A Discussion With OTPP's CEO and CIOs on Their 2025 Results
Ontario Teachers’ Pension Plan earned a 6.7-per-cent return in 2025 but missed its internal benchmark for performance by a wide margin as it marked down struggling private equity and real estate assets.
The plan’s investment gains were bolstered by its publicly traded stock portfolio, which increased in value by 15 per cent, as well as its holdings in gold. Its smaller venture growth arm was up 30 per cent on rising valuations at companies such as SpaceX and Databricks.
But Teachers’ private equity portfolio lost 5.3 per cent, against an 18-per-cent benchmark that is weighted toward public stocks. And its real estate portfolio lost 3.1 per cent.
Overall, Teachers fell short of its 11.7-per-cent benchmark by 5 percentage points - a difference of $12-billion of potential investment income.
Chief executive officer Jo Taylor attributed the plan’s poor results in private equity and real estate in part to “broad sector headwinds,” in a statement.
“We responded with disciplined year-end valuation adjustments to reflect current market conditions, which weighed on performance,” he said.
Teachers also lost $1.2-billion on foreign currency moves, in particular the depreciation of the U.S. dollar against the Canadian dollar, but said it softened the impact by managing its currency exposure during the year.
Over 10 years, Teachers has had an average annual return of 6.8 per cent. Its assets increased to $279.4-billion, from $266.3-billion a year earlier.
The plan is 111 per cent funded, with a $31.2-billion preliminary funding surplus as of the start of 2026, meaning it has more money on hand than it expects to pay out in pensions to members.
“Despite the uncertain environment, our investment business delivered strong dollars earned and was able to successfully realize some key assets while proactively working to address challenging areas of the portfolio,” Mr. Taylor said.
Teachers manages pensions for about 346,000 members in Ontario, including working and retired teachers.
Layan Odeh of Bloomberg also reports Ontario Teachers' posts first private equity loss since 2099:
Ontario Teachers’ Pension Plan is overhauling its approach to investing in private equity after the $200 billion asset manager booked its first loss on that portfolio in 16 years.
After the value of its private equity holdings dropped by about C$10 billion ($7.4 billion) in 2025, the Canadian firm said it will shift its focus in that business to just three sectors: financial services, technology and services. The overall fund still generated a 6.7% return last year, thanks to the rising value of stocks, gold and its investment in Elon Musk’s SpaceX.
“We saw adjustments in software with the AI uncertainty, and we saw adjustments in health care that just had to do with likely an overbuy in the market through a given period that just created more vintage risk,” Gillian Brown, chief investment officer for public and private investments, said in an interview. “I think outside of that, you’re really talking about more idiosyncratic.”
The change means the pension plan no longer has specific teams focusing on health-care investments and the sustainable energy transition within that unit, according to its website.
“We felt before we were too broad,” Chief Executive Officer Jo Taylor said in the interview. “I wouldn’t honestly say the three that we have today are going to be the only ones we have forever — this is just a for-now type question.”
The value of Ontario Teachers’ private equity holdings totaled C$50.8 billion at year-end.
Lowering Valuations
While the executives declined to identify companies that were marked down, Taylor said the pension plan lowered valuations for some investments made in the wake of the pandemic.
Assets in the fund’s private equity portfolio include dental support firm Abano Healthcare, eye-care services provider Nvision and PhyMed Healthcare Group. Ontario Teachers’ acquired a majority stake in software maker Miratech in 2021 in a deal that valued the firm at more than $1.5 billion. In December, Miratech secured a $2 billion loan from private credit firms led by Blackstone Inc. to refinance a bank loan package.
The pension plan will continue using external fund managers within private equity, with Jeff Markusson leading the effort as senior managing director of global funds. Third-party funds account for 28% of the private equity portfolio, with direct investments making up most of the rest.
The private equity team has undergone other changes over the past year, including the appointment of Dale Burgess as head of equities and the addition of a department focused on value creation. Harj Shoan, senior managing director for sustainable energy transition and head of global funds, left the firm, and at least five other senior managers from that unit have departed over the past several months.
Canada’s largest pension plans are re-evaluating their private equity play books amid rising macroeconomic uncertainty and a difficult climate for deal exits. Ontario Municipal Employees Retirement System, which posted a 2.5% loss for its private equity investments last year, revamped that unit over the past two years, including hiring a new global head, halting direct buyouts in Europe and cutting a team focused on the asset class in Asia.
