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Institutional Investors Expect to Raise Risk Tolerance for Private Markets

Private infrastructure is attracting more attention from pensions, sovereign wealth funds and endowments, per a Nuveen survey.

By Michael Katz

In their ongoing search for alpha, institutional investors are increasingly willing to raise their risk tolerance for private market investments, particularly in infrastructure, according to survey results released by Nuveen.

The percentage of large institutions owning private credit and equity investments has more than doubled over the last five years, Nuveen reported, based on its EQuilibrium survey. According to the firm, the momentum toward private markets “shows no sign of slowing,” with 66% of respondents saying they will increase their commitments to private investments over the next five years.

“After years of heightened caution, institutions are gradually shifting back toward growth-oriented strategies and becoming more comfortable adding exposure to risk markets,” the Nuveen report stated.

To make room for the capital needed to increase their allocation to private market investments, institutional investors need to shift their assets, the report found. According to the survey results, of the 39% of respondents who said they are going to reallocate capital to growth-oriented investments in 2025, 54% said they will increase their exposure to equities, nearly double the 28% from last year’s survey. Respondents also said they would extend fixed-income duration with investments such as private credit and infrastructure debt.

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When polled about which alternative asset that they currently hold that they plan to increase in the next two years, private infrastructure was cited by half of all respondents. Private equity and private credit were close behind, with 49% saying they will increase their allocation to both.

Meanwhile, the survey results indicated that reshuffling of portfolios will mainly be at the expense of private real estate and hedge fund investments. Some 14% of respondents said they expect to reduce their allocation to private real estate, while 12% said the same regarding their investments in hedge funds. The two were the only asset classes named by more than 9% of the institutions surveyed as classes in which they plan to reduce exposure.

Nuveen also reported that major investors are increasingly turning their interest toward higher-yield, higher-risk fixed-income investments, with infrastructure again drawing the most interest, followed by private infrastructure debt and private real-estate debt. Approximately 53% of respondents said they plan to up their allocation to private infrastructure debt, with 42% also eyeing an increase in private real estate debt.

“This marks a shift from last year when investment-grade fixed income was the top priority across both public and private markets,” the Nuveen report stated. “Institutions remain focused on diversifying their fixed income strategies to capture higher yields and optimize risk-adjusted returns.”

According to Nuveen, the survey included 800 institutions with aggregate assets under management of $19 trillion.


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Home > News > Pensions > Ontario Teachers’ Nets 9.4% Return, Assets Grow to $185.5B
Pensions

Ontario Teachers’ Nets 9.4% Return, Assets Grow to $185.5B

The fund touted strong returns across equities, credit and inflation-sensitive assets.
By Matt Toledo



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.  

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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. 

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Ontario Teachers’ Returns 1.9% in 2023 

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