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Ontario Teachers’ Pension Plan is reporting a 3.8-per-cent return for the first half of 2021.

Ontario Teachers’ Pension Plan is reporting a 3.8-per-cent return for the first half of 2021, a figure that trails the two other major Canadian plans that have released six-month figures.

Caisse de dépôt et placement du Québec said its overall return through June 30 was 5.6 per cent, beating its benchmark of 4.4 per cent. The Ontario Municipal Employees Retirement System (OMERS) reported it posted an 8.8 per cent return in the first six months of 2021, but released no benchmark information.

Teachers CEO Jo Taylor said in an interview Monday that “3.8 per cent on a six-month basis is absolutely on track to deliver the returns we need to keep the plan fully funded and move towards our $300-billion [asset] target in 2030.

”The challenge for us as a long-term investor is that the danger of looking at a snapshot six-month period is you can probably read a bit too much into it.”

Teachers, which handles the pensions of Ontario’s 331,000 active and retired teachers, had $227.7-billion in assets at June 30. It said it returned 13.2 per cent over the prior 12 months, and its five- and 10-year annualized net returns were 7.9 per cent and 9.3 per cent, respectively.

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The mix of assets a plan chooses can weigh heavily on results, and in this case, Teachers moved money into bonds during a period they fell in value, thanks to rising interest rates.

Teachers released neither department-level returns nor an overall benchmark, but bonds represented 15 per cent of the portfolio at June 30, compared with 8 per cent at Dec. 31. The fixed-income category, which includes other investment products that aren’t technically bonds, was 20 per cent of the portfolio at midyear.

Still, the portfolio is much less bond-heavy than in 2019. Teachers, believing stock markets were well valued, had 46 per cent of its portfolio in fixed income at the end of the year – which served the pension well when markets became wildly unpredictable in early 2020 as the pandemic began.

The pension fund slightly trimmed its holdings in stocks on public exchanges slightly and holds 37 per cent of the portfolio in public and private equities as of June 30. Real assets – real estate and infrastructure – make up 21 per cent.

Ziad Hindo, Teachers’ chief investment officer, said in Monday’s interview that even though the bonds make up a larger proportion of the balance sheet, the fund has shifted to bonds with a shorter duration – they are less sensitive to interest rates and have smaller gains or declines when rates change.

Mr. Taylor and Mr. Hindo said investment priorities in 2021 have included greater internationalization – Mr. Taylor ran that department prior to his 2020 ascension to CEO – as well as commodities, as a hedge against inflation.

One of Teachers’ newest and smallest line items, the Teachers Innovation Platform of investments – largely equities, in disruptive companies, technology and otherwise – grew the fastest: The pension fund reported $5.66-billion in assets at June 30, up 63 per cent from the $3.47-billion at Dec. 31.

Mr. Taylor said Teachers is finalizing its policies for employee vaccinations and its Toronto return-to-work schedule and should make the announcement internally in the next week to 10 days. A number of large Canadian financial institutions have said they will require employees to be fully vaccinated in order to return to the office.

“We are trying to get people back into the office, trying to be thoughtful about making sure they’re safe, and trying to also make sure that we can do that in a way that allows us to comply with public health guidance,” Mr. Taylor said.

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