The Ontario Teachers' Pension Plan Board office in Toronto.Cole Burston/The Canadian Press
Ontario Teachers' Pension Plan is reassessing its appetite for U.S. investments in the face of tariffs and trade tensions, looking for ways to boost the share of its overseas assets as economic risks rise.
Teachers has more than two-thirds of its $266-billion of assets invested in Canada and the United States – 36 per cent at home and 33 per cent south of the border.
With U.S. President Donald Trump promising to press ahead with punishing tariffs on Canada, Mexico and other trading partners, “one of the questions inevitably will be, ‘well, what do we want to do next vis-à-vis our U.S. activity?’ ” chief executive officer Jo Taylor said in an interview on Thursday.
Teachers is in “a live process” to determine whether to change the geographic mix of its investments, he said, in the same way that individual companies are looking to diversify their trade and reduce their reliance on the U.S.
“We are an international investor, we invest all over the world: What’s the right balance in the current climate of looking at other destinations, potentially, to where we’ve been investing recently?” he said. “And can we get the right risk-return if we do that?”
For investors, the huge U.S. market has historically been highly attractive because it offers a broad range of investment partners, strong capital markets, good management teams and consistent conditions.
“But I think what we’ll layer on top of that now is a more uncertain geopolitical situation,” Mr. Taylor said.
“If I was contrasting our approach to perhaps some U.S. investors that I was working alongside at Davos and some other places recently, I think we are much more open to looking at the world through an international lens than some of our peers who’ve really hunkered down to really North America only,” he said.
That doesn’t mean Teachers will pull back on investments in Canada, even as the country faces a potentially severe economic shock. “We are clear that we would like to do more in Canada,” Mr. Taylor said, but a shortage of large projects is the main barrier.
On Thursday, Teachers reported a 9.4-per-cent return for its portfolio in 2024, bouncing back from a weak 1.9-per-cent return in 2023.
The pension fund’s 2024 returns fell short of its internal benchmark of 12.9 per cent, mostly because private equity returns lagged the stock market’s performance, and real estate assets such as office buildings and shopping malls continued to struggle.
Over 10 years, Teachers has an average annual return of 7.4 per cent.
In 2024, the pension fund’s publicly traded stocks gained 23.2 per cent and the value of its venture capital investments increased by 25.8 per cent. Private equity investments rose by 11.7 per cent – but lagged a benchmark portfolio of mostly public stocks that gained 23.7 per cent. Real estate assets lost 0.9 per cent.
“I’m pretty pleased with the way our portfolio is standing up to the uncertainties that are around today,” Mr. Taylor said. “Over the last few months, post the year end, the portfolio’s held up really well.”
Even as Teachers looks more skeptically at U.S. investments, nearly one-third of the $23.7-billion of investment income the pension fund earned last year – roughly $7-billion – came from currency gains as the gap widened between the U.S. dollar and a sinking loonie.
Teachers reviewed its portfolio for exposure to tariffs and found “a relatively light impact so far,” Mr. Taylor said, with few investments in sectors such as manufacturing that will be most directly affected.
Even so, the pension fund is looking to get more out of its network of international offices in London, Singapore, Mumbai and San Francisco, to become less dependent on North American investments. Teachers announced this week that it will close its Hong Kong office.
“Geopolitically, life’s got more complicated,” Mr. Taylor said, “So we’re trying to work out how we use that network of great people around the world as best we can.”