Shedding a Little Light on the City’s Investment Portfolio
The performance of the City’s investment portfolio brings us a good news story that doesn’t often get recognized. This year’s City Investment Committee report shows a strong performance of our investment portfolio. The portfolio is sizeable, at $3.4B, with the largest portion being the Ed Tel Endowment Fund.
The report states, “all of the City’s investment funds matched or outperformed their benchmarks,” demonstrating the City’s strong financial stewardship of our assets. Very few municipalities around the country a comparable portfolio to ours, mostly because of Edmonton’s nearly $1 billion Ed Tel endowment fund.
The Ed Tel fund was created back in 1995 through the sale of Edmonton Telephones to TELUS, with the goal of providing “a source of income in perpetuity while ensuring the real purchasing power of the fund is maintained.” Every year, this fund generates significant dividends that goes back into the City coffer to fund capital projects and other operating needs. In 2021, the stronger-than-expected performance did generate a special dividend (on top of a regular dividend of $41 million) that went into supporting our COVID emergency fund. This year, we are anticipating a $54 million dividend that includes a special dividend of $11 million. The City Council at that time had the foresight to establish this fund that keeps giving.
Ideas and Opportunities
The overall investment portfolio is very much diversified in various sectors. I’m curious about any opportunities here to use a portion of the portfolio or the endowment strategically as an investment vehicle into our own economy in the city, region and province.
For me, the report highlighted the need we have to continuously diversify our revenue options beyond the property tax base. For example, how can we leverage private sector investment by issuing our own debt via bonds like the sustainability bond one created last fall by the City of Vancouver? Creative approaches like this could also align with our ESG (Environmental, social, and governance) goals. Or what about an innovation fund like the City of Calgary’s Opportunity Calgary Investment Fund? This fund was created from the City of Calgary’s reserve fund and managed through the arms-length organization Calgary Economic Development.
Some exploration into how we can leverage various financial vehicles to maximize the goals of the city has been done in the past, and I’m keen to follow up on what else we can do.
In the meantime, the City of Edmonton's investment portfolio is a prudent approach to safeguard taxpayers’ dollars, while returning a revenue that continues to build the city so that we can achieve our goals and vision through the City Plan.
