Ontario Teachers plans to diversify international investments

The Ontario Teachers' Pension Plan is reevaluating its investment strategy due to rising trade tensions and tariffs, especially with the U.S. Over two-thirds of its $266 billion in assets are currently invested in Canada and the U.S., with 36% in Canada and 33% in the U.S. CEO Jo Taylor stated that the pension fund is in the process of assessing whether to diversify its investments geographically. As uncertainties in the global economy grow, the fund is considering increasing its overseas investments. Taylor noted that, unlike some U.S. investors focused solely on North America, the pension fund is open to looking at international opportunities. Despite the shifting focus, the fund plans to continue investing in Canada. However, Taylor mentioned there is a shortage of large projects available for investment. In 2024, the pension fund reported a 9.4% return, recovering from a low return of 1.9% in 2023. The returns fell short of the internal benchmark of 12.9%, primarily due to weaker performance in private equity and struggling real estate assets. In terms of specific asset performance, publicly-traded stocks gained 23.2%, and venture capital investments rose by 25.8%. However, private equity lagged, gaining only 11.7%, which was below the benchmark for public stocks. Real estate assets, conversely, saw a slight decline of 0.9%. Taylor expressed satisfaction with the portfolio's resilience during uncertain times. Although the pension fund is reassessing U.S. investments, it still earned about $7 billion in investment income last year from currency gains, largely due to the depreciation of the Canadian dollar against the U.S. dollar. The fund has also reviewed its exposure to tariffs and found minimal impact so far, indicating a lighter risk profile. The pension fund aims to leverage its network of international offices in places like London, Singapore, and Mumbai to reduce reliance on North America and navigate the more complex geopolitical landscape.