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Ontario Teachers’ delivers positive return in first half of 2022

Portfolio diversification, active management and investing agility helped fund navigate through highly inflationary and difficult markets

2022 mid-year highlights:

  • Six-month and one-year total-fund net returns of 1.2% and 8.3%
  • Annualized total-fund net return over ten years of 9.0% and since inception return of 9.6%
  • Plan sponsors filed fully funded valuation with regulators
  • Successfully made high-quality global investments across asset classes despite challenging investment environment  

TORONTO (August 15, 2022) -- Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced a total-fund net return of 1.2% for the six-month period ended June 30, 2022, while the 12-month total-fund net return was 8.3%. Net assets grew to $242.5 billion.

“In a tumultuous time for global markets and with the highest inflation rates we have seen in decades, we were able to deliver positive returns for our members and continue to make progress towards our goal of reaching $300 billion in net assets by 2030,” said Jo Taylor, President and Chief Executive Officer. “These results show that diversification, active management and an agile investment approach enable us to generate returns in a wide array of investment environments and position us well to navigate through what is likely to be a challenging investment landscape over the next few years.”

As at June 30, 2022, Ontario Teachers’ had an annualized total-fund net return of 9.6% since inception in 1990. The five- and 10-year annualized net returns were 7.9% and 9.0%, respectively.

Investment Performance

Time period (all as at June 30, 2022)

Six-month

One-year

Five-years

10-years

Since inception

Total-fund net return

1.2%

8.3%

7.9%

9.0%

9.6%

 

“Our diversified portfolio performed well and as designed, delivering positive returns despite a highly inflationary environment that saw losses in most major stock and bond indices. We saw positive returns in our inflation-sensitive, infrastructure and absolute return strategies asset classes, which were partially offset by losses in public equities, venture growth and credit,” added Ziad Hindo, Chief Investment Officer. “The fund has benefited from our deliberate efforts over the last 12 months to tilt the asset mix towards those that perform well in inflationary environments, particularly commodities and infrastructure.”

Detailed Asset Mix

 

As at June 30, 2022

 

As at Dec. 31, 2021

 

Asset Class

$ billions

%

$ billions

 %

Equity

 

 

   

Public equity

20.5

9%

27.2

11%

Private equity

55.3

23%

55.1

23%

 

75.8

32%

82.3

34%

Fixed income

 

 

   

Bonds

43.6

18%

33.3

14%

Real-rate products

9.8

4%

11.9

5%

 

53.4

22%

45.2

19%

Inflation sensitive

 

 

   

Commodities

27.9

12%

26.5

11%

Natural resources

9.8

4%

9.4

4%

Inflation hedge

12.4

5%

12.1

5%

 

50.1

21%

48.0

20%

Real assets

 

 

   

Real estate

28.6

12%

26.3

11%

Infrastructure

30.6

13%

26.1

11%

 

59.2

25%

52.4

22%

Innovation

8.2

3%

7.1

3%

Credit

24.9

10%

24.3

10%

Absolute Return Strategies

17.7

7%

14.9

6%

Overlay[1]

0.0

0%

(0.5)

0%

Funding for investments[2]

(49.3)

  (20%)

(34.7)

(14%)

Net investments[3]

240.0

100%

239.0

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 $242.5 billion at June 30, 2022 (Dec. 31, 2021 - $241.6 billion) include net investments and other net assets and liabilities of $2.5 billion (Dec. 31, 2021 - $2.6 billion).

Funding Status

As at January 1, 2022, the plan was fully funded with a $17.2 billion surplus, underscoring its long-term financial health and sustainability. The plan’s sponsors, Ontario Teachers’ Federation and the Government of Ontario, have filed the January 1, 2022 valuation with the regulators.

Transactions Highlights

Ontario Teachers’ manages approximately 80% of assets internally, with a focus on deploying capital into active strategies. During the first half of 2022, the fund continued to diversify investments globally. Highlights from the period include: 

Equities

  • Invested in Orva, a full-service e-commerce platform specializing in the sale of footwear, apparel, accessories, and home products from leading consumer brands;
  • Made a follow-on investment in Princeton Digital Group, a leading Pan-Asia data center operator with a portfolio of 20 data centers spanning five countries;
  • Led a €250M Series C extension for Trade Republic, Europe’s largest savings platform;
  • Made a significant investment in VerSe Innovation, the largest and fastest growing local language AI-driven content platform in India;

Infrastructure & Natural Resources

  • Formed a joint venture with Corio Generation to develop 14 offshore wind projects with a capacity of up to 9GW. Ontario Teachers’ will invest up to US$1 billion in development capital;
  • Provided funding to Haddington Ventures LLC’s ACES Delta Platform to finance the development of world’s largest green hydrogen platform;
  • Invested up to US$175 million in KKR’s road platform in India, which includes a portfolio of 12 road assets, including Highway Concessions One;
  • Partnered with Sprott to acquire a US$225 million royalty convertible note issued by Seabridge Gold’s wholly owned subsidiary, KSM Mining ULC. The KSM project is located in northern British Columbia;
  • Completed the acquisition of a stake in Puget Holdings, the parent company of Puget Sound Energy, the longest-running and largest electric and natural gas utility in Washington state;

Real Estate

  • Formed a 50:50 joint venture partnership with Thomas White Oxford Ltd, and developer Stanhope PLC to deliver Oxford North, a new global innovation district in Oxford, UK. The JV will invest almost £700 million to deliver 939,000 sq. ft. of laboratory and workspace to enable life-enhancing discovery;
  • Acquired two European logistics properties with a total of 1.1 million sq. ft. for a combined total of €250 million. These properties are the first acquisitions in a joint venture formed with Boreal IM;
  • Alongside partner Stanhope, finalized an agreement to buy 70 Gracechurch Street, a prime office building situated in the City of London;

Teachers’ Venture Growth

  • Led a €183 million Series E funding round for Alan, a top-tier European digital healthcare company;
  • Led a US$120 million Series C funding round for Evolved By Nature, which utilizes natural silk protein to eliminate reliance on petrochemicals in personal care, leather, apparel and other industries;
  • Participated in a US$75 million Series B funding round for Ledger, an InsurTech start-up;
  • Led a £210 million funding round for Lendable, a leading consumer finance platform that applies AI and automation to enhance underwriting;
  • Led a US$220 million Series D funding round for Taxfix, Europe's leading mobile tax app.

About Ontario Teachers’

Ontario Teachers' Pension Plan Board (Ontario Teachers') is a global investor with net assets of $242.5 billion as at June 30, 2022. 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 333,000 working members and pensioners.

With offices in Hong Kong, London, San Francisco, Singapore and Toronto, our more than 350 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 9.6% 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 Twitter @OtppInfo.

Contacts:

Dan Madge
Ontario Teachers' Pension Plan
Phone: +1 416-419-1437
Email: media@otpp.com

Q2 2022 Interim Report