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Pension Funds

Ontario Teachers chalks up 3.6% net return for first half of 2017

Ontario Teachers' Pension Plan, Toronto, returned a net 3.6% on its investments in the first six months of 2017, helping boost its total assets to C$180.5 billion ($138.6 billion) as of June 30, according to financial reports released Wednesday. ​

Plan assets were up 2.8% from Dec. 31.

Investment income totaled C$6.4 billion for the first six months of the year, with combined employer and employee contributions of C$1.72 billion for the same time period.

The plan did not provide comparative numbers for the previous six-month period. It also does not provide midyear return breakouts for individual asset classes nor related benchmark returns.

Generally, performance of global public equities, infrastructure, private equity and government bonds drove the first-half gains, Bjarne Graven Larsen, chief investment officer, said in a news conference Wednesday. However, he added, appreciation of the Canadian dollar over the first six months of the year impacted the gross returns of the plan's foreign investments. The plan's gross returns in local currency was 4.5% vs. a loss of 0.8% in Canadian dollars.

The plan was 105% funded as of Jan. 1, according to the latest data available.

Ontario Teachers' discount rate was 3% as of June 30, vs. 3.25% six months earlier.

The plan's asset allocation as of June 30 reflects the plan's new allocation approved last year, separating credit from other fixed-income investments and reclassifying natural resources under an inflation-sensitive allocation.

The overall allocation as of June 30 was 35% fixed income, 20% public equity, 16% private equity, 14% real estate, 12% inflation-sensitive investments (commodities, natural resources and inflation hedge), 11% infrastructure, 7% credit, 6% absolute return and 1% real return. As of Dec. 31, the plan had 44% in fixed income, 22% public equity, 16% each private equity and real estate, 10% infrastructure, 8% absolute return, and 3% each commodities and natural resources. (For both time periods, the allocations include an additional 22% used for liquidity purposes.)

"We shifted our strategy to adjust in a more diversified direction, not only to perform well in good conditions, but also to sustain us in bad conditions," Mr. Larsen said.