“We want to be actively investing in private equity,” Taylor said. “But we have to be self-aware and say, ‘What are we good at and where do we want to spend more of our time and capital going forward?’”
Ontario Teachers’ venture growth portfolio surged 30%, largely because of its stakes in SpaceX and software firm Databricks.
The fund’s overall return, which fell short of the benchmark by 5 percentage points, pushed the Canadian fund’s net assets to C$279.4 billion as of December.
Ontario Teachers’ real estate group, which is long on Canadian shopping malls, had another tough year, losing 3.1% — partly because of the bankruptcy of department store chain Hudson’s Bay Co.
The fund posted a C$1.2 billion loss from foreign-currency exposure, mostly because of a slump in the US dollar.
Ontario Teachers’ exposure to the US increased to 38% last year from 33% in 2024, while Canada comprised 31% of investments, down from 36%.
The pension plan is looking at two sectors in the US: power and transition related activities as well as technology. The fund invested in artificial intelligence firm Anthropic last year.
Earlier today, Ontario Teachers’ announced positive 2025 results:
- Achieved a one-year total-fund net return of 6.7%.
- Strong returns across venture growth, public equity, gold and credit.
- Underperformed the 2025 benchmark return of 11.7% by 5.0%, resulting in negative value add of $12.0 billion.
- Delivered a ten-year annualized total-fund net return of 6.8% and return since inception of 9.2%.
- Fully funded for the 13th straight year with a strong preliminary funding surplus of $31.2 billion.
TORONTO - Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced a one-year total-fund net return of 6.7% for the year ended December 31, 20251, compared to a 9.4% return in 2024. Net assets grew to $279.4 billion, up from $266.3 billion in 2024. Investment income of $18.5 billion and member and employer contributions of $4.1 billion for the year were partially offset by benefits paid of $8.5 billion and administrative expenses of $1.0 billion.
The plan is fully funded as at January 1, 2026, with a $31.2 billion preliminary funding surplus, compared to a funding surplus of $29.1 billion last year. This equates to a funding ratio of 111%, up from 110% in the prior year. This marks the plan’s 13th consecutive year being fully funded (meaning plan assets exceed future pension liabilities), underscoring the plan’s long-term financial health and stability.
"Our 2025 results reflect the resilience of our diversified portfolio and the disciplined approach we take to managing the plan on behalf of our members. We remain fully funded and delivered a one‑year net return of 6.7%, supported by strong performance from gold and our venture growth and public equities asset classes. Our private equity and real estate teams had a more challenging year given broad sector headwinds. We responded with disciplined year-end valuation adjustments to reflect current market conditions, which weighed on performance,” said Jo Taylor, President & Chief Executive Officer. “Despite the uncertain environment, our investment business delivered strong dollars earned and was able to successfully realize some key assets while proactively working to address challenging areas of the portfolio. Moving forward, our focus is on maintaining our sound funding position by delivering strong risk‑adjusted returns and continuing to deliver excellent service to our members.”
While delivering strong investment income, the Plan underperformed relative to the benchmark return of 11.7% by 5.0%, or $12.0 billion in negative value add2. The benchmark underperformance was driven by several factors including continued robust performance in our public market-linked benchmarks, as well as constrained performance of certain assets particularly the private equity, infrastructure and real estate asset classes.
1 All figures are as at December 31, 2025, and denominated in Canadian dollars unless noted.
2 Value-add is the amount of return in excess of (below) benchmarks after deducting management fees, transaction costs and administrative costs allocated to the active programs (includes annual incentives but does not include long-term incentives).
Impact of currency on returns
In 2025, the fund experienced a foreign currency loss of $1.2 billion as assets denominated in foreign currencies depreciated in value when converted back into Canadian dollars. This was primarily driven by the depreciation of the U.S. dollar compared to the Canadian dollar. The fund’s net exposure to the U.S. dollar is significantly larger than any other foreign currency. The negative impact was significantly reduced thanks to the fund’s proactive management of our exposure to currency markets during the year.
