HOOPP Grows to $77.8 Billion, Remains 122% Funded

Fund exceeds benchmark by 2.99%.

Following a 10.88% rate of return, the Healthcare of Ontario Pension Plan (HOOPP) increased its assets by more than C$7 billion, retaining its 122% funded status at the end of 2017.

“Our investment return for 2017 was 10.88%. While we had strong returns pretty much across all asset classes, our public and private equities, fixed income, and real estate all provided significant contributions to our investment income,” HOOPP President and CEO Jim Keohane said in a statement.

At the end of 2017, the Canadian pension fund’s assets climbed from 2016’s C$70.4 billion to C$77.8 billion ($62 billion), keeping its funded status on-par with the previous two years.

Investment income was C$7.6 billion ($5.9 billion, beating 2016 by C$1 billion, with the fund’s 10.88% return exceeding HOOPP’s benchmark by 2.99%. According to a news release, the 10-year return is at 9.55%, just above the 20-year return of 9.01%.

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HOOPP utilizes a liability-driven approach to its investment strategy. With two portfolios—a liability hedge portfolio and a return-seeking portfolio—the fund is able to continually reap returns while minimizing risk. The liability hedge portfolio consists of real estate and fixed income, while the return-seeking portfolio handles public equities, private equity, corporate credit, short-term money market and foreign exchange, and other return-seeking strategies. 

In 2017, 48% of the liability hedge portfolio contributed to HOOPP’s returns. Although real return bonds were basically unchanged, nominal bonds returned 10.5%. According to the release, the real estate section of the portfolio saw an 11.9% currency hedged return—a major contributor during the year.

Returning the remaining 52% of HOOPP’s income, the return-seeking portfolio saw public equities as the top contributor with a 14.8%. Private equity returned 19% on a currency hedged basis.

“HOOPP exists to pay pensions for members. We invest with that objective in mind to ensure that we can meet our pension obligation regardless of the economic backdrop. We also continue to reinvest in our personnel and our systems in order to maintain the sustainability of the Fund and support growth going forward,” Keohane said.

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Organizational Changes, New Roles Created for Australian Future Fund

Changes made to simplify structure, focus on performance.

As it heads into its second decade, Australia’s A$138.9 billion ($107.8 billion) Future Fund sovereign wealth fund will be changing its organizational structure in terms of its investment team.

Dr. Raphael Arndt will stay on board as the Melbourne-based fund’s CIO, adding the investment duties of the chief investment strategist to his responsibilities as well as leading the asset class teams.  Stephen Gilmore, the current chief investment strategist, will aid in Arndt’s transition before his departure from the fund in late April.

The Future Fund will also seek to fill the newly created role of head of portfolio strategy.

Wendy Norris, the fund’s head of infrastructure and timberland, will become deputy CIO of the private equity markets, while David George, head of debt and alternatives, will become deputy CIO for public markets. Norris will oversee private equity, property, infrastructure, and timberland, while George will monitor listed equity, overlays, debt, and alternatives.

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The Future Fund has also created a chief technology officer position, which will be responsible for leading the IT area as well as investment solutions. The CTO will work with the investment team to “develop bespoke investment technology solutions to drive investment insights,” according to a news release. The fund will soon perform a global search process to fill the position.

In addition to his obligations as general counsel, Cameron Price will also become the fund’s chief risk officer.

According to a news release, the changes are “focused on simplifying the structure and reinforcing our focus on the performance of the portfolio as a whole.”

“Over the last decade, the Future Fund has exceeded its benchmark return and generated over $78bn in investment returns,” said CEO David Neal in a statement. “To sustain our success as our portfolio grows, we are refining our structure. This will strengthen our collaborative approach and help us to be more nimble and streamlined in the hunt for investment opportunities, the management of the investment portfolio, and the creation and use of technology and risk insights.

“Implementing these changes will help us stay sharply focused on our task of investing for the benefit of future generations of Australians,” Neal said.

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