While 2018 was challenging for investors, the year ended on a positive note for the Healthcare of Ontario Pension Plan, with its assets growing to $79 billion in 2018, representing investment return of 2.17 per cent, compared to 10.88 per cent in 2017.
“Despite market challenges, the investment team was successful in positioning the fund defensively in a year when missteps could have resulted in significant losses,” the annual report said.
The HOOPP plan has a liability-driven investment strategy and its assets are comprised of two broad portfolios: a liability-hedge portfolio and a return-seeking portfolio.
“A year ago, our analysis showed that market valuations were high, and we could see significant uncertainty on the horizon,” said HOOPP president and chief executive officer Jim Keohane in the annual report. “As a result, we took steps to be defensively positioned in our investments. This protected the gains the fund made over the last decade, ensuring that we can continue to deliver on our pension promise.”
In 2018, the liability hedge portfolio generated a return of $1.1 billion, driven mainly by real estate and fixed income strategies and the return-seeking portfolio generated a return of $0.6 billion, driven mainly by private equity and other alternative strategies.
While investment income was lower in 2018 than the previous year, at $1.7 billion compared to $7.6 billion, the plan’s 10-year annualized return was 11.19 per cent. As well, the plan’s funding status remains strong at 121 per cent, down slightly from 122 per cent in 2017.
“To ensure we deliver on our pension promise to members, our investment strategy takes a very long-term view while anticipating and adapting to market changes,” said Keohane in a press release. “Our approach allows us to preserve value even during turbulent and challenging investment environments.”
“Looking ahead, HOOPP continues to explore new and effective investment opportunities and strategies,” Keohane added.