Investment performance
Given the plan’s liabilities stretch decades into the future, results over longer periods are particularly important. Ontario Teachers’ has delivered an annualized total-fund net return of 9.2% since inception in 1990, and five- and 10-year annualized total-fund net returns of 6.6% and 6.8%, respectively.
Time Period One-year Five-year 10-year Since Inception Total-fund net return 6.7% 6.6% 6.8% 9.2%
Portfolio Performance by Asset Class (all figures as at December 31)
Fund returns (%)3 Actual Benchmark Actual Benchmark 2025 2025 2024 2024 Equity Public equity 15.0 13.9 23.2 25.8 Private equity (5.3) 18.0 11.7 23.7 Venture growth 30.2 18.5 25.8 29.2 6.1 16.7 16.7 24.8 Fixed income 2.6 2.6 4.8 4.8 Inflation sensitive Commodities 27.0 27.0 25.2 25.2 Natural resources 1.8 0.0 13.3 15.0 Inflation hedge (4.7) (4.7) 9.8 9.8 13.6 13.2 18.6 19.1 Real assets Real estate (3.1) 2.2 (0.7) 5.0 Infrastructure 1.8 7.8 9.1 8.5 (0.4) 5.3 4.9 7.0 Credit 5.8 4.5 17.2 16.8 Total-fund net return 6.7 11.7 9.4 12.9
3 The total-fund net return is calculated after deducting transaction costs, management fees and investment administrative costs. Asset-class returns are calculated before deducting investment administrative costs.
The table below summarizes Ontario Teachers' portfolio mix by asset class for the current and previous year.
Portfolio Performance by Asset Class (all figures as at December 31)
Asset Class $ billions % $ billions % 2025 2025 2024 2024 Equity Public equity 50.0 18% 37.4 14% Private equity 50.8 19% 60.4 23% Venture growth 15.3 6% 10.4 4% 116.1 43% 108.2 41% Fixed income 61.8 23% 78.0 30% Inflation sensitive Commodities 32.1 12% 28.9 11% Natural resources 12.1 4% 12.5 5% Inflation hedge 11.9 4% 12.6 5% 56.1 20% 54.0 21% Real assets Real estate 27.9 10% 29.4 11% Infrastructure 34.5 13% 43.2 17% 62.4 23% 72.6 28% Credit 38.3 14% 37.2 14% Absolute return strategies 25.2 9% 24.0 9% Funding and other4 (87.3) (32%) (113.1) (43%) Net investments5 272.6 100% 260.9 100%
4 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.
5 Comprises investments less investment-related liabilities. Total net assets of $279.4 billion at December 31, 2025 (2024 - $266.3 billion) include net investments and other net assets and liabilities of $6.8 billion (2024 - $5.4 billion)
Investment highlights
Ontario Teachers’ manages approximately 75% of its assets internally, with a focus on deploying capital into a mix of active and passive strategies around the world.
Transaction highlights in 2025 include:
- Participated in the Series F funding round of Anthropic, the AI safety and research company behind Claude.
- Invested in Darwinbox, a leading cloud-based human resources technology provider in Asia, as part of their latest funding round.
- Acquired Donte Group, a leading dental care platform in Europe, to support growth and innovation in healthcare services.
- Acquired a prime logistics real estate portfolio in Sweden and Denmark alongside partner Fokus Nordic.
- Agreed to acquire our first residential real estate asset in Sweden through a new partnership with Gordion.
- Invested in Grafana Labs, a global leader in open-source observability and monitoring solutions, as part of a funding round to accelerate global expansion.
- Completed our fourth investment into National Highways Infrastructure Trust (NHIT), the Government of India’s nodal agency for national highway development.
- Participated in Quantexa’s Series F investment round, supporting the company’s growth in decision intelligence solutions.
- Led StackAdapt’s latest funding round, supporting the Canada-based company’s growth as a leading programmatic advertising platform.
Realizations from 2025 include:
- Completed the sale of our stakes in Copenhagen, Brussels, Birmingham, Bristol, and London City Airports.
- Reached an agreement to sell Amica Senior Lifestyles, a leading provider of premium senior living residences in Canada.
- Partnered with Ethos Capital, BCI and White Mountains alongside BroadStreet to drive the next chapter of growth.
- Completed the sale of our stake in Diot-Siaci to Ardian, marking an exit from a leading European insurance brokerage group.
