Ontario Teachers' Gains 9.4% in 2024, Boosted by Venture Investments and Stocks
(Bloomberg) -- Ontario Teachers' Pension Plan gained 9.4% last year, driven by strong returns in stocks, venture growth and commodities.
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The performance boosted the fund's net assets to C$266.3 billion ($185.2 billion) as of the end of 2024, according to a statement Thursday, although it missed its overall benchmark of 12.9%.
'We have some categories where it's been a deliberate policy decision by us to be different where it's paid off,' Chief Executive Officer Jo Taylor said in an interview. 'Gold was our highest performer in 2024, and we've been relatively light on bonds and fixed income.'
Venture growth holdings gained about 26% last year, as several assets performed well, with SpaceX standing out, according to Taylor.
With the exception of the pension plan's real estate portfolio, which lost 0.7%, all of the fund's asset classes earned returns last year. Stock holdings gained 23.2%, with commodities surging 25.2%. Meanwhile, private equity notched an 11.7% gain and credit returned 17.2%.
With markets being mired in uncertainty amid the US's trade war with other countries, Ontario Teachers' is taking a cautious approach. 'It's hard to invest with confidence in the time of volatility, Taylor said.
Still, the pension fund is on the hunt for companies but has increased the bar in terms of the quality threshold, he said. Ontario Teachers' has been active in venture, private equity — particularly financial services — and infrastructure.
The one sector where the opportunity set has changed is defense. 'Everybody's now realizing they have to spend money on defense, building their own capabilities,' Taylor said. 'If you invest in defense companies, I think you have to be quite careful about does it meet your values and your view of what's an appropriate company to be putting investment behind.'
The Toronto-based pension plan created a department last year to 'focus our value creation efforts and drive the predicted outcomes from the portfolio,' according to the statement. The new group, called Portfolio Solutions, is led by Kevin Kerr, who was the head of the fund's infrastructure team in the Americas.
According to Taylor, the team is trying to do a few things, including giving an accurate assessment of what to do with an asset, maximizing the potential of the company beyond just the investment teams, and 'if there is an asset where we think it's probably the right time to dispose of it, make sure it's really ready ahead of that process,' he said.
Ontario Teachers', which manages around 80% of its assets internally, made several investments last year. This includes selling an equity stake in New Zealand's mobile tower company Connexa and acquiring a co-control stake in Stockholm-based financial adviser Max Matthiessen from private equity firm Nordic Capital.
In 2024, Ontario Teachers' posted a foreign currency gain of nearly C$7 billion, primarily driven by the appreciation of the US dollar compared with the loonie. The fund's net exposure to the greenback is 'significantly' larger than any other foreign currency.
(Adds quotes from an interview with the chief executive officer throughout.)
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