April 1, 2014 / 2:03 PM / 4 years ago

Ontario Teachers' Pension Plan posts 10.9 percent return in 2013

* Pension plan erases funding shortfall, notches C$5.1 bln surplus

April 1 (Reuters) - The Ontario Teachers’ Pension Plan, one of Canada’s biggest investors, on Tuesday reported a 10.9 percent rate of return on its investments in 2013, bringing net assets to a record high of C$140.8 billion ($127.6 billion).

The fifth straight year of double-digit returns on the investment portfolio erased Teachers’ funding shortfall. The preliminary results showed a C$5.1 billion surplus, the plan’s first in 10 years.

“Our rate of return since inception (in 1990) is 10.2 percent,” Teachers’ Chief Executive Officer Ron Mock said in a statement.

Teachers’ and peers like the Canada Pension Plan Investment Board and Caisse de dépôt et placement du Québec have been among the world’s most active dealmakers in recent years, with major bets on real estate, natural resources and infrastructure.

“We face an increasingly competitive investment landscape,” Mock said.

Teachers’, which once focused mainly on Canadian stocks and bonds, has shifted strategy in recent years to put more money to work outside the country, seeking projects and assets that promise long-term income and gains.

The pension plan notched strong returns in equities, real estate and infrastructure. But negative returns in fixed income weighed on the overall results, Teachers’ said in a statement accompanying its annual report.

Demographic trends mean Teachers’ must provide benefits to an increasing number of retirees while the number of active educators paying into the plan declines. The fund serves 307,000 active and retired teachers in Ontario.


Last year marked the fifth year of recovery since the 2008 financial crisis lopped 18 percent from its investments.

In 2013, investment earnings were C$13.7 billion, down from C$14.7 billion in 2012.

The combined value of public and private equity assets rose to C$61.9 billion as of Dec. 31 from C$59.5 billion a year earlier. The equities portfolio had a one-year rate of return of 27.6 percent.

Teachers’ Private Capital investments increased to C$14.8 billion from C$12.0 billion, posting a 26.9 percent return for the year.

Real assets, which comprise real estate and infrastructure, rose to C$30.9 billion from C$26.5 billion.

The real estate portfolio, managed by Teachers’ Cadillac Fairview unit, totaled C$19.2 billion at year-end and returned 13.2 percent. The infrastructure portfolio was C$11.7 billion and returned 16.8 percent.

Fixed income was a weak spot, with net assets falling to C$56.9 billion from C$60.0 billion. The one-year rate of return was negative 7.9 percent. ($1 = 1.1038 Canadian dollars) (Reporting by Andrea Hopkins; Editing by Lisa Von Ahn)

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