The Ontario Teachers’ Pension Plan returned 3.8 per cent in the first half of 2021, a significant improvement on its negative 0.4 per cent return in the first half of 2020.
According to its mid-year report, the Ontario Teachers’ net assets grew to $227.7, up $8.6 billion from the beginning of the year. This is well below its historic annualized total fund net return of 9.6 per cent and marginally below its five-year average of 7.9 per cent.
With assets and liabilities in more than 50 countries, gains made by the Ontario Teachers’ were dampened by about $3.2 billion, or 1.5 per cent, as a result of the strength of the Canadian dollar during the period.
While the pension fund’s performance during the first half of 2020 may have slid, it entered the year in a relatively comfortable position. In the one-year period between the beginning of the third quarter of 2020 and the end of the second quarter of 2021, its assets grew by 13.2 percent. It also began 2021 with a surplus of about $8.5 billion.
In 2021, the Ontario Teachers’ gains were driven by investments in private and public equity. Low fixed income yields served to draw down these gains somewhat. According to a press release, an ongoing effort to rebalance and diversify the portfolio will see capital allocations made toward real assets including infrastructure and real estate as well as inflation-sensitive assets.
Jo Taylor, the Ontario Teachers’ president and chief executive officer, said the mid-year checkpoint is a less important measure of the plan’s overall success than its long-term results. “While mid-year is an important checkpoint, long-term results are the best gauge to assess our investment performance. We are pleased to be sustaining strong 10-year and since inception returns.”