2010 returns - public markets
The Plan’s Canadian equity portfolio posted solid gains of 19.3% in 2010, bettering the benchmark return of 17.6%. The portfolio continued to build on its momentum from 2009, returning to outperformance relative to the benchmark. The portfolio benefited from its exposure to small cap stocks, which outperformed large cap equities throughout the year, particularly in the third and fourth quarters.
Since inception in 1995, the Canadian equity portfolio has achieved annual returns of 11.1%, compared with a benchmark return of 9.6%.
The global equity portfolio also recorded solid gains of 11.5% in 2010, significantly outperforming its benchmark return of 6.3%. A relative underweight to EAFE equities during the year was beneficial to the portfolio along with an overweight to emerging markets, which significantly outperformed developed markets in the first half of the year.
The portfolio’s allocation to fixed income assets helps generate the income required to fund the Plan’s pension obligations. OPTrust’s fixed income investments include nominal bonds and non-marketable Ontario debentures. OPTrust also holds a portfolio of Government of Canada real return bonds that are linked to the Canadian rate of inflation.
The fixed income portfolio, including real return bonds, returned 11.9% during 2010, exceeding the benchmark return of 11.6% and more than doubling its 5.4% return in 2009. In 2010, the Plan’s conventional bond portfolio returned 12.1% while our real return bonds achieved a return of 11.3%.
Since 1995, the fixed income portfolio has returned 8.9% versus its benchmark of 8.3%.