Liquidity management is overseen by the Total Fund Management (TFM) department. With a holistic view of the overall portfolio, TFM develops a perspective for how resources can be effectively utilized to support the investment portfolio.
This includes having sufficient cash on hand to meet current liabilities and liquidity in place in the event of disruptive markets. This also seeks to take advantage of investment opportunities. The liquidity position is therefore managed carefully.
We have an established liquidity governance framework and reporting requirements. We test our liquidity position regularly through simulations of major market events, and the board’s Investment Committee receives regular updates on our liquidity position.
Changing rules and regulations affecting banks may indirectly impact Ontario Teachers’, so we continue to adapt and enhance the way that we manage, oversee, measure and report on liquidity and funding risks.
Benefits of liquidity
Having cash on hand is vital for several reasons:
- It allows us take advantage of investment opportunities in disruptive markets.
- It allows us to avoid selling high-quality long-term assets to meet short-term funding needs at inopportune times
- It gives us the ability to adjust our asset mix in response to market movements
- It enables us to invest in assets such as real estate, infrastructure, timberland and private equity that cannot be quickly monetized
- It means we can meet short-term, mark-to-market payments embedded in our derivative exposure.