Funds posts 4% return in ‘difficult’ investment environment in 2022 as net assets grew to $247.2 billion.
Published Mar 14, 2023 • Last updated 9 hours ago • 2 minute read
Ontario Teachers’ Pension Plan net assets grew to $247.2 billion, approaching the pension’s goal of $300 billion by 2030. Photo by Cole Burston /THE CANADIAN PRESS The Ontario Teachers’ Pension Plan has invested heavily in tech and financial services companies in recent years, but the chief executive of the $247.2 billion fund says he isn’t lining up to buy the Canadian business of failed Silicon Valley Bank.
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Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors “We’ve not really looked at it so far,” Jo Taylor said Mar. 14, after the fund released annual results for 2022.
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Though Teachers bought HOMEQ Corp., the parent company of reverse mortgage specialist HomeEquity Bank, last year and is building a venture investing platform that could triple in size over the next decade, Taylor suggested there are reasons SVB — which lends primarily to venture firms — would not be a good fit for the pension fund.
“Were we to look at the project, we’d obviously be then owning a bank and regulated accordingly and there’s a lot of issues that go with that,” he said.
“So personally, I’m not sure that’s necessarily our first choice just at the moment.”
Teachers’ posted a net return of four per cent for the year ended Dec. 31, driven primarily by strong returns from inflation sensitive and infrastructure asset classes.
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Article content Net assets grew to $247.2 billion, approaching the pension’s goal of $300 billion by 2030 and Teachers’ beat its benchmark return of 2.3 per cent.
The plan was fully funded as of Jan. 1, for the tenth year in a row, with a $17.5-billion preliminary funding surplus.
“We delivered positive results for our members in 2022, leveraging our portfolio diversification and flexible asset allocation capabilities in a difficult investment environment,” said Taylor.
He added that the relative investment performance was impressive, given that many public equity and fixed income indices experienced double-digit losses during the year.
The latest results contributed to an annualized net return of 9.5 per cent since the pension management organization’s inception in 1990, and five and 10-year annualized net returns of 7.3 per cent and 8.5 per cent, respectively.
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Article content When it came to Silicon Valley Bank, Taylor referenced how the bank failure was handled in the U.K., where the operations were placed with an established lender.
“They picked HSBC because actually they wanted somebody who had a huge amount of reassurance and cover in terms of what might happen, and I don’t know whether that’s something you (as a pension fund) want to be committing to to a regulator,” he said.
Taylor said the job for Teachers’ will be to manage any tremors and opportunities that arise in the aftermath of the bank failure.
“I doubt anybody saw the SVB (Silicon Valley Bank) thing coming but you know, that’s not necessarily that relevant — it’s really more how you cope with the impact of the situation,” he said. “We’re very lucky we don’t have any real exposure to them. So that’s not really going to be front of mind for me or for (chief investment officer) Ziad (Hindo) over the next few days.”
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