Exploring Your Potential

The Alberta Teachers’ Retirement Fund is growing—and diversifying its investments in kind

Overseen by Derek Brodersen and the ATRF board, the Alberta Teachers’ Retirement Fund has made impressive strides beyond its original vision of providing the province’s teachers with sound financial security well into the future. Brodersen, who serves as chief investment officer, originally came on board in 1997 as an equity portfolio manager. Today his investment department has a staff 24 employees.
Overseen by Derek Brodersen and the ATRF board, the Alberta Teachers’ Retirement Fund has made impressive strides beyond its original vision of providing the province’s teachers with sound financial security well into the future. Brodersen, who serves as chief investment officer, originally came on board in 1997 as an equity portfolio manager. Today his investment department has a staff 24 employees.

Although teachers are one of enlightened society’s greatest assets (and greatest cultural forces), they need their own set of generous assets to do the job right. That’s where the Alberta Teachers’ Retirement Fund (ATRF) comes in. As an independent corporation, the ATRF was originally established in 1939 under the Teachers’ Pension Plans Act, and now, with 75,000 members, the fund currently manages more than $8 billion in assets. Overseeing these funds doesn’t happen on its own, though; its carefully conducted by Derek Brodersen, whose sound policies are helping the ATRF find new investment opportunities in the private sector for the continued betterment of its members.

“What we’re really here to do is secure the pensions for the teachers of Alberta—that’s our role,” says Derek Brodersen, the chief investment officer for the ATRF. “Everything we do on the investment side needs to support that. It’s not about making headlines or bragging about a good investment; it’s about the strong fiduciary responsibility we have to our stakeholders.”

In addition to his role at ATRF, Brodersen is a member of the CFA Society and the Pension Investment Association of Canada, and he has held his position since 2008, after originally joining the fund as an equity portfolio manager in 1997. Before that, he was working for an investment-management subsidiary of a Regina, Saskatchewan-based insurance company, but he was drawn to the ATRF for its challenges and—as he later found—its intellectual reward. “I wouldn’t have imagined 20 years ago that I’d be at any job for 16 years,” he says.

When Brodersen joined the fund, he was one of eight staff in his department, and even when he transitioned to the CIO role, the organization was still operating fairly conservatively. However, the funding structure of the pension plan at ATRF changed in 2009 and began collecting more money in contributions than it was paying out to its pensioners.

“This growth has been significant for two reasons,” Brodersen says. “First, the fact that our assets are growing and that we know they’re growing gave us the scale to do things we weren’t able to do before. And secondly, because we have cash coming in, we don’t need to worry about liquidity. We can make investments now that we might not be able to touch for 10 years, and that’s okay.”

By the Numbers

1939
Year the ATRF was established

$8 b
Total assets managed by the ATRF

300
Percentage the ATRF’s investment team has grown by in the past three years

Previous to ATRF’s growth, it primarily put its money into publicly traded investments, but now it has a significant portion of its portfolio in privately traded investments such as real estate, private equity, and infrastructure. “What we’ve done in the past three years is build internal teams to manage those portfolios of assets on an ongoing basis,” Brodersen says. “These asset classes are much more labour intensive than public-market assets, so we’ve needed to add a lot of people.” The investment department now staffs about 24 employees, and its work has led to growth in other ATRF departments.

The bulk of the fund’s dramatic changes came roughly a year after Brodersen reached the CIO position, and though some of them had been forecast earlier, it was only after Brodersen took the helm that they began to crystallize. “The changes have been great, and though it has been a huge challenge developing the business plan and educating our board and investment committee about the requirements of investing in these asset classes, everyone has been working very hard and having a good time doing it,” Brodersen says.

After such an involved period of active growth, Brodersen adds, it’s now time for the ATRF to mature its newly established departments and roles. For the first time in three years, the fund is no longer in an active hiring mode, so it is critical to strengthen its internal cohesion and to pursue new and increasingly diverse investment opportunities. It’s good for the ATRF, but, more importantly, it’s good for the teachers. “That’s the reason we’re here—to support the teachers,” Brodersen says. “What we’re doing is finding the right balance to enable us to pay the teachers’ pensions over the long run but not taking too much risk in the process. Managing investments is as much about managing risk as it is about managing return.”