The Ontario Teachers’ Pension Plan is reporting a net return of 1.9 per cent for 2023, according to its latest annual report.

The investment organization underperformed its benchmark return of 8.7 per cent, a 6.8 per cent difference or $15.8 billion in negative value add. In 2022, the plan beat the benchmark by 1.8 per cent or $4.4 billion in value add.

Read: Ontario Teachers’ reporting 1.9% return, $17.5BN surplus in first half of 2023

Public equities returned 20 per cent, just shy of its 20.3 per cent benchmark, while private equity and infrastructure investments produced results lower than the benchmark, generating returns of 3.6 per cent and negative 2.8 per cent, respectively. Real estate allocations returned negative 5.9 per cent.

The decline in performance was credited to under-exposure in listed equities that performed strongly in the year and valuation adjustments in the infrastructure and real estate portfolios. The report said net investment income reached $5.5 billion with contributions from plan members adding $3.3 billion.

In addition, the Ontario Teachers’ net assets grew to $247.5 billion, towards a goal of $300 billion in net assets by 2030, compared to $247.2 billion in 2022. As at Jan. 1, 2024, the plan was fully funded with a $19.1 billion preliminary funding surplus, marking the 11th consecutive year of being fully funded status.

In a press release, Jo Taylor, president and chief executive officer at the Ontario Teachers’, said the plan didn’t generate investment returns to its desired levels. “This was largely due to positioning the portfolio for a more challenging economic environment than ultimately transpired, our relatively lower exposure to public equities and valuation adjustments in certain real estate and infrastructure assets.”

Read: Ontario Teachers’ returns 4% for 2022, driven by private equity, inflation-sensitive investments