The Healthcare of Ontario Pension Plan has invested more than half of its assets in Canadian holdings and that is not about to change despite the threatening economic climate, its leaders say.
“We remain committed to Canada,” chief investment officer Michael Wissell said in a recent interview with The Globe and Mail. “There’s a hometown advantage because we don’t have any currency hedging or other exogenous risks.”
At the same time, Mr. Wissell and HOOPP chief executive officer Jeff Wendling say the pension’s liquidity will allow it to invest globally when the current trade chaos creates attractive investments.
“At some point, there will be opportunities in this, right?” Mr. Wendling said. “We don’t know what the endgame is here with President Trump. Is this part of trying to negotiate a different agreement? Is it really severing this free-trade arrangement that we’ve had for many years, which would be an incredible change?”
HOOPP, which manages pension investments for more than 478,000 members at more than 700 employers in Ontario’s hospital and health care sector, posted a 9.7-per-cent return last year, net of its investment costs. The return beat its internal benchmark of 8.7 per cent, after falling short by a full percentage point in 2023.
The plan closed the year with assets of $123-billion, up from $113-billion at the end of 2023.
For 2024, public equities led the way with a return of 17.9 per cent, while the pension’s private equity, infrastructure and private credit classes all returned between 11 and 13 per cent.
The plan’s fixed income/bonds portfolio returned 1.9 per cent. Real estate lagged at 1.4 per cent, but still posted a better return than in 2023, when it lost 6.5 per cent. (HOOPP does not release its benchmarks for specific asset classes.)
HOOPP said high interest rates continued to adversely affect real estate values. Strong performance in its industrial properties globally was offset by weakness, specifically in Southern California. While most of its best office properties gained value, it needed to continue writing the value of U.S. properties as well as its second-tier offices.
HOOPP said roughly $60-billion of its assets at year-end were in Canada, and two-thirds of that – about $40-billion – was in Canadian government bonds. With the bond market pricing in continued rate cuts in Canada, the bonds have gained value in 2025 and pushed the Canadian proportion of the portfolio above 50 per cent, Mr. Wissell said.
“At the same time we need to be diversified, and a good example of that is happening in real time right now, where European equities are performing quite a bit better than some of the North American equities,” he said. “We want to go into any sort of near-term hiccups that might occur over the next little while.”
HOOPP’s board approved benefit increases for its members and a cost-of-living adjustment in 2024. It also used new research published by the Canadian Institute of Actuaries to increase its estimate of the benefits it must pay members in the future, owing to longer life expectancies for its members.
The actuarial change helped cause its funding ratio – its assets, compared with its future pension obligations, or liabilities – to slip for a second straight year. The plan closed 2024 at a funding ratio of 111 per cent, versus 115 per cent at the end of 2023, and 117 per cent for 2022. Mr. Wendling says the actuarial change contributed about three percentage points to the decline.