Ontario Teachers’ delivers positive return in first half of 2023
2023 mid-year highlights:
- Six- and 12-month total-fund net returns of 1.9% and 4.8%
- Strong long-term returns of 8.6% over ten years and 9.4% since inception
- Plan is fully funded for 10th straight year and sponsors have elected to file a valuation with the regulators
- Advanced portfolio diversification with high-quality investments across asset classes
TORONTO (August 15, 2023) -- Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced a total-fund six-month net return of 1.9%, while the 12-month total-fund net return was 4.8% (all figures as at June 30, 2023, unless noted). Net assets are $249.8 billion (all figures are in Canadian dollars unless noted).
“We continue to deliver positive investment returns for our members. Our investment portfolio is purposely designed to help us achieve stable returns over the long term, and our half-year results demonstrate that our portfolio construction is working as planned,” said Jo Taylor, President and Chief Executive Officer. “Our balanced portfolio positions us well to navigate markets that we anticipate will continue to be volatile in the coming years.”
As a defined benefit pension with liabilities that stretch decades into the future, Ontario Teachers’ remains focused on delivering consistent investment returns over the long term. Ontario Teachers’ had an annualized total-fund net return of 9.4% since inception in 1990. The five- and 10-year annualized net returns were 7.0% and 8.6%, respectively.
Investment Performance
| Time Period (all as of June 30, 2023) | Six-months | 12-months | Five-years | 10-years | Since inception |
|---|---|---|---|---|---|
| Total-fund net return | 1.9% | 4.8% | 7.0% | 8.6% | 9.4% |
“We saw positive returns across multiple asset classes including public and private equities, infrastructure, and credit over the course of the first six months of 2023,” added Ziad Hindo, Chief Investment Officer. “Looking ahead, we will remain disciplined as we pursue attractive investment opportunities while building value within our high-quality portfolio of companies.”
Detailed Asset Mix
| As at June 30, 2023 | As at Dec. 31, 2022 | |||
|---|---|---|---|---|
| Asset Class | $ billions | % | $ billions | % |
| Equity | ||||
| Public equity | 23.3 | 9% | 21.9 | 9% |
| Private equity | 60.7 | 25% | 58.3 | 24% |
| Teachers' Venture Growth | 7.0 | 3% | 7.3 | 3% |
| 91.0 | 37% | 87.5 | 36% | |
| Fixed income | ||||
| Bonds | 118.0 | 48% | 76.2 | 31% |
| Real-rate products | 9.3 | 4% | 9.8 | 4% |
| 127.3 | 52% | 86.0 | 35% | |
| Inflation sensitive | ||||
| Commodities | 20.9 | 9% | 25.0 | 10% |
| Natural resources | 10.6 | 4% | 10.1% | 4% |
| Inflation hedge | 12.2 | 5% | 12.7 | 5% |
| 43.7 | 18% | 47.8 | 19% | |
| Real assets | ||||
| Real estate | 29.3 | 12% | 28.1 | 12% |
| Infrastructure | 42.4 | 17% | 39.8 | 16% |
| 71.7 | 29% | 67.9 | 28% | |
| Credit | 37.4 | 15% | 35.2 | 14% |
| Absolute Return Strategies | 20.6 | 8% | 18.7 | 8% |
| Overlay1 | 0.4 | 0% | (0.2) | 0% |
| Funding for investments2 | (145.0) | (59%) | (98.8) | (40%) |
| Net investments3 | 247.1 | 100% | 244.1 | 100% |
1 Includes strategies that manage the foreign exchange risk for the total fund.
2 Includes term debt, bond repurchase agreements, implied funding from derivatives, unsecured funding, and liquidity reserves.
3 Comprises investments less investment-related liabilities. Total net assets of $249.8 billion at June 30, 2023 (Dec. 31, 2022 - $247.2 billion) include net investments and other net assets and liabilities of $2.7 billion (Dec. 31, 2022 - $3.1 billion).
Funding Status
As of January 1, 2023, the plan was fully funded with a $17.5 billion funding surplus, underscoring its long-term financial health and sustainability. The plan’s sponsors, Ontario Teachers’ Federation and the Government of Ontario, have elected to file the January 1, 2023 valuation with the regulatory authorities.
Transactions Highlights
Ontario Teachers’ manages approximately 80% of assets internally, with a focus on deploying capital into active strategies. During the first half of 2023, the fund continued to diversify investments globally. Highlights from the period include:
Equities
- Acquired a co-control position in Compass Datacenters, a company that designs and constructs data centres for some of the world’s largest hyperscalers and cloud providers on campuses across the globe.