- Reached an agreement to sell our remaining stake in future free cash flow from New Gold’s New Afton Mine.
- Completed the sale of Sahyadri Hospitals, a leading healthcare network in India.
- Completed the sale of our majority stake in Sydney Desalination Plant to Utilities Trust of Australia, supporting sustainable water infrastructure in Australia.
Corporate news
- Chris Goodsir and Bill Butt were appointed to Ontario Teachers’ Pension Plan’s board by the Ontario Teachers’ Federation, with terms commencing January 1, 2026, replacing Gene Lewis and Patti Croft respectively.
- Terry Hickey was appointed as Chief Technology Officer to oversee Ontario Teachers’ enterprise technology activities globally.
- Christopher Metrakos, Dale Burgess and Jenny Hammarlund were appointed Executive Managing Directors for Infrastructure & Natural Resources, Equities, and Real Estate respectively, each responsible for guiding their teams’ global strategy, portfolios and asset management activities.
- Constructively engaged with the federal government to discuss “nation building” projects and the Ontario government to consider large investments meant to bolster economic development. Discussions on investments from Ontario Teachers’ in these projects are ongoing.
- Achieved a 50% reduction of portfolio carbon emissions intensity in 2025 compared to our 2019 baseline, exceeding our 2025 emissions intensity target.
- Subsequent to year-end, published the 2026-2030 Climate Strategy, which introduced a 2030 target of $70 billion in Climate Transition Aligned (“CTA”) assets, encompassing private market investments in companies that are decarbonizing their operations and those enabling the global energy transition. Over the next five years, our goal is to double our CTA assets from their approximate value of $35 billion6.
Note to Editors: To read our annual report, please click here.
6 As at June 30, 2025, Ontario Teachers' had an estimated $35 billion in the Paris Aligned Reduction Target and Green Assets programs, which is being used as a proxy for our CTA assets.
About Ontario Teachers’
Ontario Teachers' Pension Plan Board (Ontario Teachers') is a global investor with net assets of $279.4 billion as at December 31, 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 346,000 working members and pensioners. For more information, visit otpp.com and follow us on LinkedIn.
Take the time to read OTPP's 2025 annual report here.
The annual report is comprehensive, well written, and goes over a lot of material.
Below, you will find the table of contents:
I recommend you read Chair Steve McGirr's message on page 8 where I note the following:
I am pleased to report that the Plan remains fully funded for the 13th consecutive year, delivering a positive investment return in a year marked by continued uncertainty and market volatility. This positive outcome reinforces the soundness of a model built to withstand the types of external pressures that defined 2025.
The Plan’s resilience has been built over time. Since its inception in 1990, the Plan has generated a cumulative investment return of 9.2%, reflecting consistent performance across a range of economic and market conditions. Investment returns now account for approximately 80% of the Plan’s total assets, with contributions from members, the Ontario government and designated employers making up the remaining 20%. This long-term balance, together with a strong surplus, should provide members and sponsors with confidence in the Plan’s ability to pay pensions now and into the future.
Then read CEO Jo Taylor's message on page 10 where I note the following:
In 2025 we earned a total-fund net return of 6.7%, just shy of our 7% annual target. In the year, we generated net investment income of $18.5 billion and grew our net assets to $279.4 billion. With those returns, we remain fully funded for a 13th straight year with a preliminary funding surplus of $31.2 billion.
That performance was driven by double-digit returns from our allocation to gold, with strong returns from our venture growth and public equity portfolios. At the same time, we faced continued headwinds in our private equity and real estate portfolios. Overall, this was a good outcome in a complex and unpredictable investment environment.
That said, our net return trailed our benchmark. Our active programs are designed to consistently deliver excess returns, but this was not the case in 2025. This will be a key focus for improvement in 2026. Other key priorities will be to deploy capital where we have a competitive advantage and to raise our game on value creation to improve the operational performance of the businesses in which we are invested.
He also notes this on investment highlights:
While our investment activity in private markets was reduced in 2025, we were able to add some exciting new companies to the portfolio. Additions included Anthropic, the company behind the AI-model Claude, and Donte Group, a leading dental care platform in Spain. In our home market, we led StackAdapt’s latest funding round, supporting their growth as a leading programmatic advertising platform.
