HOOPP reports 17.71% return in 2014, drives net asset to $60.8 billion

TORONTO – The pension fund that invest on behalf of health-care workers in Ontario reported a 17.71 per cent rate of return for 2014.

The Healthcare of Ontario Pension Plan says the $9.1 billion in investment income exceeded its portfolio benchmark by more than $1 billion, and drove net assets to a record $60.8 billion from $51.6 billion at the end of 2013

HOOPP said the funded position of the pension plan remained stable at 115 per cent, up from 114 per cent in 2013.

President and CEO Jim Keohane attributed the results to the “liability driven investing” approach that the plan adopted several years ago.

“2014 was a year that highlighted the merits of the LDI approach,” Keohane said. “Sharp declines in interest rates, that were highly beneficial to our fixed income portfolio, offset the negative impact of the rate declines on our pension obligations.”

HOOPP’s approach utilizes two investment portfolios: a liability hedge portfolio that seeks to mitigate risks associated with pension obligations, and a return-seeking portfolio to help to keep contribution rates stable and affordable.

In 2014, the liability hedge portfolio provided about 72 per cent of HOOPP’s investment income. Nominal bonds and real return bonds provided most of the income within this portfolio, generating returns of 30.2 per cent and 13.4 per cent respectively. The real estate portfolio provided a 9.8 per cent return.

Within the return-seeking portfolio, public equities returned 10.4 per cent, while private equity posted a return of 16.3 per cent.