Ontario Teachers' reports 4.2% net returns and key leadership changes
Ontario Teachers' Pension Plan Board has reported a total-fund six-month net return of 4.2 percent, generating $10.8bn in net investment income.
This performance brought net assets to $255.8bn as of June 30, an increase of $8.3bn from year-end. The one-year total-fund net return also stood at 4.2 percent.
Jo Taylor, president, and chief executive officer of Ontario Teachers', emphasized the importance of consistent performance, stating, “Our results for the first half of 2024 reflect our ability to generate positive returns across various market conditions, ensuring that we maintain a well-funded status for our members.”
Focusing on the long-term, Ontario Teachers' has achieved an impressive, annualized total-fund net return of 9.3 percent since its inception in 1990. The five-year and ten-year annualized net returns were 6.7 percent and 7.3 percent, respectively, highlighting the plan’s strong historical performance.
Asset Mix Overview:
The table below provides a detailed breakdown of Ontario Teachers' asset mix as of June 30, compared to the previous year-end:
|
Asset Class |
$ billions (As at June 30, 2024) |
% (As at June 30, 2024) |
$ billions (As at Dec. 31, 2023) |
% (As at Dec. 31, 2023) |
|---|---|---|---|---|
|
Equity |
|
|
|
|
|
Public equity |
37.2 |
15% |
25.4 |
10% |
|
Private equity |
58.5 |
23% |
58.5 |
24% |
|
Venture growth |
8.1 |
3% |
7.5 |
3% |
|
Fixed income |
|
|
|
|
|
Bonds |
85.2 |
33% |
85.9 |
35% |
|
Real-rate products |
9.7 |
4% |
9.9 |
4% |
|
Inflation sensitive |
|
|
|
|
|
Commodities |
29.1 |
11% |
22.2 |
9% |
|
Natural resources |
12.2 |
5% |
11.4 |
5% |
|
Inflation hedge |
12.2 |
5% |
11.8 |
5% |
|
Real assets |
|
|
|
|
|
Real estate |
30 |
12% |
28.2 |
12% |
|
Infrastructure |
41.7 |
16% |
39.2 |
16% |
|
Credit |
34.8 |
14% |
38.6 |
16% |
|
Absolute return strategies |
20.5 |
8% |
19.5 |
8% |
|
Funding and other¹ |
-125.4 |
-49% |
-114.2 |
-47% |
|
Net investments² |
253.8 |
100% |
243.9 |
100% |
Funding Status:
As of January 1, Ontario Teachers' Pension Plan was fully funded with a $19.1bn preliminary surplus. This underscores the plan's long-term financial health and sustainability.
On July 23, the Ontario Teachers' Federation and the Government of Ontario, co-sponsors of the plan, announced their decision to file the funding valuation with regulatory authorities. The surplus will be classified as a contingency reserve.
Corporate Updates:
In 2024, Ontario Teachers' saw key leadership changes:
- Tracy Abel, chief operating officer, will retire at the end of the year.
- Mabel Wong was appointed chief financial officer, effective immediately, after serving as acting CFO since April.
- Bernard Grzinic was named executive managing director, Capital Markets, responsible for guiding active risk-taking in credit and absolute return strategy asset classes.
- Steve Saldanha became executive managing director, Total Fund Management, overseeing asset mix, trading activities, and integrating portfolio construction with treasury and funding capabilities.
- Robert Sturgeon was promoted to senior managing director, Global Investment Strategy, focusing on global business assessment, strategic responses to emerging themes, and fostering key relationships.
Investment Highlights:
Ontario Teachers' continues to manage approximately 80 percent of its assets internally, emphasizing active strategies. Noteworthy transactions in the first half of 2024 include:
- Equities: Ontario Teachers' saw the merger of Fairstone Bank of Canada with Home Trust Company, creating Canada's leading alternative lender. It also acquired a minority stake in Kogta Financial (India) Limited and completed sales of Shearer's Foods and a partial sale of SeaCube Container Leasing Ltd.
- Infrastructure & Natural Resources: Ontario Teachers' completed a third investment in National Highways Infra Trust in India and co-sponsored the Sustainable Energy Infra Trust with Mahindra Group.
- Real Estate: The fund, alongside Boreal IM, completed logistics investments in Germany, France, and Spain.
- Teachers' Venture Growth: The fund co-led a fundraising round for SmartHR in Japan, invested in DeepL, Perfios, and Instagrid, expanding its global reach in innovative sectors.
