To meet our funding obligation, OPTrust has built an investment portfolio valued at $13.3 billion at the end of 2010. The Plan’s assets include Canadian and international equities, fixed income investments, growing real estate, infrastructure and private equity portfolios and an allocation to energy commodities.

Diversification is a key element of our long-term investment strategy. By selecting an appropriate mix of asset types and investing in a range of markets and sectors, we aim to achieve a number of objectives, including:

• managing the Plan’s exposure to investment risk
• reducing the impact of poor returns from particular markets or asset classes in any given year, and
• maximizing our ability to achieve the Plan’s target return over time.

Diversification strategy
In 2009, OPTrust undertook a major review of the Plan’s diversification strategy. As part of this review, we carried out a major asset/liability study, which tested the expected performance of a range of possible changes to the Plan’s asset mix against the anticipated growth in our pension liabilities, under different economic scenarios.

Based on the results, the Board of Trustees approved a number of adjustments to our long-term asset mix. These changes, which build on the growing diversification of the Fund since 2004, are expected to meet two objectives: reducing the Plan’s overall investment risk and increasing our ability to meet its funding requirements over the long term.

OPTrust is currently implementing the following adjustments to the Plan’s long-term asset mix over a period of several years:

• increasing both our real estate and private equity allocations to 15% each
• continuing the implementation of our 15% target for infrastructure
• maintaining a substantial 20% allocation to government and corporate bonds,
• reducing the Plan’s public equity portfolios to 25% of the total fund

As part of our diversification strategy, OPTrust also implemented a new 5% allocation to energy commodities in 2010 and early 2011.

In 2010, OPTrust continued the multi-year implementation of changes to the Plan’s long-term asset mix, approved in 2009. The changes are designed to further reduce investment risk and volatility at the total fund level, while strengthening OPTrust’s ability to meet the Plan’s target return under a range of scenarios. * Categories include temporary cash balances.