It was sheer luck that Bob Bertram, ’71 MBA, got his hands on some company computers in 1978, scooping them up after another manager pooh-poohed their usefulness. Bertram, a pension fund employee at what was then Alberta Government Telephones (AGT), had done the math — and he knew the computer was a game-changer because it could do the math faster.
AGT’s pension fund became a sandbox where Bertram tested financial theories devised decades earlier by the likes of Nobel winners Harry Markowitz, Merton Miller and William Sharpe, along with other contemporary thought-leaders.
“Until that point, you had no way of managing a portfolio of bonds because you couldn’t do the mathematics fast enough,” Bertram recalls. “All of a sudden we could do it instantly. You could go into the marketplace … and make a ton of money. And we did.”
A new mindset in investing
He started testing new investing strategies — like derivatives, swap markets and hedge funds — and he consciously managed for risk rather than a rate of return. “We were feeling our way along,” he says. But those experiments were laying the groundwork for a completely new mindset in pension fund investing.
In 1991, Bertram took a job as the first chief investment officer for the newly created Ontario Teachers’ Pension Plan. With the retirement incomes of about 200,000 teachers on the line, Bertram started putting his strategies to work in a much bigger arena.
“I don’t know whether you want to call it courage or just foolishness but I was willing to take risks to get out of the status quo and make things work better.”
By his retirement in 2008, the $19-billion fund had grown into a $108-billion diversified portfolio that owned the likes of Cadillac Fairview and Maple Leaf Entertainment.
Not bad for the farm kid from Eston, Sask., who had drifted into university with a short-lived notion of being a lawyer. After earning a history degree, Bertram worked for a few years at AGT in Calgary, then quit that job to enrol in the University of Alberta’s fledgling MBA program, thinking he’d become a chief financial officer.
In contrast to many so-called “investment stars” who cannot get out of the way of their own ego, Bob is one of the most down-to-earth, genuinely humble leaders, whose many accomplishments speak for themselves.
James Leech, former president and CEO, Ontario Teachers’ Pension Plan
Strategies adopted around the world
He graduated into a recession and, about six months later, gratefully accepted a job offer from his old employer.
Today, the strategies Bertram put in motion are improving the retirement fortunes of retirees around the world.
He has received numerous honours, including the Order of Canada and an induction into the Investment Industry Hall of Fame, but he’s quick to state that the credit is not his alone.
“There were pioneers in pension funds before me,” he says. “But nobody did it consciously, starting with the balance sheet, worrying about the risks, optimizing the portfolio, fitting all the pieces together in a single portfolio. That’s what I did.
“Other people had the full picture in their mind, just not the opportunity to do it. I had the picture and the opportunity.”
Go Deeper
Play ball
Eston, Sask., had enough kids to field four Little League teams. Bertram started playing at age six and practiced by repeatedly throwing a rubber ball at a target on the garage. At 13, his last year of play, he was the Eston Pirates’ first baseman.
An interesting lesson
Bertram fondly remembers his Grade 9 English teacher, who was close to retirement and devoted an entire class to the concept of compound interest.
Playing the field
In university, Bertram continued working on the family farm, even though it meant missing a few weeks of fall classes. His bigger regret was having to give up baseball. “I was never back early enough to get on a team.”
Boldest move
The Ontario Teachers’ Pension Plan bought Cadillac Fairview in 1999, a decision Bertram cites as the best he has made. “The board said, ‘If this doesn’t work out, it’s going to cost you your job,’” Bertram laughs. “And I said, ‘Good! Let’s do it.’”
‘The dumb part of this is …’
He loves computers but has never bought Microsoft shares, citing the price and his wariness of tech stocks. “Clearly just absolutely wrong, but it’s a bias that I can’t get my mind around.”
Any advice?
Bertram has offered tips to his three daughters, who don’t always listen. As for his siblings (he’s number 12 of 14), Bertram knows better than to try. “They’re all older than me. They don’t take advice very well.”
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