Discussing OTPP's Mid-Year Results With CEO and Co-CIOs
- Net assets at $269.6 billion.
- Six- and 12-month total-fund net returns of 2.1% and 7.1%.
- Long-term returns of 6.9% over ten years and 9.2% since inception.
- Fully funded for the 12th straight year and plan sponsors have announced they will file a valuation with the regulatory authorities, with the preliminary surplus classified as a contingency reserve.
TORONTO - Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced a total-fund six-month net return of 2.1%, or net investment income of $6.0 billion. The one-year total-fund net return was 7.1%. Net assets are $269.6 billion, up $3.3 billion from year-end (all figures are as at June 30, 2025, and in Canadian dollars, unless noted).
“The results for the first half of 2025 show the ability of our investment portfolio to generate a positive return while maintaining a cautious position on risk given prevailing market conditions. The total fund return was predominantly driven by our public assets, particularly gold. Our private assets were generally flat to negative in the period reflecting a challenging environment in those asset classes at present,” said Jo Taylor, President and Chief Executive Officer. “Looking ahead to the remainder of the year, our investment teams remain focused on delivering returns and working with portfolio companies to create value.”
Given the plan’s liabilities stretch decades into the future, results over longer periods are important. Ontario Teachers’ had an annualized total-fund net return of 9.2% since inception in 1990. The five- and 10-year annualized net returns were 7.5% and 6.9%, respectively.
The table below summarizes Ontario Teachers' portfolio mix by asset class for the current period and previous year-end.
Detailed Asset Mix
1 Includes funding for investments (term debt, bond repurchase agreements, implied funding from derivatives, unsecured funding, and liquidity reserves) and overlay strategies that manage the foreign exchange risk for the total fund.2 Comprises investments less investment-related liabilities. Total net assets of $269.6 billion as at June 30, 2025 (As at December 31, 2024 – $266.3 billion) include net investments and other net assets and liabilities of $4.6 billion as at June 30, 2025 (As at December 31, 2024 – $5.4 billion).
Funding Status
As of January 1, 2025, the plan was fully funded with a $29.1 billion preliminary funding surplus, underscoring its long-term financial health and sustainability. The plan’s sponsors, the Ontario Teachers’ Federation (OTF) and the Government of Ontario, publicly announced on June 4, 2025 that the funding valuation will be filed with the regulatory authorities. The co-sponsors elected to classify the preliminary surplus as a contingency reserve.
Corporate News
- Appointed Terry Hickey as Chief Technology Officer to oversee Ontario Teachers’ enterprise technology and operations activities globally.
- Welcomed Patti Croft back to the Ontario Teachers’ board to serve in an interim capacity up to December 31, 2025. The reappointment followed the resignation of former board member Tim Hodgson, who left to run as a candidate in the federal election.
- Announced Chris Goodsir will join Ontario Teachers’ board starting January 1, 2026. Mr. Goodsir was appointed by the OTF and will succeed Gene Lewis, who has served on the board for eight years
Investment Highlights
Investment highlights from the period include:
Equities
- Reached an agreement to sell Amica Senior Lifestyles, one of the leading providers of premium senior living residences in Canada, to Welltower Inc.
- Welcomed an equity partner in BroadStreet Partners, a leading North American insurance brokerage company. Ontario Teachers’ will maintain a significant co-control stake in the company alongside an investor group led by Ethos Capital.
- Signed an agreement to sell its majority stake in Sahyadri Hospitals Group, one of the largest chain of hospitals in Maharashtra, India, to Manipal Hospitals Group.
- Concluded the acquisition, alongside Nordic Capital, of Max Matthiessen, a leading financial services advisor for pensions, insurance and wealth management companies in the Nordics.
Infrastructure & Natural Resources
- Signed separate agreements to sell ownership stakes in Ontario Teachers’ airport portfolio including Copenhagen Airport, Brussels Airport and three UK airports - Birmingham Airport, Bristol Airport and London City Airport.
- Agreed to sell its remaining stake in the New Afton Mine, a high-quality gold and copper mine located near Kamloops, British Columbia, to New Gold Inc.
- Completed a fourth follow-on investment in National Highways Infra Trust, an Infrastructure Investment Trust sponsored by the National Highways Authority of India.
Real Estate
- Signed agreements to acquire two newly built residential properties located in Stockholm, marking its first residential investment in Sweden.
- Acquired a 92,000 sqm prime logistics portfolio across Sweden and Denmark.
Teachers’ Venture Growth
- Led a US$235 million funding round in StackAdapt, a leading multichannel programmatic advertising platform based in Canada.
- Led a US$175 million Series F round in Quantexa, a global leader in decision intelligence solutions for public and private sectors.
