Ontario Teachers' Pension Plan gets 13 percent return for 2012

Tue Apr 2, 2013 12:36pm EDT
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By Andrea Hopkins

TORONTO (Reuters) - The Ontario Teachers' Pension Plan, one of Canada's top investors, said on Tuesday it had a 13.0 percent rate of return on its investments in 2012, bringing net assets to a record high C$129.5 billion ($127.4 billion).

With a fourth straight year of double-digit returns, the global dealmaker, which administers the pension plan for public-system teachers in Canada's most populous province, said it would expand its thrust into emerging markets as it seeks acquisitions across asset classes that will add long-term value and income to the underfunded pension plan.

Chief Executive Jim Leech and Chief Investment Officer Neil Petroff said Teachers' would boost its exposure in emerging markets from the current 15 percent to closer to 20 percent "over time" as the fund searches for alternatives to slow-growth Europe and North America.

"You look at Europe and if we get zero (percent growth) for the next five to 10 years we'll be lucky, and North America 1 to 3 (percent). So the emerging market, with China having a bad year at 7, doesn't look so bad," Leech told reporters at a news conference.

At 15 percent, Teachers' emerging markets exposure is already high relative to other global pension funds, which also lag Teachers' 13 percent rate of return for 2012.

Teachers' biggest emerging markets exposure is in Brazil, but Leech said the plan would open an office in Hong Kong this year to take advantage of acquisition opportunities in Asia.

Petroff said Teachers' has several deals that are undergoing due diligence, and acquisitions would likely continue at the steady pace seen in recent years. He also did not rule out deals in Europe, where the debt crisis has caused some assets to be undervalued.

"There are opportunities in Europe, but we believe as long as we are compensated for the risk we're taking, these are some real gems of investments," Petroff said.   Continued...