Ontario Teachers’ Pension Plan Board gets small return

Still on track to reach $300 billion in net assets by 2030

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The Ontario Teachers’ Pension Plan Board returned 1.2% in the first half of the year amid high inflation and “struggling” markets.

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The net assets of Canada’s largest single-profession pension plan reached $242.5 billion.

“In a tumultuous time for global markets and with the highest inflation rates we have seen in decades, we have been able to deliver positive returns to our members and continue to make progress towards our goal of ‘reach $300 billion in net assets by 2030,’ Jo Taylor, chief executive of the pension manager, said in a statement.

“These results show that diversification, active management and an agile investment approach allow us to generate returns in a wide range of investment environments and position us well to navigate what is likely to be an investment landscape. difficult over the next few years.”

The net return of the fund over one year is 8.3%, with a total annualized net return of the fund of 9% over 10 years. The return since inception is 9.6%.

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Teachers’ chief investment officer Ziad Hindo said last period’s performance was achieved despite losses in most major stock and bond indices and a strong inflationary environment.

“We saw positive returns in our inflation-sensitive, infrastructure and absolute return asset classes, which were partially offset by losses in public equities, venture capital growth and credit” , did he declare.

“The fund has benefited from our deliberate efforts over the past 12 months to skew the asset mix towards those that perform well in inflationary environments, particularly commodities and infrastructure.”

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The pension plan was fully funded with a surplus of $17.2 billion as of January 1, 2022.

In an interview, Taylor said the first-half return was “lower than what we’d like to do”, but added that he remained confident the longer-term returns would keep the pension plan well-funded with ample cash. to take advantage of investment opportunities.

“Compared to the others, these are…good numbers given the environment we worked in trying to navigate in the first half,” he said. “But having said that, we see that the environment is still quite tricky, and it’s going to be, I think, tough, certainly in the second half of 22 and beyond.”

Taylor said Teachers’ private equity business was neutral in a difficult market in the first half of the year, due to the performance of individual assets, including the fairly good performance of recent additions that capitalized on sensitivity. to inflation and commodities.

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“It’s a good sign when we move into new areas where they played the way we wanted,” he said.

In the real asset segments, Teachers’ is looking to new, higher growth sectors to adapt to challenging market conditions. In infrastructure, this has included recent utility deals focused on electrification, leaders said. In real estate, that means looking outside of Canada and into segments beyond established office and retail properties to include multi-family dwellings and industrial and medical real estate.

Taylor said geopolitical concerns and supply bottlenecks are part of the investment picture, but he added that while some investors in the United States may retreat to their home market, Teachers remains committed to investing in global markets, including the United States, Europe and India.

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“We tried to balance really more of an even weight perhaps between North America and other markets around the world,” he said.

Taylor and Hindo said Teachers remained committed to the growth goals of its late-stage tech venture capital platform, launched in 2019, despite a dramatic pullback in tech valuations in public markets.

“We’re pretty agnostic because if the valuation changes, we’re always happy to back a good company, we just lower the cost of our stake for the amount of equity we hold,” Taylor said. “So we can play a long-term game with these companies, probably better than a standard venture capital fund which may have less capital or may be on a slightly different time horizon.”

• Email: bshecter@postmedia.com | Twitter:

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