One-year total fund net return of 11.1%, driven by strong returns from private equity, inflation sensitive and innovation investments
Record annual value add to the fund of $5.5 billion
The plan is fully funded for a ninth straight year
Annualized total-fund net return over ten-years of 9.3% and since inception return of 9.7%
Diversified investments globally, acquiring nearly 50 private assets across five continents
Invested or committed over $5 billion into additional green or transition assets
TORONTO (March 14, 2022) — Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced a one-year total-fund net return of 11.1% for the year ended December 31, 2021, exceeding its benchmark by 2.3%. This outperformance relative to its benchmark resulted in a record annual value add of $5.5 billion. Net assets grew to $241.6 billion.
These results contributed to the plan being fully funded as at January 1, 2022, with a $17.2 billion preliminary funding surplus. This marks the plan’s ninth consecutive fully funded year, underscoring the long-term financial health and sustainability of the plan.
“We delivered strong results for our members despite the challenges brought about by a second year of a global pandemic,” said Jo Taylor, President & Chief Executive Officer. “We had excellent investment performance, maintaining our fully funded status, and delivered a high level of service for our members – all while making meaningful progress on our new multi-year strategy.”
As at December 31, 2021, Ontario Teachers’ delivered an annualized total-fund net return of 9.7% since inception in 1990 and five- and 10-year annualized total-fund net returns of 8.4% and 9.3%, respectively.
Investment Performance
Time period (all as at December 31, 2021)
One-year
Five-year
10-year
Since inception
Total-fund net return
11.1%
8.4%
9.3%
9.7%
“Our diversified portfolio had an excellent performance in 2021 with strong returns across private assets, particularly in private equity, infrastructure, inflation sensitive assets and the Teachers’ Innovation Platform,” said Ziad Hindo, Chief Investment Officer. “Our efforts to balance and diversify our portfolio through increasing allocations to credit, real assets and inflation-sensitive assets proved timely, and positions us well to weather the potential impacts of various economic outcomes including the current inflationary environment.”
The performance relative to the benchmark was driven largely by outperformance by our private equity, infrastructure, credit and inflation sensitive asset classes, which all meaningfully exceeded their individual benchmarks.
Portfolio Performance by Asset Class (all figures as at December 31)
Fund returns by asset class are reported in the table below.
Fund returns (%)1
Actual
Benchmark
Actual
Benchmark
2021
2021
2020
2020
Equity
Public equity
9.0
13.1
15.2
11.2
Private equity
29.0
17.5
13.5
12.3
21.3
15.5
13.2
12.1
Fixed income
Bonds
(9.4)
(9.4)
24.6
24.5
Real-rate products
(1.4)
(1.4)
12.8
12.8
(6.3)
(6.3)
20.7
20.6
Inflation sensitive
Commodities
7.9
7.9
4.3
4.2
Natural resources
28.1
24.1
(11.2)
(8.5)
Inflation hedge
8.0
8.0
(4.4)
(4.4)
11.4
10.9
(2.4)
(1.6)
Real assets
Real estate
2.5
8.8
(13.7)
(4.7)
Infrastructure
7.9
1.2
2.6
7.5
5.4
5.3
(7.6)
(0.1)
Innovation2
39.0
39.0
16.3
16.3
Credit
3.5
1.2
2.6
1.5
Total-fund net return
11.1
8.8
8.6
10.7
1 The total-fund net return is calculated after deducting transaction costs, management fees and investment administrative costs. Asset-class returns are before deducting investment administrative costs.
2 Benchmarked to actual return during an incubation period, after which it will be measured against an active benchmark.
Detailed Asset Mix (all figures as at December 31)
Asset Class
$ billions
%
$ billions
%
2021
2021
2020
2020
Equity
Public equity
27.2
11%
42.4
19%
Private equity
55.1
23%
41.8
19%
82.3
34%
84.2
38%
Fixed income
Bonds
33.3
14%
17.2
8%
Real-rate products
11.9
5%
17.4
8%
45.2
19%
34.6
16%
Inflation sensitive
Commodities
26.5
11%
17.7
8%
Natural resources
9.4
4%
7.4
4%
Inflation hedge
12.1
5%
11.5
5%
48.0
20%
36.6
17%
Real assets
Real estate
26.3
11%
25.2
12%
Infrastructure
26.1
11%
17.8
8%
Real-rate products
–
0%
1.9
1%
52.4
22%
44.9
21%
Innovation
7.1
3%
3.5
2%
Credit
24.3
10%
18.0
8%
Absolute Return Strategies
14.9
6%
13.6
6%
Overlay3
(0.5)
0%
0.8
0%
Funding for investments4
(34.7)
(14%)
(18.3)
(8%)
Net investments5
239.0
100%
217.9
100%
3 Includes strategies that manage the foreign exchange risk for the total fund.
4 Includes term debt, bond repurchase agreements, implied funding from derivatives, unsecured funding and liquidity reserves.
