Record investment income of $20.2 billion during the year
Ontario Teachers' Pension Plan Board (Ontario Teachers') today announced a total-fund net return of 10.4% for the year. Net assets reached $207.4 billion as of December 31, 2019, a $16.3 billion increase from December 31, 2018. Ontario Teachers' earned $20.2 billion in investment income in 2019, the most in the organization's history.
"Ontario Teachers' diversified, high-quality portfolio achieved a total-fund net return of 10.4% and our net assets reached $207.4 billion to end the year," said Jo Taylor, President and Chief Executive Officer. "The investment world since then has changed dramatically due to COVID-19, which is having an impact on all of our activities. We are highly focused on the wellbeing of our members and employees, and our team has demonstrated remarkable agility as we adapt the way we work while maintaining our high levels of service."
As of January 1, 2020, the plan was fully funded using prudent assumptions for a seventh consecutive year, with 100% inflation protection being provided on all pensions.
As at December 31, 2019, Ontario Teachers' has had an annualized total-fund net return of 9.7% since inception. The five- and ten-year net returns, also as at December 31, 2019, were 7.8% and 9.8%, respectively.
"Each of our asset classes achieved positive returns during the year, showing the value of a well-constructed and diversified portfolio. We had particularly strong returns in equities and fixed income," said Ziad Hindo, Chief Investment Officer. "This year was a transformational year, with a number of significant transactions conducted globally, the launch of Teachers' Innovation Platform to invest in disruptive technology, and the creation of Koru, an incubator that partners with our portfolio companies to design and build new digital businesses."
As often is the case in years when public equity markets have exceptional returns, Ontario Teachers' diversified portfolio trailed its benchmark. Strong returns in private assets did not keep up with robust public equity markets, many of which were up more than 20% during the year. In 2019, Ontario Teachers' underperformed its benchmark by 1.8% or $2.7 billion.
Detailed Asset Mix
2019
|
2018
| |||||||||||
Effective Net
Investments at Fair Value(Canadian $ billions) |
Asset Mix
% |
Effective Net
Investments at Fair Value
(Canadian $
billions) |
Asset Mix
%
| |||||||||
Equity
| ||||||||||||
Publicly traded
|
$
|
35.8
|
18%
|
$
|
31.6
|
17%
| ||||||
Non-publicly traded
|
39.3
|
19
|
33.4
|
18
| ||||||||
75.1
|
37
|
65.0
|
35
| |||||||||
Fixed income
| ||||||||||||
Bonds
|
72.7
|
36
|
58.2
|
31
| ||||||||
Real-rate products
|
20.4
|
10
|
19.5
|
10
| ||||||||
93.1
|
46
|
77.7
|
41
| |||||||||
Inflation sensitive
| ||||||||||||
Commodities
|
17.6
|
9
|
10.6
|
6
| ||||||||
Natural resources
|
8.2
|
4
|
8.1
|
4
| ||||||||
Inflation hedge
|
10.3
|
5
|
8.7
|
5
| ||||||||
36.1
|
18
|
27.4
|
15
| |||||||||
Real assets
| ||||||||||||
Real estate
|
28.7
|
14
|
27.5
|
15
| ||||||||
Infrastructure
|
17.0
|
8
|
17.8
|
9
| ||||||||
Real-rate products
|
—
|
—
|
4.3
|
2
| ||||||||
45.7
|
22
|
49.6
|
26
| |||||||||
Credit
|
16.3
|
8
|
15.2
|
8
| ||||||||
Absolute return strategies
|
16.5
|
8
|
12.6
|
7
| ||||||||
Overlay
|
0.3
|
—
|
(0.4)
|
—
| ||||||||
Money market
|
(79.1)
|
(39)
|
(59.5)
|
(32)
| ||||||||
Net investments1
|
$
|
204.0
|
100%
|
$
|
187.6
|
100%
| ||||||
1
|
Net investments, which comprise investments less investment-related liabilities per the December 31, 2019 Consolidated Statements of Financial Position, exclude all other assets and liabilities.
|
Total fund local return was 12.8%. Ontario Teachers' invests in dozens of global currencies and in more than 50 countries but reports its assets and liabilities in Canadian dollars. In 2019, currency had a negative 1.8% impact on the total fund, resulting in a loss of $3.5 billion. The currency loss was mainly driven by the appreciation of the Canadian dollar relative to various global currencies, particularly the U.S. dollar.
About Ontario Teachers'The Ontario Teachers' Pension Plan Board (Ontario Teachers') is the administrator of Canada's largest single-profession pension plan, with $207.4 billion in net assets (all figures at December 31, 2019). It holds a diverse global portfolio of assets, approximately 80% of which is managed in-house, and has earned an annual total-fund net return of 9.7% since the plan's founding in 1990. Ontario Teachers' is an independent organization headquartered in Toronto. Its Asia-Pacific region office is located in Hong Kong and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which is fully funded, invests and administers the pensions of the province of Ontario's 329,000 active and retired teachers. For more information, visit otpp.com and follow us on Twitter @OtppInfo.
Contact:
Note to Editors: Please See Attachments:
- Net Assets graph
- Link to Annual Report
- Benchmarks Used to Measure Fund Performance
- Member Services – Key Statistics
- Download high resolution pictures: Jo Taylor and Ziad Hindo
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