OPTrust, which invests on behalf of OPSEU Pension Plan, reported an overall net return on investment of 12 percent last year, outperforming its benchmark of 6.2 percent. As a result, net assets rose to $17.5 billion as of December 31, 2014 from $16 billion the year before. The infrastructure portfolio of the Toronto-based pension fund manager turned in an especially strong performance, with a return of 48 percent. The private equity portfolio, which made 12 new commitments to both fund and direct investments in 2014, returned 11.3 percent. Last month, OPTrust partnered with Imperial Capital Group in an investment in Ackerman Security Systems.
OPTrust Delivers 12% Return in 2014
Net assets grow to $17.5 billion as OPTrust celebrates 20th anniversary
TORONTO, April 23, 2015 /CNW/ – OPTrust, one of Canada’s major public pension plans, today reported 2014 investment results of 12.0%, net of external management fees, significantly outperforming its benchmark return of 6.2%.
Net investment income for 2014 was $1.8 billion, and after collecting contributions of $515 million and paying $798 million in benefits, the Plan’s net assets increased to $17.5 billion at year-end ($16.0 billion as at December 31, 2013). On average, 76 cents of every pension dollar paid by the Plan is generated by investment returns with the other 24 cents being funded by member and employer contributions. The Plan’s costs in 2014 were 53 basis points.
“As OPTrust celebrates its 20th anniversary, we continue to deliver investment results that allow us to pay pensions today and preserve pensions for tomorrow,” said Hugh O’Reilly, President and CEO of OPTrust. “Exceptional returns in our infrastructure portfolio, complemented by solid performance in real estate and public equities, offset challenging market conditions such as this year’s steep decline in energy prices. The results also validate our ongoing commitment to strengthening the relationship between assets and liabilities in our investment strategy.”
OPTrust’s investment returns in 2014 reinforced its sustained, stable funding position. The Plan continued to be fully-funded during a year in which it took meaningful steps to support its long-term funding health by further strengthening its mortality and economic assumptions.
The Plan’s 2014 funding target was 6.15%, and over its 20-year history, the Plan’s investment portfolio has realized an average annual return of 8.4% net of internal and external investment expenses, exceeding its 7.11% average funding target return for the same period.
Investment results by portfolio
OPTrust’s infrastructure portfolio led performance in 2014, with a return of 48%. These exceptional results were driven in large part by a significant investment in European infrastructure. The Plan’s real estate portfolio delivered a strong return of 10%.
The Plan’s equity investments had a solid year in 2014. The public equities portfolio returned 11.8%, supported by its global equity exposure. The private equity portfolio returned 11.3% in a year in which OPTrust made 12 new commitments to both fund and direct investments.
Challenged by volatility in the energy sector and declining oil prices, the energy commodities portfolio delivered a return of negative 36.2%, consistent with market performance for this asset class. The Plan’s fixed income portfolio posted a return of 7.5%.
In 2014, OPTrust remained fully-funded while strengthening its mortality and economic assumptions, for the second year running, to enhance the long-term funding health of the Plan.
The valuation also identified $1.2 billion in deferred investment gains, compared to $811 million at the end of 2013. These gains will be recognized between 2015 and 2018, further improving the Plan’s funded status.
More detailed information about OPTrust’s 2014 investment results, funding position and other activities will be available in its annual report, to be released later this spring.
With assets of $17.5 billion, the OPSEU Pension Trust (OPTrust) invests and manages one of Canada’s largest pension funds and administers the OPSEU Pension Plan, a defined benefit plan with over 86,000 members and retirees. OPTrust was established to give plan members and the Government of Ontario an equal voice in the administration of the Plan and the investment of its assets, through joint trusteeship. OPTrust is governed by a 10-member Board of Trustees, five of whom are appointed by OPSEU and five by the Government of Ontario. www.optrust.com
SOURCE OPSEU Pension Trust (OPTrust)
For further information: contact OPTrust Communications: Karen Danylak, Director, Communications, 416-681-6784, email@example.com; Samantha Gileno, Manager, Communications, 416-681-4507, firstname.lastname@example.org
Photo courtesy of OPTrust