- Supported BroadStreet Partners Inc. in their acquisition of Westland Insurance, one of the largest independent insurance brokers in Canada.
- Entered a strategic partnership with Sevana Bioenergy LLC, which will see Ontario Teachers’ acquire a majority stake in the business and make a capital commitment to develop renewable natural gas projects across North America.
- Helped portfolio company APCO Holdings LLC acquire National Auto Care, a leading provider of finance and insurance products, administration, consulting services, training, and marketing support.
- Supported GPA Global in its acquisition of Cosfibel Group, one of the leading players in luxury promotional packaging.
Infrastructure & Natural Resources
- Acquired a significant equity ownership position in Diamond Communications, one of the largest privately held U.S. wireless communications infrastructure platforms.
- Acquired 25% equity stake in Sweetwater Royalties, a base metals and industrial minerals royalty company.
- Acquired a majority stake in Mitolo Family Farms, a vertically integrated grower, harvester, packer and marketer of fresh potatoes and onions based in Australia.
- Completed the acquisition of 2degrees Mobile’s passive mobile tower assets in New Zealand alongside Connexa.
Real Estate
- Cadillac Fairview (CF), Ontario Teachers’ real estate subsidiary, acquired a significant majority stake in Lincoln Property Company’s Residential Division to support and grow multifamily property operations and investments across the United States. CF first acquired a 49% interest in Lincoln Residential in 2019.
- Expanded into Spain and France with Boreal IM joint venture acquiring logistics assets.
- Announced a partnership with Gateway Capital to form a new investment vehicle, Gateway Capital Urban Logistics Partnership (GULP), to acquire and develop Australian assets.
Corporate News
- Alongside CF, announced an evolution to their real estate operating model that will see the establishment of an in-house real estate asset class group at Ontario Teachers’. This aligns the real estate investment approach to that of other asset groups, where investment capabilities are embedded within Ontario Teachers’ to enable information sharing, co-sourcing, and best practices across geographies. With this model Ontario Teachers’ will focus on global real estate investing and portfolio management, while CF will focus on growth, diversification, and densification of its real estate portfolio in Canada.
- Appointed Bruce Crane to the position of Head of Asia-Pacific. Mr. Crane joined Ontario Teachers’ in 2020 and most recently led the Infrastructure & Natural Resources team in Asia-Pacific. He succeeds Ben Chan, who retired in June.
Financial Statements
About Ontario Teachers’
Ontario Teachers' is a global investor with net assets of $249.8 billion as at June 30, 2023. We invest in more than 50 countries in a broad array of assets including public and private equities, fixed income, credit, commodities, natural resources, infrastructure, real estate and venture growth to deliver retirement income for 336,000 working members and pensioners.
With offices in Hong Kong, London, Mumbai, San Francisco, Singapore and Toronto, our more than 400 investment professionals bring deep expertise in industries ranging from agriculture to artificial intelligence. We are a fully funded defined benefit pension plan and have earned an annual total-fund net return of 9.4% since the plan’s founding in 1990. At Ontario Teachers’, we don’t just invest to make a return, we invest to shape a better future for the teachers we serve, the businesses we back, and the world we live in. For more information, visit otpp.com and follow us on LinkedIn.
Media Contact:
Dan Madge
Ontario Teachers' Pension Plan
Phone: +1 416-419-1437
Email: media@otpp.com
Forward-Looking Statements
This news release contains forward-looking information and statements that are intended to enhance the reader’s ability to assess the future financial and business performance of Ontario Teachers’. Forward-looking information and statements include all information and statements regarding Ontario Teachers’ current beliefs, targets, intentions, plans, and expectations concerning its objectives, future performance, strategies, and financial results, as well as any other information or statements that relate to future events or circumstances and which do not directly and exclusively relate to historical facts. Forward-looking information and statements often but not always use words such as “trend,” “potential,” “opportunity,” “believe,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions. Because the forward-looking information and statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond Ontario Teachers’ control or are subject to change, actual results or events could be materially different. Although Ontario Teachers’ believes that the estimates and assumptions inherent in the forward-looking information and statements are reasonable, such information and statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such information or statements due to the inherent uncertainty therein. Ontario Teachers’ forward-looking information and statements speak only as of the date of this annual report or as of the date they are made and should be regarded solely as Ontario Teachers’ current plans, estimates and beliefs. Ontario Teachers’ does not intend or undertake to publicly update such statements to reflect new information, future events, and changes in circumstances or for any other reason.