Ontario Teachers’ Pension Plan (Teachers’) had a rate of return on investments of 13.0% for the year ended December 31, 2015, resulting in an increase in net assets to a record $171.4 billion from $154.5 billion at the end of 2014.
Investment earnings for the year were $19.6 billion, up from $16.3 billion in 2014. Measured against a consolidated investment benchmark of 10.1%, the plan’s excess return of 2.9 percentage points resulted in$4.2 billion in value added. Since the plan’s inception in 1990, total investment income has accounted for 79% of the funding of members’ pensions, with the other 21% coming from member and government contributions.
The value of the plan’s public and private equity investments totaled $77.5 billion at year-end, up from $68.9 billion at December 31, 2014. The investment return in the equities portfolio of 17.7% was ahead of the 14.7% benchmark. Private equity investments rose to $28.4 billion at year-end from $21.0 billion a year earlier. Private equity’s investment return was 32.3%, compared to the 18.1% benchmark.
Teachers’ Private Capital (TPC) manages the group’s private equity investments and is led by Jane Rowe, senior vice-president. TPC was launched in 1991 and has invested in more than 300 companies and funds, deploying more than $35 billion in capital. The group has offices in Toronto, New York and London (www.teachersprivatecapital.com).
The Teachers’ plan had a funding surplus of $13.2 billion at January 1, 2016, the third surplus in as many years, and was 107% funded at the start of the year, based on current contribution and benefit levels.
Fixed income had $69.1 billion in assets at year-end, compared to $65.6 billion at December 31, 2014. The one-year return of 5.9% was in line with the benchmark return of 6.0%. Natural resources investments were $10.2 billion at year-end, compared to $11.9 billion at December 31, 2014. The one-year return of -1.3% was ahead of the benchmark return of – 6.1%.
Real assets, a group that consists of real estate and infrastructure, had total assets of $40.6 billion at year-end, compared to $34.7 billion a year earlier. The real estate portfolio, managed by the plan’s subsidiary Cadillac Fairview, totaled $24.9 billion in assets at year-end and returned 12.9%, exceeding the 8.0% benchmark. The infrastructure portfolio had $15.7 billion in assets at year-end, up from $12.6 billion a year earlier. Infrastructure’s investment return of 21.4%, compared to the 14.3% benchmark.
Ontario Teachers’ Pension Plan, led by president and chief executive officer Ron Mock, and chief investment officer Bjarne Graven Larsen, is one of Canada’s largest and most active pension investors. Teachers’ portfolio of assets, 80% of which is managed in-house, has earned an annualized rate of return of 10.3% since the plan’s founding in 1990. Teachers’ has offices in Toronto, Hong Kong and London (www.otpp.com).
© 2016 Private Equity Professional • Private Equity’s Leading News Magazine • 3-31-16