About Ontario Teachers’
Ontario Teachers' Pension Plan Board (Ontario Teachers') is a global investor with net assets of $269.6 billion as at June 30, 2025. Ontario Teachers’ is a fully funded defined benefit pension plan, and it invests in a broad array of asset classes to deliver retirement security for 343,000 working members and pensioners. For more information, visit otpp.com and follow us on LinkedIn.
This morning I had a chance to catch up with OTPP CEO Jo Taylor as well as CIO of Public & Private Investments, Gillian Brown, and CIO of Asset Allocation, Stephen McLennan.
I want to begin by thanking them all for another insightful discussion and jump right into it.
I also want to thank Dan Madge for setting up this Teams meeting.
Once again, I'm not a huge fan of covering half year results because these are pension funds with very long dated liabilities but it gives me a chance to connect with leaders and talk to them about what they're thinking and seeing on the ground.
As you will gather by reading the comments below, the six-month return of 2.1% doesn't give you the whole story of the activities taking place at OTPP.
Alright, CEO Jo Taylor began by giving me an overview and sharing his thoughts:
You're right, what does a 2.1% six-month return tell you? Probably not a lot. We prefer that, we are a long-term business and want to drive returns over longer term periods. And secondly, if you look at the world today, it all looks pretty much positive with growing listed markets. We saw a lot of volatility in the first six months, particularly in March-April when we were talking about tariffs and things on that side.
Our approach this year has been a continuation of a pretty careful if not cautious risk allocation in terms of the risk we are willing to take. We will probably loo relative to our peers in some of the other Canadian plans that we have a lighter exposure to listed markets in terms of passive or specific allocations to companies.
That in part as you know is we have made some really good returns over the last 20 years in private markets so we still believe in those private markets and the teams we have build to invest in those companies and actually grow them.
It's fair to say returns in those asset classes have been lower recently, there are certainly more headwinds which we will go into in a minute, and also it's harder to transform those businesses in a shorter time line. It takes time to move around in terms of how they're performing and where we have adjusted their allocation within asset groups.
A couple of comments I would like to make having said that. Firstly, we have had some successful disposals in the first half of the year. We sold the five airport assets on good terms in that period (see press releases here, here and here). We sold Diot-Siaci which is a French insurance business to Ardian. That was a good transaction as was the sale of Sahyadri Hospitals in India. We are actually seeing the ability to sell out either minority stakes or complete holdings in businesses to other particularly interested buyers.
The other thing we've been trying to be careful about within our capital allocations is thinking about our dollar exposure -- US dollar versus Canadian dollar -- although other plans will tell you that in terms of where the dollar has been moving, Stephen can talk to you about that.
The other thing is we do want to reserve capital beyond what we already have as a significant holding to Canada. There will be and there are already discussions around opportunity with both the federal and provincial governments that we work with around what we can do to make sure there is a good supply of capital to those projects whether it's data centres, power, commodities, there's a whole bunch of things that we have been having more active thought processes and dialogue around what we can do locally.
Jo then passed the torch to Stephen McLennan, CIO of Asset Allocation, to talk more about allocations:
As you are aware, our risk profile is not as large as some of our peers if you just think about our pension inflows and outflows and how that informs almost from an actuarial basis what our risks should be and we just won't do the same as some of our peers.
We start we that and try to think about the portfolio from that resilience perspective, growth and inflation being the two big categories which you're well aware of.
I guess on that when we think about the outlook for growth and inflation, global growth for instance, it does feel like there are a lot of things that have occurred even this year which gives us some pause for concern. It doesn't mean that growth goes negative, it can also mean that growth goes more positive depending on how things manifest over the next 6, 12, 18 months. The range of outcomes is something we are trying to think through on the growth side.
There's a pretty important impact from inflation not only from a liability perspective -- and obviously our liabilities are inflation linked -- but also how that inflation flows through other asset classes,not only fixed income but equities, does it mean you're going to have margin compression or what not. The range of outcomes from an inflation perspective also feels expanded and that goes to policy under way globally but specifically in our neighbour from the south.
Then some of the other things that are out there that are giving us some reason to review or think about what the world looks like is if you think about the geopolitical landscape not only US-China but US-Rest of World, there have been some pretty significant changes over the last three to six months in terms of the formation and it's still pretty early to fully ascertain what this all means.
So that's all dripping through our view that we already have a lower risk appetite if you will but where within that range should we be positioned and there's just a lot of things going on that have given us a bit more pause for taking a step back and reflecting on what the world might look like 12 to 18 months from now.
Jo mentioned a couple of the positive trends we are trying to think through, that goes to AI and goes to transition. Those are obviously pretty front and center in terms of how those might impact the portfolio in the coming years.
It's critically important to understand why OTPP is more "risk conscious" than its peers, namely, the demographics of the plan, the ratio of retired to active members is much higher than other plans.
