Ontario Teachers' returns climbed again in 2011

Tue Apr 3, 2012 3:36pm EDT
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By Andrea Hopkins

TORONTO (Reuters) - Ontario Teachers' Pension Plan, one of Canada's top dealmakers, said on Tuesday it had an 11.2 percent rate of return on its investments in 2011, bringing net assets to a record high C$117.1 billion ($117.9 billion) despite market volatility.

Still, the third straight year of double-digit returns on its massive investment portfolio failed to close Teachers' funding shortfall, which narrowed to C$9.6 billion from C$17.2 billion in 2010. That means the plan is 94 percent funded, with a shortfall between the projected cost of providing pensions to Teachers' 300,000 active and retired teachers and its projected asset growth.

Strong returns in private equity, fixed-income and infrastructure drove 2011 gains while returns in commodities and timberlands pulled overall returns lower, Teachers said in a statement accompanying its annual report.

"Our team's 2011 performance was especially impressive, given the market volatility and economic uncertainty that accompanied the euro-zone debt situation, and was compounded by the year's natural disasters," Jim Leech, the pension fund manager's chief executive, said in a statement.

The pension plan has also started 2012 off well, benefiting from rebounding equity markets as investor appetite for riskier assets recovered early in the year.

"Starting 2012, we have had some success already, not only because markets have seemed to be in risk-on mode for the last three months, but also because some of our investments are doing very well," Neil Petroff, chief investment officer, told a news conference.

Teachers, Canada's largest single-profession pension plan, has emerged as one of the world's most powerful dealmakers, investing in infrastructure and real estate projects around the globe and harnessing top-notch talent to manage its huge investment portfolio to ensure high returns.

It abandoned a passive investment strategy - which focused mainly on Canadian stocks and bonds - in 1996 and has since put its money to work in private equity, seeking global projects and assets that promise long-term income and gains.   Continued...