(March 2 – 10:40 ET) – The Ontario Teachers’ Pension Plan Board produced a return of 9.3% for 2000.

The OTPPB says it has averaged a 13% return over the last four years, consistent with its average annual return since the inception of the investment strategy in 1990. Its long-term investment goal is an average annual return of 4.5%, plus inflation.

At the end of 2000, net assets were $73.1 billion, up from $68.3 billion in 1999. Investment income totalled $6.2 billion, including $2.6 billion in value created by beating the composite benchmark by 4%. “This was our best year yet in creating extra value for teachers,” said Claude Lamoureux, president and CEO.

“We measure our performance against market benchmarks, and this year our rate of return of 9.3% was significantly higher than the 5.3% benchmark for the markets in which we invest. This difference in dollar terms is $2.6 billion — enough to pay all our pensions for one year.”

Lamoureux attributed the results to a shrewd conservative strategy. “Our investment team achieved this by shifting our asset mix away from equity markets early in the year and, in particular, reducing our overall exposure to the technology sector prior to the decline. We increased our holdings of inflation-sensitive investments, such as real return bonds and real estate, which returned 19.9% over the year.”

At year end, 57% of the plan’s assets were invested in equities, 25% in real return bonds, commodities and real estate, and 18% in fixed-income securities, largely federal and Ontario government bonds.

Since 1990, with the help of strong markets and low inflation, the plan has created over $19 billion in surplus, most of which has been used to improve benefits and pay off the pre-1990 unfunded liability.
-IE Staff