More significantly, we were also able to sell several investments during the year freeing up capital for new opportunities. One highlight was the sale of our portfolio of five European airports, which returned $8 billion of capital and concluded more than 20 successful years of ownership in that sector. See pages 66–67 for more details on sale of this portfolio.
Another key priority for us is to deliver outstanding service to our members at the right cost. Member satisfaction remains very high, and we received a perfect score from 46% of our members.
I will also refer you to the Q&A with chief investment officers Gillian Brown and Stephen McLennan on pages 28-29. I note this passage:
Q: 2025 brought headwinds in private markets. Given their importance to the Plan, what shifts, if any, are you making to support performance of the portfolio?
Gillian: Many private asset classes are facing industry-wide sectoral headwinds, and in some cases, asset-specific challenges, that require active hands-on work to address. If you take private equity, for instance, investors across the spectrum, including ourselves, are dealing with a less liquid market for both acquisitions and exits, higher interest rates, and greater competition for the best deals.
As active investors and owners, we are working closely with our companies to build and protect value. Examples of how we are doing that include deepening our value creation capabilities to improve our company’s operational performance, prioritizing investment in areas where we have an edge, and using technology and data more effectively to drive insights and productivity. Read more about how we are increasing value creation
efforts across the portfolio on pages 56–57.
We are also excited to have appointed new leaders in a number of asset classes including Equities (Dale Burgess), Infrastructure & Natural Resources (Christopher Metrakos) and Real Estate (Jenny Hammarlund). All three have a successful track record at Ontario Teachers’, substantial experience investing in private markets and are well placed to oversee successful execution of our investment plan.
Now, before I get into my discussion with Jo, Gillian, and Stephen, some high-level comments.
First, OTPP's detailed asset mix:
Next, let's look at total fund investment performance and by asset class:
The biggest underperformance came in Private Equity which declined 5.3%, significantly underperforming its benchmark that gained 18%.
Real Estate also declined by 3.1%, underperforming its benchmark which gained 2.2%, and Infrastructure gained 1.8% but underperformed its benchmark of 7.8%.
When three of the biggest private market asset classes underperform their benchmark by a wide margin and 52% of your assets are there, it detracts from overall performance, especially when Private Equity loses 5% in an odd year since that is the most important private market asset class at Teachers'.
Still, despite the paltry performance in private markets, Teachers' did manage to post a gain of 6.7% last year because of gains in public equities, commodities and venture growth which had an exceptional year.
I believe absolute return strategies also kicked in to help boost overall performance but need to double-check this.
That speaks volumes about the benefits of a diversified portfolio.
As far as currency losses, I note this from the annual report (page 53):
In 2025, the fund experienced a foreign currency loss of $1.2 billion, or 0.45% net loss, as assets denominated in foreign currencies depreciated in value when converted back into Canadian dollars.This impact was significantly reduced as a result of our proactive management of our exposure tocurrency markets during the year.
This loss was primarily driven by the depreciation of the U.S. dollar compared to the Canadian dollar (making our U.S. dollar denominated assets less valuable when converted back into our home currency). The fund’s net exposure to the U.S. dollar is significantly larger than any other foreign currency.
Not as bad as peers as Teachers' started reducing US Treasuries early in 2025.
Discussion with Jo Taylor, Gillian Brown and Stephen McLennan
Earlier today, I had a Teams meeting with Jo Taylor, Gillian Brown, and Stephen McLennan to go over their 2025 results.
I want to thank them for taking the time to speak with me and also thank Dan Madge for setting up the virtual meeting.
Jo began by giving me an overview of the results:
We would look back at 2025 and say this. We're still generating the returns we need to keep the plan well funded. You know, 111% funded. It's a balanced portfolio that's well constituted and resilient to the shocks and challenges the world is serving up, which is very relevant today.
When we look back at the performance, you could see it was a bit of a mixed bag. We had headwinds and challenges in old and new areas. So, old areas, a bit more in real estate and in private equity, but we had pleasant surprises in venture growth and our inflation-sensitive commodities area, which actually came up with the returns we did, which has been pretty close to what we've been trying to generate on a regular basis.
