Ontario Teachers' fund 2018 net returns drop on market volatility

FILE PHOTO: Ron Mock, CEO of the Ontario Teachers Pension Plan (OTPP), takes part in a discussion at the Canadian Coalition for Good Governance annual public meeting in Toronto, Ontario, Canada June 14, 2016. REUTERS/Chris Helgren/File Photo

(Reuters) - Ontario Teachers’ Pension Plan, Canada’s third-biggest public pension fund, on Tuesday posted a sharp drop in net returns from investments compared with the previous year, due to a difficult trading environment caused by volatile global markets.

The fund, which administers pensions for 327,000 working and retired teachers in Canada’s most populous province, reported net returns of 2.5 percent last year, compared with 9.7 percent in 2017.

“In 2018, we were able to generate positive returns even as we navigated some of the most volatile markets in years,” said Ron Mock, chief executive officer of the fund.

Returns from fixed income rose 2.8 percent, while those from private equity jumped 19.5 percent.

However, that was eclipsed by a 3.6 percent drop in returns from publicly traded equity, and a 2.2 percent slip in commodities.

The fund’s total assets rose by C$1.6 billion ($1.20 billion) from a year ago, to C$191.1 billion, as of Dec. 31.

The fund’s Chief Investment Officer Ziad Hindo said there were several headwinds on multiple fronts for investors - from heightened trade tensions to the “rise of populism”.

“Volatility is expected to remain intense in the coming years,” Hindo said in the fund’s annual report.

Reporting By Aparajita Saxena in Bengaluru, Editing by Sherry Jacob-Phillips