Healthcare of Ontario Pension Plan, Toronto, returned 5.12% on its investments in 2015, helping boost the plan’s assets 5.1% to C$63.9 billion ($46.1 billion) as of Dec. 31, said Jim Keohane, president and CEO.
The return surpassed the defined benefit plan’s 3.95% custom benchmark return.
The pension fund's investments returned an annualized 12.02% over five years, 9.3% over 10 years and 9.46% over 20 years.
Its 2014 return was 17.7%.
HOOPP’s funding ratio at the end of 2015 was 122%, up 7 percentage points from the previous year. Its discount rate was cut to 5.65% from 5.85%, in response to lower interest rates during the year, Mr. Keohane said at a news conference.
“It was a year of high volatility and low returns,” Mr. Keohane said. “But we were still able to maintain a strong funded position, driven by our investment returns.”
Investment income for the year was C$3.1 billion, down 66% from 2014, because of what Mr. Keohane said was “a challenging year” with increased global regulatory requirements and slowing growth in China and other emerging markets.
HOOPP’s liability hedge portfolio — nominal bonds, real estate and real-return bonds — provided 62% of the pension fund’s investment income, Mr. Keohane said. Nominal bonds returned 8.9% in 2015, while real estate returned 8% and real return bonds, 2.2%.
In its return-seeking portfolio, private equity returned 17.7% and public equities, 0.8%.