I think there are other things to say, which I think have allowed us to be quite discerning and prudent as we think about the portfolio very actively, actually, less within the investing side of the market, but more in the divesting side of the market. We sold a number of companies at good prices, our portfolio being probably the ones that are a standalone group, and that allows us to be pretty connected with how buyers see our assets. And actually, what are their issues, what we need to be doing to make our portfolio market-ready, and that's where we have the choice between those companies for the future, or seeing that it's probably the time for us to look for an exit, if we can get the right
And the other thing I would say is we've really tried to build our capability alongside the asset teams, with specialist teams that can help on value creation, value protection and making our portfolio companies exit-ready. So we have a Portfolio Solutions Group which we're building to be able to do that alongside our investment teams, and most importantly, making sure that they get in touch with our thinking as we invest in those businesses, as well as once we're already engaged.
And then that's just to say, the world remains uncertain, and probably where that affects us is thinking about what might be the go-forward, as well as just reacting to things.
And secondly, with the uncertainty that's around -- which you could go back to 2025 around tariffs and Liberation Day and all those questions -- try and see what the opportunity is for segments of the market, geographies and particular companies, in terms of their growth aspects. And that's been, I would say in my own experience, more difficult than perhaps it has been historically, to be accurate, because there's a fair bit of uncertainty around which I think takes more time and more skill to figure out.
I then separated it out into two areas, private markets being extremely important at Ontario Teachers', were weaker, particularly in private equity. I remember Gillian talking to me about structural changes in private equity. I asked her flat out if Ontario Teachers' took a lot more writedowns last year in private equity to flush it out. Is that a fair assessment?
Gillian replied:
Maybe it's a semantic question, but a couple of things there. One is that we obviously go through the full valuation process every year, which is both internal and with external auditors, and we get opinions on valuations of assets, etc. And so there's no process this year that would be any different from our normal course. I think it points to a couple of things. One, to Jo's point earlier around as you go to market, and as we see assets transacting, you get a better sense of what the market is aimed for or not. And there can be some look-through to other assets you hold. How is the market looking at earnings quality, or how is the market looking at growth potential? How is the market considering platform valuations, whatever that may be. And so we took a good, strong look at our portfolio to see what the impacts could be there. I think those were sort of the factors, more than some view.
I noted that I also saw there was a change in the approach in private equity, focusing on three sectors: financial services, technology and services. I asked Gillian if it's fair to say they'll be doing a lot more fund investing and co-investing going forward.
She responded:
I wouldn't say that that's a goal. It could happen if that's where we see the best opportunities. But I think we're still committed as a direct investor in private equity. We still think that we can invest where we have a competitive advantage and generate better returns. So that's still an area of focus. I think we're saying, those are the sectors where we see our competitive advantage. There could be other sectors that we want to invest in that we don't see that competitive advantage. And it would therefore behoove us to partner with, you know, people we think are smart in those areas, and whether that generates co-investment or not, I think we would obviously like to target co-investment as a fee management exercise. But I think it's going to be a question of what the opportunities we face are versus a targeted view around how much funds or directs we want to do.
I also noted that the Portfolio Solutions Group is integral in this process. I asked if it's fair to say that this group really is the one that's going to be driving the value creation going forward in private markets, not just private equity, but all private markets?
Jo responded:
It does vary. I think the lead focus will be writing because of the nature of those assets. I'd also say that it's not a hand over the asset to the Portfolio Solutions Group, they work with the deal teams who are actually accountable for the returns on the choices they put to the Investment Committee.
The point that's important is trying to bring more in-house skills to bear around those assets. So technology expertise, particularly around AI, would be one example. Human resource expertise, around assessing management teams and finding solutions when things aren't working quite the way we hope, or people depart. So there are a few areas, specific areas, where we're trying to write a shot bringing those skills to bear on, I think, it'd be honest. It won't be every asset in the portfolio, but the ones where it's most opportunity to do it now, which is on a timing basis or a value size basis. The job here is to give the asset every opportunity to perform correctly. And if we get that right, we'll hang on to it and if it's not performing to our expectations, on return target, then we will have a different conversation.
I noted in infrastructure, Jo made a good point about selling the airports at the right price. The return on infrastructure, however, was not as high as I expected it to be (1.8% whereas it's typically 7-8% or higher). I asked if there was any specific reason why it wasn't as high this year.
Gillian responded:
It's more of a question there of sort of some assets that underperformed, so really more of an idiosyncratic story around a handful of assets rather than a larger statement on the infrastructure overall.