5 Comprises investments less investment-related liabilities. Total Net Assets of $241.6 billion at December 31, 2021 (2020 – $221.2 billion) include Net investments and other net assets and liabilities of $2.6 billion (2020 – $3.3 billion).
“Our global investment teams had an active year, making nearly 50 direct or add-on private investments across five continents and committing to ambitious interim emission reduction targets,” added Taylor. “Looking forward, we are well positioned for continued global growth and to meet our strategic goal of reaching $300 billion in net assets by 2030.”
Transactions Highlights
Ontario Teachers’ manages approximately 80% of its assets internally, with a focus on deploying capital into active strategies. During 2021, the fund diversified investments globally and acquired nearly 50 private assets across five continents. Highlights from the year include:
Capital Markets:
Alongside partner Incus Capital, provided a corporate loan of €140 million to Capital Energy, an integrated renewable energy operator in the Iberian Peninsula;
Provided capital to several syndicates at Lloyd’s, the world’s leading insurance and reinsurance marketplace, through the London Bridge Risk (LBR) PCC.
Equities:
Acquired a 33.4% interest in Greenstone, a leading insurance distributor focused on developing life and general insurance products for Australians and New Zealanders;
Announced plans to acquire HomeQ, the parent company of HomeEquity Bank, Canada’s leading bank offering reverse mortgage solutions;
Made a significant strategic investment in Mitratech, a leading provider of legal and compliance software;
Became an anchor investor funding U.S. private equity firm TPG Rise Climate Fund, which works with businesses who are developing innovative climate solutions.
Infrastructure:
Acquired a 40% holding in Caruna, Finland’s largest electricity distribution company;
Jointly acquired a 100% interest in the Canadian district energy operations owned by Enwave Energy Corporation for C$2.8 billion on an enterprise value basis;
Acquired a 50% interest in a portfolio of high-quality wind, solar and energy storage assets across the United States from NextEra Energy Resources, LLC;
Became a founding investment partner of the Brookfield Global Transition Fund, a global fund dedicated to accelerating the transition to a net-zero economy.
Natural Resources:
Became a significant shareholder in GreenCollar, a leading environmental markets project developer and investor across the carbon, water quality, biodiversity and plastics markets in Australia.
Real Estate:
Our real estate subsidiary Cadillac Fairview, alongside partner Lincoln Property Company’s residential division, grew their US multifamily fund from US$800 million to US$1.8 billion in equity. The fund will continue to focus on the development and acquisition of high-quality multifamily assets in top US markets.
Teachers’ Innovation Platform:
Led a C$375 million Series D fundraising round for ApplyBoard, an online platform that empowers students around the world to access top quality education;
Participated in the US$420 million B-1 funding round for FTX Trading Ltd., owner and operator of FTX.COM, a leading global cryptocurrency exchange;
Led the US$138 million Series C fundraising for Beamery, a leading talent operating system that helps companies attract, engage and retain top talent.
Climate ambition and investment
As part of its journey to achieve net zero on its investment activities by 2050, Ontario Teachers’ set industry-leading targets to reduce portfolio carbon emissions intensity by 45% by 2025 and 67% by 2030, compared to its 2019 baseline. Our portfolio carbon footprint and progress against these targets will be included in our upcoming annual report.
“We have a multi-faceted climate strategy that is rooted in driving real-world emission reductions,” said Hindo. “Our strategy reflects our commitment to be accountable and to act immediately to reduce the environmental impact of our portfolio.”
Ontario Teachers’ has more than $30 billion in green investments in its portfolio and completed several transactions in 2021 that contribute to a net-zero carbon future. Since announcing its net-zero commitment in January 2021, it has invested or committed over $5 billion into additional green or transition assets.
Investment costs
Ontario Teachers’ is committed to cost effectiveness and both manages and links its costs to the investment value creation process. Total investment costs including administrative expenses, transaction costs and external management fees totaled $2,030 million (91 cents per $100 of average net assets) in 2021, compared to $1,452 million (70 cents per $100 of average net assets) in 2020.
The increase in investment costs over the prior year was driven primarily by a significant increase in deal volume and transaction size in 2021, higher external management fees including performance fees due to strong investment performance, and higher annual and long-term incentives due to strong total-fund performance.
About Ontario Teachers’
Ontario Teachers’ Pension Plan Board (Ontario Teachers’) is the administrator of Canada’s largest single-profession pension plan, with C$241.6 billion in net assets (all figures at December 31, 2021 unless noted). 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 offices are located in Hong Kong and Singapore, and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which is fully funded as at January 1, 2022, invests and administers the pensions of the province of Ontario’s 333,000 active and retired teachers. For more information, visit otpp.com and follow us on Twitter @OtppInfo.
Contact
Dan Madge Ontario Teachers’ Pension Plan Phone: +1 416-419-1437 Email: media@otpp.com
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
