The Ontario Teachers’ Pension Plan announced Thursday a 9.4% return for 2024, underperforming a 12.9% benchmark due to private equity and real estate assets trailing their respective benchmarks. Assets of the pension fund rose to C$266.3 billion ($185.5 billion).
In 2023, the fund returned 1.9%. The OTPP noted that for the 12 consecutive year, it had a funding surplus, with C$29.1 billion more assets than it has liabilities.
“Our teams worked methodically in 2024 to create value in the portfolio, delivering a 9.4% return, significantly above the outcome for 2023 and more in line with our long-term returns,” said OTPP President and CEO Jo Taylor in a statement. “We had positive contributions from across the plan, with notable success in venture growth, credit, inflation-sensitive and public equity investments.”
The fund’s equity portfolio, which contains public equity, private equity and venture growth, returned 16.7%, significantly behind a 24.8% benchmark. That was largely due to private equity’s return of 11.7%, way behind its 23.7% benchmark. Public equities slightly underperformed its benchmark, 23.2% to 25.8%, as did venture growth, which returned 25.8% against a 29.2% benchmark.
Fixed income returned 4.8%, in line with the asset class benchmark. Inflation-sensitive assets, a portfolio which contains commodities, natural resources and inflation hedges, slightly underperformed a 19.1% benchmark with an 18.6% return, which the OTPP attributed to lower returns in natural resources.
Credit returned 17.2%, outperforming its 16.8% benchmark. But real assets, which includes real estate and infrastructure, returned 4.9%, against its benchmark’s 7.0% return. Within that class, real estate had a negative return of 0.7% against a 5.0% benchmark performance, while infrastructure returned 9.1%, outperforming its benchmark of 8.5%.
Over five- and 10-year periods, the fund has returned an annualized 6.9% and 7.4%, respectively. Since the plan’s inception in 1990, the OTPP has delivered an annualized return of 9.4%.
The fund allocates 41% of its assets to its equity portfolio, 30% to fixed income, 28% to real assets and 21% to inflation-sensitive assets.
The fund also officially announced the closure of its Hong Kong office, which will be wound down over the next 18 months. The Hong Kong teams were primarily focused on private equity and venture growth investments in the region, according to an OTPP spokesperson. Duties carried out by the Hong Kong office will be moved to the fund’s Singapore office.
The OTPP has more than 343,000 members, primarily active and retired educators in the province of Ontario.
Related Stories:
Ontario Teachers’ Makes Nearly 8-Fold Gain From C$4.6B Amica Sale
Ontario Teachers’ Pension, Nordic Capital Acquire Max Matthiessen
Ontario Teachers’ Returns 1.9% in 2023
Tags: Canada, Jo Taylor, Ontario, Ontario Teachers' Pension Plan, OTPP