I asked if they invested in Thames Water and Jo confirmed they were not.
In real estate, I noted there's a new head there, Jenny Hammarlund who's doing a great job diversifying the portfolio internationally. I asked what's going on in real estate and why it underperformed last year.
Stephen responded:
Happy to give some comments on that. You're right, Jenny has been with the firm for several years, and more recently, was named the head of real estate. She's thus far done a fantastic job.
The story with real estate is really what's happening in Canada is one piece, and then what's happening internationally. This sector in Canada specifically has a lot of challenges over the last four or five years, think COVID, think a number of failures of major kind of retailers and so on.
I think that's been a very big challenge. You've also had the specter of kind of just rising cost of capital, higher interest rates, and how that flows through, kind of cost accounting and valuation pieces.
On the Canadian side, the impact of Hudson Bay was a big driver of performance in 2025. We're seeing some green shoots now in terms of return to the office. Streets are quite busy. That has an impact both on the office side, but it also drives traffic into our malls, which we tend to bring our locations. And so there are some signs of, I suppose, on the real estate piece.
The other part of the equation is what's been going on internationally and and frankly, that's part of the efforts to diversify that portfolio away from Canada to kind of get a different flavour of exposure, both geographically and by sector, as you know, prior to or one of the one of the challenges with our portfolio of Canada is that it is very concentrated to the sectors that have been impacted the most over the last couple of years. And so there has been a conscious effort to try to source assets and sectors that are different than that. And those were actually quite positive in 2025 if you think about some of the exposures in Northern Europe, as well as some of the exposures in our US-related to our data center.
They shared with me that their real estate portfolio is now 56% Canada, down significantly from prior to Covid when it was 85% Canadian (all managed by Cadillac Fairview).
I moved on to private credit which continues to do well. I asked if they can talk a little bit about the credit portfolio, which is a mixed bag of emerging market debt, high yield and private credit.
Gillian responded:
In terms of private credit, I think the portfolio is still fairly small compared to some others who would have either bought platforms or partnered with GPS to build a portfolio more quickly than we would have. We chose to go in and build our own private credit business so that we could handle that sort of individual name underwriting which in our view, is proving to be very valuable in the current market. So that portfolio, I would expect to be somewhat challenged with software exposure, like every private credit portfolio is, but not to be challenged around some of this kind of rehypothecation issue around collateral for votes.
On Emerging Market credit and private credit, she added this:
EM private credit is one that we don't really do. I'm trying to think what we have in private credit, it would be negligible. EM credit is something that we do more in the liquid space. I don't think it's impacted by this at all.
I think again, private credit, for us, we are doing those underwrites pretty carefully. I'd say having the team, and we've talked about it before, but having credit as a team across public, private, EM/ DM, etc, it means that that team can shift to where the opportunities are, versus having sort of target allocations.
And so that gives us more flexibility.That just means that when spreads tighten and they're there, you don't feel like you're being paid sufficiently for the risk and private credit. It's easy to allocate more into public markets and the allocation at the top of the house. So I'd say we have a, probably a pretty flexible approach compared to most of our peers.
I moved on to this year, noting volatility is insanely high. I asked Stephen about asset allocation and he responded:
Yeah, sure. No, just a comment on the volatility piece, which was the January, February story. I see you alluded to what feels like a year of volatility in three or four weeks, want to be careful to say, because I don't think this time is volatility comes and goes, and so you need to be aware of that again, as you're aware with this premise of building a portfolio that's resilient to a prepared in advance for these kind of shots, not knowing what those shots are going to be.
That's certainly one of the underlying principles that we use, and we have a reasonably large allocation to inflation-sensitive asset classes not to predict, not to predict these types but to protect their portfolio in the event that these things occur.
And certainly that's been both in 2025 but also in 2026 that really served as well in terms of really providing some offsets to some of the negative moves we've seen in equities and interest income, which, by the way, for the magnitude of the events, have been relatively stable. I think the volatility that you're referring to has been surprisingly buying markets, not as much in kind of the more traditional asset space, income, the two main ones, and that's being the other way,
I noted that Jo spoke at the WEF in Davos about reducing their exposure to US Treasuries and asked if it's continuing this year. I also noted that while the depreciation of the US dollar hit them last year, it wasn't as much as their peers.