This doesn't mean they don't take risks, they obviously have to across the risk spectrum, it means they need to think long and hard about value creation, outcomes and risk-adjusted returns over a longer period.
Gillian Brown, CIO of Public & Private Investments, followed Stephen to discuss private markets:
On the private asset side which is where we make the distinction in the mid-year around the performance of public markets versus private markets, the private assets were a pretty flat contributor to the portfolio this year.
Year-to-date, clearly not what we'd like to see out of some of those asset classes. And I think it's a continuation of the story I've been telling, if I think about private equity, we've been saying it has been a very important long-term contributor over to total fund results. We know that the industry is one in transition, that the economic environment is different than the one that created the heyday of private equity, so we need to be mindful of that in thinking about what those forward looking returns can be.
And making sure we are thinking about our portfolio with our Portfolio Solutions group, leaning into the assets, driving the returns we want out of those assets. But on a prospective basis, how much do we want in private versus public markets, how much do we want in our internal active management programs versus what we may give to an external fund manager where we think they have competencies we may not have in those specialty focused areas.
I think it's similar to some of the issues we would have discussed a year ago at this time, just that those markets are transitioning to a different macro and political environment and private markets takes more time to adjust to some of those changes versus public markets where more quick adjustments.
Gillian is spot on, the adjustments in private markets take more time, something Jo Taylor also referred to, so you need to be mindful of that and always think long term as you adjust allocations and think about prospective returns.
At this point, I jumped in to note that I agree with all the points and referred to the recent acquisition of the DONTE Group, and other deals.
I also noted that some analysts made a big stink about OTPP exiting airports altogether and asked them if that was a strategic decision or just one based on the price being right, allowing them to realize nice gains.
Jo responded:
You know, you sell a bunch of assets and people think it's a big strategic statement.
The assets we've been disposing of have been more in the price is right area. We like healthcare yet we sold our hospital chain in India. It was a good transaction for us, we made a great return, very happy to do more in the same space but that was an asset we thought good time to monetize it.
On the Infrastructure side, we are still very fond of it, we see it as a meaningful allocation in our portfolio yet we sold some infrastructure assets recently and that's partly due to the fact there's a lot of demand for those assets at the moment.
We are not asset collectors, we take the view when it's the right time to monetize them for the members, we do that and I think those examples fit that profile.
I asked Gillian if she thinks there is a secular shift going on in private equity and gong back to what Stephen said about tariffs and we haven't seen the full effects on inflation, I wonder how this will play out on all asset classes including private equity.
I also asked her how much they're leaning more on their strategic partners because Jo made a reference to that last time we spoke to dive value creation and get better co-investment opportunities.
She responded:
I'll take the beginning and the end of that and let Stephen respond to other bits. I do think there's a secular shift going on, there's clearly been a shift in the rates and inflation environment that we are living in and that means companies cannot lever the way they used to have at the same rate as in the past.
I think we've also seen an adjustment where there was probably a modelled assumption around multiple expansion during the life of an asset that just doesn't hold anymore. When we are looking at new assets, we now are assuming a turn or so less on exit rather than assuming you're going to get your returns out of that.
And what that means is you're actually leaning into the operating performance of that business, again it's part of our plan of setting up the Portfolio Solutions group that can get into the operating aspects of a business. We will sit down with the deal teams even during underwrite, here are the five value creation levers we see for this company, and none of those are going to be multiple expansion or financial engineering, they're going to be actual operating performance growth of the company.
And the Portfolio Solutions group can work hand in hand with deal team around making sure the KPIs that were identified on the way in are being delivered during the life of the asset.
So I do think you're filling into that more and with that comes the strategic partners you referenced making sure we are humble about where we are experts and not, and where we are not, let's make sure we are finding the right partners to be with. There are certain sectors that are going to require very specialized knowledge, very specialized operating support so let's make sure we are picking the right partners to work on those assets.
So there are certain geographies we are not going to have a big presence, so let's make sure we are picking the right partners versus some where we feel we have a good track record that gives us conviction that sector will continue to perform and we will continue to be competitive there.
Gillian then passed it on to Stephen to talk about tariffs and inflation and the broader aspects and he responded:
Sure and just to add to Jo and Gillian's comments, I think if you take a simplistic approach what you're really trading off with private assets and private equity is liquidity or illiquidity versus governance and the ability to effect change and value creation and ability to have in a position to have different information.
On the liquidity side, there's a couple of different strains there. One is liquidity as typically defined in a CFA textbooks but there's also this notion of price discovery or sources of that liquidity and obviously in the private equity space, that is a very commercially savvy business and they're thinking about how they expand their sources of capital into other areas besides large asset managers, I'm thinking about the retail piece and seeing how that unfolds. For us it's really as Gillian highlighted leaning into our Portfolio Solutions group and how we make sure we are affecting our governance levers as effective as possible.
