Ontario Teachers’ Pension Plan’s 2.1-per-cent return in the first half of the year was underpinned by a cautious position toward risk-taking as privately owned assets struggled.
The first-half returns added $6-billion of income to the fund, helping push the pension plan’s total assets to $269.6-billion.
Assets increased $3.3-billion from the end of 2024, because Teachers paid out more in benefits to retired members than it took in from new contributions, offsetting a part of the investment gain.
With a continued threat of higher inflation, weak returns from private assets such as real estate and private equity, and the impact from higher tariffs imposed by the United States still murky, Teachers has been working to guard against potential hits to its portfolio.
“We’re in the mode of being really careful about how we see the market and our risk exposure,” chief executive officer Jo Taylor said in an interview.
Over the 12 months that ended June 30, Teachers earned a 7.1-per-cent return, and on average the fund has gained 6.9 per cent annually over the past 10 years.
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Teachers manages pensions for about 343,000 members in Ontario, including working and retired teachers.
Most of the fund’s first-half gains came from publicly traded assets, especially its investments in gold. But private assets mostly produced flat returns or losses, extending a multiyear slump as higher interest rates have slowed dealmaking.
Mr. Taylor said Teachers still believes that private equity and other private assets can produce good returns for members.
And the fund has had some success at selling assets, including five airports in Europe and Britain as well as a majority stake in Indian hospital chain Sahyadri Hospitals Group.
“We’ve still got assets that people want to own at prices where we’d want to sell them, so it’s far from completely negative territory. It’s just that it’s probably not at the level we’ve seen a few years back,” Mr. Taylor said.
He said Teachers is being “realistic,” and said that the optimists who say that liquidity is coming back and that deals are poised to pick up are mostly those seeking to raise money for funds.
The reality is that is has become more difficult to predict whether the future rates of return on private-equity assets will look similar to historical trends, with tariffs driving up the cost of goods and wages under pressure.
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On top of that, tariff rates are only just starting to settle as the U.S. ratchets trade tensions higher and some countries cut deals to minimize the damage.
“It’s easy to forget, sitting here in August, some of the volatility we saw in April,” Mr. Taylor said.
“We haven’t forgotten that. We’re trying to be quite careful about how we deploy new money.”
Even so, Teachers has been busy. Its executives have worked to improve companies in its private-equity portfolio, adjust currency hedges after exposure to the U.S. dollar became a drag on results, and consider tweaks to its mix of equities and bonds.
“Underneath, that’s been a duck under water: There’s been quite a lot going on in terms of trying to make sure we are managing our risk,” Mr. Taylor said.
With a handful of major U.S. stocks dominating sentiment and growth in markets, Teachers is “moving a bit more to a passive allocation” to equities, rather than actively selecting them, Mr. Taylor said. But he added that there is no major change in Teachers’s strategy in the works.
The U.S. is “still a very attractive market,” he added, especially after potentially damaging policy proposals from the Trump administration – including a “revenge tax” on foreign investors – have proved to be “noise that’s come and gone.”
In Canada, early conversations that pension funds have had with Prime Minister Mark Carney’s government about how to attract more capital to infrastructure, energy and defence projects have been “really constructive,” he said, and he expects the pace of discussions to pick up.
“I’m pretty hopeful that we’ll see some projects moving towards fruition,” he said.