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The Ontario Teachers’ Pension Plan says it had a better first half of 2024 after ending 2023 on a disappointing note, as it generated positive returns across its portfolio.

Teachers’ said it had a six-month return of 4.2 per cent, or $10.8 billion, as of June 30, and had $255.8 billion in assets, up $8.3 billion since the end of 2023.

“All of our asset groups actually made a positive contribution, which wasn’t the case in 2023,” chief executive Jo Taylor said. “We are aiming for a four per cent real return and, therefore, our performance in the first half of the year is pretty consistent with that long-term objective.”

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In 2023, Teachers’ posted a net return of 1.9 per cent, which was sufficient to cover net pension outflows, but Taylor said it was not satisfactory. It also had a more negative economic outlook than what ultimately transpired, so it did not benefit from the strong market performance, particularly in the United States.

Although a thorough assessment of this year’s performance can only come about by the end of 2024, Taylor said the pension plan is feeling “more positive about how returns are coming through the different parts of the investing teams.”

Teachers’ invests in more than 50 countries in a broad array of assets. But despite being in a “comfortable position” and being fully funded for the past 11 years, Taylor said it isn’t as easy to make returns in the current environment than it was in the past.

“Some of the reason for that is more volatility in the market,” he said. “It’s more complicated to be a large-scale international investor, the type we are, investing around the world with geopolitics and other issues.”

He said some of the markets where Teachers’ made good returns on a 10-to-20-year basis have been providing reduced returns in recent years.

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A key aspect that could dictate future returns is how private markets evolve over the next few years and the merger and acquisition (M&A) activity that takes place, Taylor said.

“M&A has reduced significantly from what it was five years ago, so there’s a bit of an outstanding question about how that’s going to play out,” he said.

Teachers’ on Tuesday also announced the appointment of a series of new team leaders, including Mabel Wong as chief financial officer, Bernard Grzinic as executive managing director of capital markets and Steve Saldanha as executive managing director of the total fund management section.

Taylor said the additions do not indicate the pension plan is going to make “radical” changes to its investment strategy. It will instead continue to focus on getting consistent returns from its existing portfolio.

“The best return is to really grow our assets with active management and pick good companies in either growth countries or growth sectors, which we are trying to do carefully,” he said.

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In the long run, Taylor expects global issues, including the ongoing conflicts in the Middle East and Ukraine, the debate around international trade tariffs and the issues around international supply chains, to continue to influence Teachers’ decision-making.

The plan is going to be “careful and selective” about adding portfolios, he said, and will “think hard” to figure out the right mix between active and passive investing.

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