On tariffs and inflation side, again, it's still pretty early to actually know what that is going to do on broader trends be that global growth rates. You can argue it's potentially inflationary for US consumers but on the flip side, it could be deflationary for non US parties depending on the reciprocity, etc.
It's still pretty early days, what we've tried to do from a portfolio perspective is a couple of different things. One is at the aggregate level, let's make sure we have a portfolio that gives us a fighting chance depending on how strained that inflation versus growth is. For instance, not to be unduly exposed to a severe recession in the US or be exposed to large inflation shock regardless of where that happens.
Again, the all-weather philosophy, it doesn't mean we are going to get every instance correct but at least make sure we have that mindset around ensuring we are not over-exposed to one extreme or the other as part of part and parcel of the approach.
The other piece of that is how do those tariffs affect the underlying assets particularly on the private asset side and so we have been spending quite a bit of time with our private portfolio companies trying to ascertain where they see vulnerabilities and where we need to be thinking about providing those entities additional support and how those events might impact that part of the portfolio.
I asked Stephen about the US dollar which Jo mentioned earlier in or conversation and he responded:
Obviously the US dollar has been a headwind in 2025 for most investors, particularly non US investors so that's certainly something we keep an eye on and monitor quite aggressively I would say.
As a large global investor with some degree of sophistication, we do have the ability to separate the actual investment decision to buy a US asset from the currency exposure so when we are thinking about the overall portfolio, we do try to layer in how currencies respond to broad asset buckets like Equities, Bonds and F/X and depending on those views and that outlook, we will adjust our hedge ratios accordingly to account for that again with the view how are we generating a portfolio that's going to give us the best risk-adjusted returns at the top of the house.
I also noted it's fair to say that liquid alternatives (ie hedge funds where Teachers' invests 10% of its assets) have been performing better than illiquid alternatives over the last couple of years and Stephen said "absolutely and the US dollar and US equities have been a tailwind up until the beginning of this year."
I told Jo that CDPQ recently announced it will invest $10 billion in UK private market assets over the next five years and was wondering about opportunities there and in Canada for Teachers'.
He responded:
We already have a big portfolio of infrastructure assets in the UK. We've had positive conversations with the UK government about what else we might be able to do. We hope we have demonstrated we are a responsible custodian of assets whether they are normal or equally politically sensitive.
The question for us is the mix of regulated utility style assets you want to have versus other assets where the growth and returns you make are more revenue-level depended. We are looking at that in terms of what's the right mix.
I also said a while ago I thought there were attractive opportunities for investors in Europe. We've made some recent investment sin Europe whether it's in Max Matthiessen and the wealth management business, we've done a couple of real estate investments in Sweden, and we've just recently acquired a dental chain in Spain. So we are investing in Europe across opportunities when we see them.
I think the point of note as Stephen said it we try to operate a balanced, all-weather style portfolio which also incorporates geography.
We've been reasonably active on both investing and divesting. I think the point Stephen was trying to make is a really good one which is there's still a reasonable amount of uncertainty for specific companies or utilities in terms of what's actually going to be the final outcome. So on a company basis, how does all the uncertainty in the world affect their revenue and input price performance and on utilities, is the next review in terms of regulators based on the same criteria in terms of performance you had in the past.
He added this for Canada:
If you look at the things we do regularly, we do a lot in natural resources, so we have a specific natural resources team and I'm sure that will be busy looking at opportunities here.
I'm sure there will be data centres and transmission associated opportunities in Canada that will be subject to review. And there will probably be some segments which may be slightly more difficult to see as an obvious role as an independent private investor like affordable housing where there will be a lot of investment but an easy one for us to target as an activity.
Lastly, Jo gave me some final thoughts:
I think it's to repeat what you said, six months of a long time line and you've said this often, and thank you for saying it. Secondly, we made a positive return with a low risk appetite in terms of allocations. And we are working really hard on our private portfolio to optimize the opportunities for those businesses and that will involve some divesting from time to time where it doesn't suit the portfolio profile. And where we invest in new things, it's harder than it's been in the past because there's a lot of uncertainty in terms of what the future is going to look like.
Great summary, great in-depth discussion, I thank Jo, Gillian and Stephen for sharing their wise insights.
You may have noted that OTPP doesn't provide a breakdown of performance in terms of asset class performance for its mid-year results but as you can tell, private markets remain challenging and in a state of adjustment and their Portfolio Solutions team is working hard with deal teams to create value there.
Jo Taylor is always very upfront in his analysis and doesn't surgarcoat anything, he's a straight shooter.
Alright, let me wrap it up there.
Below, professor Claudia Zeisberger looks at trends in Buyout and Growth Equity in 2025.
She also recently discussed operational value creation in private equity and how critical it is now more than ever. Take the time to listen to her wise insights.
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