Ontario Teachers’ Pension Plan (Ontario Teachers’) announced 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.
"We are pleased with our Toronto, London and Hong Kong teams’ performance this year," said Ron Mock, President and Chief Executive Officer. "This, in combination with the plan sponsors’ 2008 adoption of condition inflation protection, which improved our investment risk tolerance, resulted in a successful year," he said.
Bjarne Graven Larsen, who assumed the Chief Investment Officer role on February 1, credits the plan’s ongoing success to an evolving investment strategy with a global outlook. He noted: "Despite volatile market conditions, Ontario Teachers’ global, diversified portfolio produced strong investment returns."
Ontario Teachers’ continues to show strong performance in pension services, according to two independent, annual studies. The plan’s Quality Service Index (QSI), which measures members’ service satisfaction, was 9.1 out of 10 in 2015, and the plan was ranked second for pension service in its peer group and internationally.
The plan had a preliminary funding surplus of $13.2 billion at January 1, 2016, the third surplus in as many years. It was 107% funded at the start of the year, based on current contribution and benefit levels.
2015 investment return highlights by asset class
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 Capital investments rose to $28.4 billion at year-end from $21.0 billion a year earlier. Private Capital’s investment return was 32.3%, compared to the 18.1% benchmark.
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.
Next Finance , April 4
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