The
Ontario Teachers’ Pension Plan
posted a 6.7 per cent return in 2025, with strong returns from its public equity,
gold
, credit and venture growth divisions. However, there were negative returns across
private equity
and real estate.
Teachers’ responded to challenges in those two areas with year-end valuation adjustments to reflect current market conditions, which weighed on performance, said Jo Taylor, the pension fund’s chief executive. The collapse of Hudson’s Bay Co. Ltd. weighed on the pension fund’s performance because real estate subsidiary Cadillac Fairview was a major landlord of the storied Canadian retailer.
While net assets grew to $279.4 billion as of Dec. 31, 2025, up from $266.3 billion in 2024, the Teachers’ fund underperformed against a benchmark portfolio return of 11.7 per cent, and the one-year return was well below the 9.4 per cent posted in 2024.
Taylor said some asset sales over the past year helped peg the valuation adjustments, including in real estate and private equity, two asset classes where institutional investors including Teachers’ are facing sectoral challenges.
“When you’re selling companies, you realize what people are willing to pay you for those businesses, and what they see in positives and negatives around how that would shape valuations generally,” he said. “We’ve seen a market more recently… where a lot of the people who are active and out there are largely bargain hunters, and that inevitably provides some pressure on how you approach thinking about carrying values.”
Despite headwinds in some segments of the overall portfolio, the
pension plan
is fully funded for the thirteenth straight year, with a preliminary funding surplus of $31.2 billion. That equates to a funding ratio of 111 per cent, up from 110 per cent in 2024.
The total annualized 10-year return for the Teachers’ fund is 6.8 per cent, with a 9.2 per cent return since inception.
In 2025, the fund’s private equity portfolio posted a negative return of 5.3 per cent compared to a benchmark gain of 18 per cent, with the portfolio valued at $50.8 billion compared to $60.4 billion in 2024.
To address global challenges including higher interest rates, a less liquid market, and increased competition for high-quality deals, Teachers is shifting into three areas where it believes it has a competitive edge: financial services, services and technology.
The pension fund’s real estate portfolio also posted a negative return in 2025 of 3.1 per cent, which compared to a benchmark gain of 2.2 per cent. Valuation declines as a result of the Hudson’s Bay insolvency were partially offset by a positive return from the international portfolio, with the total real estate portfolio valued at $27.9 billion at the end of 2025 compared to $29.4 billion a year earlier.
Beyond retail, the office segment was hard hit in recent years due to a sharp increase in remote work and interest rate movements. The five-year annualized rate of return for Teachers’ real estate portfolio also came in below the benchmark, with a loss of 2.2 per cent compared to the benchmark return of 4.9 per cent.
However, with stock markets on a tear over the past year, Teachers’ public equities portfolio shot past double-digit benchmark returns, as did venture growth, with the latter posting a 30.2 per cent return. The venture growth portfolio was valued at 15.3 billion at the end of 2025, compared to $10.4 billion a year earlier.
Teachers’ executives said private credit continues to be a solid performer for the pension plan, despite global concerns about loan exposure to software companies that could be upended by gains in artificial intelligence, which has driven withdrawals from some private credit funds.
“We’re pretty selective about the credit we put on the books… It’s our own independent analysis and we stand behind that,” Taylor said, adding that he doesn’t share the concerns of JPMorgan Chase & Co. chief executive Jamie Dimon who said he was seeing private lenders do “some dumb things” that reminded him of the lead up to the global financial crisis in 2008.
Gillian Brown, Teachers’ chief investment officer for public and private investments, said the pension plan does have additional exposure to private credit funds, but it is a small, concentrated group and their underwriting practices are well understood.
“The private credit portfolio is exposed to software… like all private credit portfolios are, but I would say we’re confident in the underwriting in terms of the quality and the names we’re entering into, versus just market risk,” she said.
Taylor said one of the biggest challenges for the pension management organization in the year ahead will be navigating different scenarios for inflation, interest rates and economic growth amid continuing wars and trade tensions.
“At the moment, with all that’s being discussed on oil prices… the inflation question is the one we’re trying to get our head around,” he said.
“For our plan, inflation is a big deal, because all of our liabilities are fully inflation linked.”
A second Canadian pension plan reported 2025 financial results on Tuesday.
The Healthcare of Ontario Pension Plan (HOOPP) posted a 7.7 per cent net return, with net assets growing to $132 billion at the end of 2025.
HOOPP’s 10-year annualized net return was 7.8 per cent, exceeding its benchmark of 5.9 per cent.
“In an increasingly complex investment environment, we remained focused on prudent risk management and long-term value creation,” Annesley Wallace, the pension management organization’s chief executive, said in a statement.
HOOPP’s returns were driven by public equities, with private markets generating positive but more moderate returns in what was described as a challenging valuation environment.
Nearly half of the fund’s assets are in Canada, spread across public equities, fixed income, infrastructure, real estate and private credit.
• Email: bshecter@nationalpost.com
Ontario Teachers' Pension Plan posts 6.7% return in 2025, but misses benchmark on real estate hit
2026-03-10 12:52:54
