Ontario Teachers’ Pension Plan earned a 6.7-per-cent return in 2025, but missed its internal benchmark for performance by a wide margin as it marked down struggling private equity and real estate assets.
The plan’s investment gains were bolstered by its publicly traded stock portfolio, which increased in value by 15 per cent, as well as its holdings in gold. Its smaller venture growth arm was up 30 per cent on rising valuations at companies such as Databricks, Inc. and Space Exploration Technologies Corp., which is known as SpaceX.
But Teachers’ private equity portfolio lost 5.3 per cent, against an 18-per-cent benchmark that is weighted toward public stocks. And its real estate portfolio lost 3.1 per cent, as the insolvency of Hudson’s Bay Co. hollowed out valuable real estate in a number of malls the plan owns.
Overall, Teachers fell short of its 11.7-per-cent benchmark by 5 percentage points – a difference of $12-billion of potential investment income.
“The headwinds we’re facing aren’t that different from many of our peers,” chief executive officer Jo Taylor said in an interview on Tuesday. But he acknowledged that Teachers has seen sharply different performance from specific assets, with outperformance on venture bets undercut by weakness in the plan’s private assets.
“When we look back to last year, we made steady progress,” he said. “There were headwinds and there were nice surprises.”
Teachers manages pensions for about 346,000 members in Ontario, including working and retired teachers.
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Investments in the software sector have struggled as fears mounted that companies will be disrupted by artificial intelligence. And it has proven “a little harder than you imagine” to squeeze more value out of portfolio companies, with prices for those assets in flux, Mr. Taylor said.
The plan’s real estate portfolio is weighted toward office and retail properties such as malls in Canada, and Teachers has spent years trying to shift new investments toward other sectors and countries.
Foot traffic to offices has recovered from pandemic lows, but Teachers had Hudson’s Bay stores close in 15 of its malls, forcing another rethink of its bet on retail.
One positive for Teachers was that “we were able to sell a number of assets at good prices,” Mr. Taylor said. That included deals to sell five airports in the United Kingdom and Europe, for proceeds of about $8-billion.
Seeing what buyers wanted, and what they were willing to pay, provided a dose of realism about what other assets in the Teachers portfolio might be worth, and how much some needed to be marked down.
On the other hand, the plan’s investment in Elon Musk’s SpaceX – which was the first investment in its $15-billion venture growth arm – looks like a home run as it seeks to raise up to US$50-billion at a US$1.75-trillion valuation through a planned initial public offering.
The potential IPO is not necessarily “a target exit point” for Teachers, said Gillian Brown, the plan’s chief investment officer for public and private investments.
Instead, the team is assessing the company’s future prospects after it acquired Mr. Musk’s xAI, gauging whether it could now be set up for “another potential leg of venture-like growth,” she said.
Looking forward, the two key economic risks that Teachers is monitoring are the potential for higher inflation or slower growth, especially with uncertainty about the fallout from the war in Iran.
“Inflation is the bane of pretty much every portfolio,” said Stephen McLennan, chief investment officer, asset allocation. “Being thoughtful around how you position the portfolio for when a shock happens is very, very important.”
Teachers lost $1.2-billion on foreign currency moves as the U.S. dollar depreciated, but said it softened the impact by managing its currency exposure.
Over 10 years, Teachers has had an average annual return of 6.8 per cent. Its assets increased to $279.4-billion, from $266.3-billion a year earlier. The plan is 111 per cent funded, meaning it has more money on hand than it expects to pay out in pensions to members.