Jo replied:
You're right, what we did early in 2025 was to reduce our exposure to US dollar and US Treasuries. I think that meant our currency hit was lower than some of our peers as a result of that in terms of the US dollar, Canadian dollar translation.
I think we still see questions about the strength of the US dollar long term, but I don't think we're that convinced to say it's going to influence our ultimate weighting to opportunities in the US. I suspect in the US, we'll just continue to be quite selective about areas where we think we've got expertise and some sort of competitive advantage.
As you know, we've been proven to be a good custodian of strategically sensitive assets in other parts of the world. We'd hope we'd be able to be considered for those. And that's a broader landscape than it used to be, something energy production and transmission is seen as a strategically sensitive area than perhaps it was 10 years ago.
We are still active in technology in the US through our venture growth team, as well as our other successes, and an area where we have a lot of successes in financial services so continue to look at North America as a very strong platform for that as we go forward. So selective by what we're good at, selective by where we see opportunity, probably finally, selective about which things we think we actually have the ability to be seen as a collaborative and a supportive partner for all projects.
Jo noted what the venture growth team brings is not only some good investments which are performing very well, but also expertise and understanding of what's happening in the disruptive areas of technology, which we can feed back into the rest of the planet.
Lastly, I asked Jo one last question, more of a philosophical question, meaning we saw the Maple 8 funds over the last 20 years shift their assets from public to private markets, where that was supposed to be the area of value creation. And now there are a lot of critics that are saying this shift towards private markets, it has run its course, and basically the funds should shift back to public markets. I asked him how he would respond to these critics?
Jo replied:
I'd say that Ontario Teachers' over 35 years made a lot of money out of private equity. Point 1. Point 2 is when you've made a lot of money in a certain area, you want to move away from that with some thought and trepidation. And then finally, we equally have to be objective and say how things change, which means it's fundamentally a different value proposition to what we've seen in the past, or the way we get paid for the risk we take and the lack of liquidity is is different, and that's those are the two questions I think we need to keep an eye on as we go forward.
But look, we have a very good portfolio. We have talented investors. We've invested in that area, but the idea is I think there is a prize for Teachers' to be one of the few investors in the sovereign wealth/ pension fund community capable of investing directly in great companies in the private space. And if that's the prize by staying with what we're doing at the moment, I think we will look at that first and then move away from that when the evidence is pretty compelling that we don't make enough return.
He added this in terms of what they're worried about in 2026 and how they're positioning the portfolio:
I think we need to get the right balance, which is to say, we're making the right steps to keep the plan funded. The portfolio at the moment, has been in 2026 performing pretty well. We have got a resilient portfolio which generally does pretty well when things get difficult. And the decision for us is actually trying to look ahead and say, where do we make adjustments more than something completely comprehensive as a change to our approach? So the adjustments are probably going to be in what sort of the right approach to inflation, what's the right approach to future growth around the companies we're already invested in, and we may choose to back in the next few months.
And in terms of his expectations, Jo was very clear:
I'm very keen for everyone at Ontario Teachers' to be clear about what we're asking them to do, and they're accountable for the outcomes of what they've done. That has been a very strong message for everybody over the last 24 to 36 months, and we're very fortunate here to be an investor at scale, accessing international opportunities with a super support team around everybody.
Great discussion, I thank Jo, Gillian and Stephen once again for taking the time to talk to me to share all this.
In sum, it wasn't a great year for Ontario Teachers' but their diversified portfolio helped them overcome challenges in private markets and the plan remains fully funded.
More importantly, they are implementing the right steps to ensure better focus, performance and outcomes, so I expect them to bounce back strongly in the next couple of years.
Please take the time to read their 2025 annual report for a lot more insights.
Below, Ontario Teachers' Pension Plan President & CEO Jo Taylor says the pension has cut exposure to US Dollar and Treasuries. He speaks to BTV's Jonathan Ferro, Lisa Abramowicz and Annmarie Hordern on the sidelines of the 2026 World Economic Forum in Davos, Switzerland (January).
Also, Jo Taylor tells CNBC’s Dan Murphy in Davos that he’s closely watching geopolitical spillovers in financial markets. While volatility should be seen as a buying opportunity, Taylor emphasizes investors must “know what you own” during uncertain times.
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