Ontario Teachers’ net assets total $204.7 billion at mid-year 2020

August 25, 2020

Portfolio design and active management help maintain stability during volatile period in financial markets

TORONTO -- Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced its net assets totaled $204.7 billion as of June 30, 2020. The total-fund net loss was 0.4% for the first six months of the year.

“The first half of this year has brought significant challenges for investors, with financial markets experiencing unprecedented volatility due to the COVID-19 pandemic, which in turn has had a devastating impact on the global economy, as well as companies and communities around the world,” said Jo Taylor, President and Chief Executive Officer. “Our diversified and high-quality portfolio has so far been quite resilient, highlighting the benefits of our balanced capital allocations and long-term investment approach. That said, we expect this pandemic to have lasting repercussions, and we want to remain vigilant and agile until the full impact can be established.”

“In the years before the crisis we had positioned the portfolio more defensively, including raising our exposure to fixed income and gold, employing a hedge against a downturn in equities and fortifying our liquidity position. These moves provided stability and helped offset losses experienced by our private assets that were disproportionately affected by COVID-19 such as airports, energy and retail real estate,” said Ziad Hindo, Chief Investment Officer. “The unprecedented volatility and dislocations in the markets provided us with an opportunity to rebalance the portfolio to position it for long-term success.”

Mid-year results provide a snapshot of performance over a six-month period, while long-term returns provide a true measure of the effectiveness of Ontario Teachers’ investment strategy. As at June 30, 2020, Ontario Teachers’ had an annualized total-fund net return of 9.5% since inception in 1990. The five- and 10-year net returns, also as at June 30, 2020, were 6.2% and 9.6%, respectively.

“The shock COVID-19 has delivered to economies around the world has been severe, but we are confident that our strong foundation and long-term investment strategy will see us through this turbulent period,” added Hindo. “Given our strong liquidity and access to capital we are well placed to pursue attractive investment opportunities as they emerge.”

Detailed Asset Mix

As at June 30, 2020          As at December 31, 2019

  Effective Net
Investments
at Fair Value
($ millions)
Asset
Mix
%
Effective Net
Investments
at Fair Value
($ millions)
Asset
Mix
%
Equity        
Publicly traded 31,668 16 35,844 18
Non-publicly
traded
36,194 18 39,344 19
  67,862 34 75,188 37
Fixed income        
Bonds 29,237 14 72,668 36
Real-rate products 19,155 9 20,440 10
  48,392 23 93,108 46
Inflation sensitive        
Commodities 15,163 7 17,588 9
Natural resources 7,464 4 8,199 4
Inflation hedge 11,101 5 10,277 5
  33,728 16 36,064 18
Real assets        
Real estate 25,558 13 28,692 14
Infrastructure 16,020 8 16,984 8
  41,578 21 45,676 22
Innovation 2,284 1 0
Credit 17,159 8 16,305 8
Absolute
return strategies
17,504 9 16,561 8
Overlay (1,027) 0 272 0
Money market (24,097) (12) (79,128) (39)
Net investments1 $203,383 100% $204,046 100%

1 Net Investments, which comprise investments less investment-related liabilities per the June 30, 2020 Condensed Interim Consolidated Statement of Financial Position, are $1,332 million lower than Net assets which include all other assets and liabilities.

Investing globally is an essential element of Ontario Teachers’ investment strategy and ability to meet its long-term investment objectives. During the first six months of the year the organization was able to successfully secure attractive investment opportunities in North America, Europe, the Middle East and Asia-Pacific. It also announced the appointment of London-based Karen Frank as Senior Managing Director of Equities, and our first Singapore-based employee, Bruce Crane, as Managing Director, Infrastructure & Natural Resources, Asia Pacific, both of whom will join the organization in the coming months.

Ontario Teachers’ invests in 35 global currencies and in more than 50 countries but reports its assets and liabilities in Canadian dollars. In the first half of 2020, currency had a positive 0.5% impact on the total fund, resulting in a gain of $1.2 billion that was mainly driven by a stronger U.S. dollar relative to the Canadian dollar.

Ontario Teachers’ took decisive action to protect its employees and communities from the spreading pandemic. By mid-March the organization had fully restricted all business travel, asked members not to visit its offices in person and most employees began working remotely. Despite the major changes, Ontario Teachers’ core investment and member services businesses were able to continue operating normally.

“I want to thank the entire team for their tremendous efforts during the COVID-19 pandemic. They have demonstrated an incredible adaptability and positive spirit while continuing to fulfill their duties on behalf of our members,” concluded Taylor.

About Ontario Teachers’
The Ontario Teachers' Pension Plan Board (Ontario Teachers') is the administrator of Canada's largest single-profession pension plan, with $204.7 billion in net assets (all figures at June 30, 2020 unless noted). It holds a diverse global portfolio of assets, approximately 80% of which is managed in-house, and has earned an annual total-fund net return of 9.5% since the plan's founding in 1990. Ontario Teachers' is an independent organization headquartered in Toronto. Its Asia-Pacific region office is located in Hong Kong and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which is fully funded as at January 1, 2020, invests and administers the pensions of the province of Ontario's 329,000 active and retired teachers. For more information, visit otpp.com and follow us on Twitter @OtppInfo.

Contacts:
Dan Madge
Ontario Teachers' Pension Plan
Phone: +1 416-730-6451
Email: Dan_madge@otpp.com

Oliver Mann
Kekst CNC
Phone: +44 203 7551 607
Email: otpp@kekstcnc.com

Note to Editors: Please See Attachments:

  • June 30, 2020 Financial Statements (PDF)
  • COVID-19 has created global economic disruption and uncertainty. Please see Note 1(c) in the Financial Statements regarding how Ontario Teachers’ has addressed this with respect to the valuation of its Level 3 investments.

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