UPDATE 1-Ontario Teachers' Pension Plan gets 13 percent return for 2012

Tue Apr 2, 2013 12:33pm EDT
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* Net assets rise to record C$129.5 billion

* Pension plan 97 pct funded; shortfall falls to C$5.1 bln

By Andrea Hopkins

TORONTO, April 2 (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.   Continued...