Investment Objectives Drive Investment Strategy
Ontario Teachers' will be paying pension benefits to today's youngest teachers 70 years or more from now. So the key objective of our investment program is to help the plan meet its long-term funding needs. It's why we strive to:
- maximize investment returns at an appropriate level of risk, considering pension liabilities (the cost of future pension benefits) and the challenges presented by the plan's mature membership demographics
- close the gap between asset values and pension obligations, which is the best way to achieve contribution rate and benefit stability for members
Ontario Teachers' is a recognized innovator and leader among pension investors. Our strategies are specifically designed to earn targeted returns to help meet the plan's long-term funding needs.
Risk Management starts with figuring out how much risk the fund can afford to take. This underpins our other investment strategies, including:
- Selecting an appropriate asset mix. Our asset mix includes equities, debt, natural resources and real assets (real estate and infrastructure).
- Active management to add value. Active management means finding investments that we believe are undervalued and then using various business strategies to get the best possible returns. Because we don't believe that passive investing through market indexes can by itself generate the risk-adjusted returns the plan needs, we work to add value over and above the fund benchmark.
- Ensuring adequate liquidity Determining optimal cash on hand to meet payments or make investments is analyzed and reported regularly to the Investment Committee of the board.
Ultimately, our investment strategies and techniques are intended to counteract funding risk: the risk of assets falling short of liabilities over time.
Our investment mandate is outlined in our Statement of Investment Policies and Procedures (SIPP) and is consistent with our core Investment Beliefs and our Responsible Investing approach.
Need drives innovation. Since its inception, Ontario Teachers' has established many of the elements of what is now known as the "Canadian model" of pension management. The model is founded on independence, strong governance with expert board members, direct investing by world-class investment teams and the ability to attract and retain top professionals.