Ontario Teachers’ Nets a 3.2% Return in 2018’s First Half

Public, private equity and inflation-linked assets bolster the Canadian pension plan.

Assets of the Ontario Teachers’ Pension Plan climbed to C$193.9 billion ($149.1 billion) Wednesday, as the fund announced its first half 2018 results.

The Canadian pension plan returned a net 3.2% in the period ended June 30, adding C$4.4 billion to the fund’s value from last December.

“Returns in the first half were driven mainly by the performance of the equity asset classes, both public and private, and the inflation sensitive asset class,” said Ziad Hindo, the plan’s chief investment officer.

Hindo became CIO in June and was also named executive managing director last week.

Since its 1990 inception, the pension plan has returned 9.9% annually. The five- and 10-year net returns as of December 31, 2017, were 9.6% and 7.6%, respectively. It has been fully funded for five years as of December.

Most recently, the pension plan breaks down its portfolio into equities (a 35% allocation), fixed income (also 35%), inflation-sensitive assets (16%), real assets (25%), credit (7%), and absolute return strategies (also 7%).

As for individual allocations, bonds consisted of 24% of the portfolio for the first half of 2018, followed by public equity, at 18%. Private equity accounted for 17%. Real estate was at 14%, and 11% was allocated to fixed income-based real-rate products. Infrastructure was 9% and commodities were 7% of the portfolio during the period. Inflation hedge assets, natural resource investments, and real-rate products tied to real assets stood at 5%, 4%, and 2%, respectively.

Ontario Teachers’ did not list the individual performance of its asset classes, nor could it be reached for comment on such.

The fund expects volatility to continue due to global trade and geopolitical tension as well as the increase in energy prices.

Ron Mock, Ontario Teachers’ president and chief executive officer, touted the ability of the plan’s balanced portfolio despite the “uncertain markets.”

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