Teachers' navigates choppy market to deliver strong results
April 27, 2012
Teachers' saw another year of investment results surpassing benchmark returns, taking net assets to an all-time high.
The Investment Division navigated chaotic markets and dealt with sluggish economies while managing risk to produce strong returns for the third straight year.
Investment performance highlights include:
- net assets: $117.1 billion;
- rate-of-return: 11.2%;
- benchmark rate-of-return: 9.8%;
- value-added return: $1.4 billion; and
- investment income: $11.7 billion.
What role do investment strategies play in paying your pension?
Because pension benefits paid to retirees exceed member and government contributions by nearly $2 billion annually, investment activity fuels the plan. The plan actively works to create value-added returns by exceeding benchmark returns that could be achieved from a more passive investment approach.
"The $1.4 billion in value-added in 2011 was enough to pay 37,000 average pensions for an entire year," says Neil Petroff, Executive Vice President, Investments.
And since the fund's creation in 1990, value-added returns have increased the plan's assets by $53 billion. Value-added returns represent 33% of the plan's total income for the same period, and benchmark returns represent 43%. These exceed the combined contributions from members and the government that accounted for 24% of the total.
Deal activity remained strong in 2011, with more realizations than in recent years. Some notable sales include:
- Maple Leaf Sports and Entertainment;
- GNC IPO;
- Sydney Airport; and
- Hillcrest Mall.
Teachers' also made some great investments in 2011. These include:
- Copenhagen and Brussels Airports;
- Impark; and
- Michael Kors.