Thursday afternoon. The flag of the embattled nation was raised last week as a show of solidarity during their conflict with Russia.--NEWS PHOTO COLLIN GALLANT
cgallant@medicinehatnews.com@CollinGallant
About one-tenth of one per cent of the City of Medicine Hat’s investments – potentially $400,000 – have direct exposure to the Russian economy, administrators told a council committee Thursday.
The greater effect could be current market uncertainty and trade problems caused by war in Eastern Europe, but, said city treasurer Ryan Wright, the city’s portfolio is broadly invested and coming off strong returns in 2021.
“There is a lot volatility (on global financial markets) and a generally down trend,” he told the corporate services committee during a general update. “Our portfolio is highly diversified among investment classes and regions.”
In response to the invasion of Ukraine by Russia, the Alberta Investment Management Corp. announced it would divest its relatively small holdings in Russia, worth about $100 million, entirely in publicly traded equities.
That is compared to $160 billion handled by AIMCo for the province, public sector pension funds and clients like Medicine Hat.
About half the city’s actively invested $400 million in reserves is managed by AIMCo. in a spread of bonds, equities and fixed-income as outlined by the city.
Last month the committee briefly discussed investment policy related to Environmental Sustainability and Governance, commonly called ESG. Officials said they depend on their fund managers to adhere to their stated ESG standards rather than have city finance staff investigate specific investments or rule out sectors of the economy or specific countries.
Another fund manager has informed the city about 1.6 per cent of its assets under management relate to Russia, but the portion related to city investments is much smaller still.
Wright said the city’s overall investments are currently tracking a rate of return less than an expected benchmark, but that is only through two months of the year.
“(Our strategy) takes a longer-term view, and we can’t get too caught up in what’s happening month to month or quarter to quarter,” said Wright. “I’d recommend sticking with the current asset mix.”
Committee members thanked officials for the update and said market risk is being managed.
“There is volatility that we are seeing, and the public can see that for themselves,” said committee chair, Coun. Robert Dumanowski.
“Its a good opportunity to remind the public that we’re going to have to work through it and be mindful.”
The final report on investment performance through 2021 is due to be presented in early April. It shows “significantly above benchmark” performance and “strong returns,” said Wright.
