Using Benchmarks to Ensure Our Effectiveness
At Ontario Teachers', we measure our investment performance on an actual basis and against a range of benchmarks. Benchmarking allows board members, plan members and employees to evaluate the effectiveness of our investment strategies and activities relative to the risks taken.
On a total-fund basis and for each asset group, we work to surpass the relevant benchmarks, and when we do we describe that as "value-added" performance.
As long-term investors, the most relevant measure of our performance is over several years. So, in addition to providing one-year returns, we also track four- and 10-year returns along with returns since 1990 – when we began our investment program – all on an actual basis and against the benchmark.
|Return above benchmark (Canadian $ billions)||$1.3||$4.2||$10.1||$12.3||$14.2||$36.9|
Benchmarks for our various asset groups are shown in the table below.
Benchmarks Used to Measure Fund Performance
|Fixed Income||Custom Canada Bond Universe|
|Custom Canada Long Bond Universe|
|Custom Provincial Long Bond|
|Custom Barclays Capital U.S. Treasury Index|
|Custom Barclays Corporate Baa 5-10 Year Index|
|Custom U.S. Interest Rate Swaps and Related Swaptions Benchmark|
|Custom Canada Real Return Bond|
|Custom Barclays Capital U.S. TIPS Index|
|Custom Emerging Markets Local Currency Sovereign Debt Benchmark|
|FTSE TMX Canada 91 Day T-Bill|
|Custom U.S. OIS Index|
|Canadian Equity||S&P/TSX 60|
|Custom Long Term Canadian Equity|
|Custom Canadian Enhanced Equity|
|Non-Canadian Equity||S&P 500|
|MSCI All Country World ex Canada|
|MSCI Emerging Markets|
|MSCI Emerging Markets ETF|
|Custom Non-Canadian National Indices|
|Custom Non-Canadian Enhanced Equity|
|Custom MSCI Global Index|
|Custom Long Term Non-Canadian Equity|
|Real Assets||5.0% + IPD Canada Capital Growth (Real Estate excluding Brazil)|
|Custom Real Estate Debt Benchmark|
| Local CPI plus 4% plus country risk premium |
(Infrastructure and Real Estate Brazil)
|Natural Resources||NCREIF Timberland Index (U.S. Timberland)|
|Local CPI plus 4% plus country risk premium (Sector Investment and non-U.S. Timberland)|
|Custom Natural Resources Benchmark|
|Goldman Sachs Commodities Index|
|Goldman Sachs Commodities Index 3 Month Forward|
|Custom Commodities Hedge|
|Total Fund||Custom Canadian CDOR Index|
|Custom U.S. LIBOR Index|
|Custom U.S. T-Bill Index|
|Custom Local OIS Index (Canada, U.S.)|
|Custom Currency Overlay|
|Custom Equity Hedge|
Managing a successful investment program involves costs in areas such as salaries and benefits, fees and commissions and research. We are committed to cost effectiveness and view certain expenditures as necessary to achieve long-term performance requirements.
In 2016, total investment costs were $451 million or 27 cents per $100 of average net assets, compared to $429 million or 27 cents per $100 in 2015.
Investment returns are calculated net of trading costs, investment management expenses and external management fees, and are calculated in Canadian dollars.