Ontario Teachers' net assets top $200 billion in first half of 2019

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Aug 21, 2019, 09:00 ET

Net assets increase by $10.3 billion from Dec. 31, 2018 to $201.4 billion

TORONTO, Aug. 21, 2019 /PRNewswire/ - Ontario Teachers' Pension Plan (Ontario Teachers') today announced its net assets reached $201.4 billion as of June 30, 2019, a $10.3 billion increase from December 31, 2018. The total-fund net return was 6.3% for the first six months of the year.

"Our focus is on achieving stable results that help deliver financial security to our members through a variety of market conditions," said Ron Mock, President and Chief Executive Officer. "Our balanced portfolio approach is delivering strong returns that are in line with our long-term objectives."

Ontario Teachers' Pension Plan - June 30, 2019 Financial Statements (CNW Group/Ontario Teachers' Pension Plan)

Mid-year results provide a snapshot of the Plan performance over a six-month period, while historical returns underscore the long-term sustainability of our investment strategy. As at December 31, 2018, the last date for which there are full year figures, the Plan has had an annualized total fund net return of 9.7% since inception. The five- and ten-year net returns, also as at December 31, 2018, were 8.0% and 10.1%, respectively.

"In the first half of the year, we had positive performance across every asset class in our portfolio, led by fixed income" said Ziad Hindo, Chief Investment Officer. "Over the last few years, we have been transitioning the asset mix to a more balanced approach from a risk perspective and as part of this transition, we increased our allocation to the fixed income asset class."

The nature of Ontario Teachers' business involves planning for the future. We take the long view on how we invest, what we invest in, and the integration of responsible investing practices into our investment decisions. Core to these plans is a larger focus on being global when it comes to the investments we make and the talent we hire.

"We demonstrated our focus on expanding globally in the first half of the year with the announcement of Jo Taylor, who has 35 years of experience investing around the world, as our next CEO, and the launch of our global Teachers' Innovation Platform, which will pursue growth equity and late-stage venture capital investments in disruptive technology," added Mock. "We are also very proud of the continued advancements we have made in attracting top talent and deploying technology to enhance our decision making and service model."

Detailed Asset Mix

	As at June 30, 2019					As at December 31, 2018

	Effective Net Investments at Fair Value ($ millions)			Asset Mix %		Effective Net Investments at Fair Value ($ millions)			Asset Mix %
Equity
Publicly traded		$	33,498		17%		$	31,602		17%
Non-publicly traded		34,302			17		33,354			18
		67,800			34		64,956			35

Fixed income
Bonds		71,936			36		58,243			31
Real-rate products		20,885			11		19,473			10
		92,821			47		77,716			41

Inflation sensitive
Commodities		14,303			7		10,612			6
Natural resources		8,138			4		8,117			4
Inflation hedge		9,025			5		8,709			5
		31,466			16		27,438			15

Real assets
Real estate		27,228			14		27,444			15
Infrastructure		17,141			9		17,801			9
Real-rate products		—			—		4,332			2
		44,369			23		49,577			26

Credit		16,242			8		15,232			8
Absolute return strategies		14,623			7		12,547			7
Overlay		569			—		(375)			—
Money Market		(69,423)			(35)		(59,509)			(32)
Net investments¹		$	198,467		100%		$	187,582		100%


¹	Net Investments, which comprise investments less investment-related liabilities per the June 30, 2019 Condensed Interim Consolidated Statement of Financial Position, are $2,895 million lower than Net assets which include all other assets and liabilities.

Total fund local return was 7.8%.The Plan 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 2019, currency had a negative 1.3% impact on the total fund, resulting in a loss of $2.5 billion that was mainly driven by the appreciation of the Canadian dollar relative to various global currencies including the US dollar, Euro and British Pound.

About Ontario Teachers'
The Ontario Teachers' Pension Plan (Ontario Teachers') is Canada's largest single-profession pension plan, with $201.4 billion in net assets at June 30, 2019. 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 9.7% since the plan's founding in 1990 (all figures as at Dec. 31, 2018 unless noted). 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, invests and administers the pensions of the province of Ontario's 327,000 active and retired teachers. For more information, visit otpp.com and follow us on Twitter @OtppInfo.