To meet our funding obligation, OPTrust has built an investment portfolio valued at $13.6 billion at the end of 2007. The Plan’s assets include Canadian and global equities, fixed income investments and growing real estate and private markets portfolios.

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 maximize our likelihood of achieving the Plan’s target return over time, while keeping risk exposure at appropriate levels.

Diversification strategy
These objectives were the focus of two detailed asset-liability studies carried out by OPTrust within the past five years. The result was a multi-year diversification strategy approved by the Board of Trustees.

In 2007, OPTrust made significant progress in implementing this strategy. Key milestones for the year included:

• net funding of more than $225 million in new real estate investments, bringing the net market value of the portfolio to $992 million, or 7.3% of the total fund, at year-end
• completing new investments in infrastructure and private equity that more than doubled the size of our private markets portfolios to $466 million
• making corresponding reductions in our weighting of public equities and fixed income investments.

When fully implemented, this strategy will see OPTrust’s allocation to real estate increase to 10% of the total fund, or $1.4 billion based on the current portfolio size. Private equity and infrastructure investments will account for another 10% and 15% of the Plan’s assets, respectively.

In 2007, OPTrust increased the Plan’s real estate and private market investments to 7.3% and 3.4% of the fund, respectively. Corresponding reductions were made to our global equities and fixed income investments portfolios. When the Plan’s multi-year diversification strategy is fully implemented, the real estate and private market portfolios will account for 10% and 25% of the total fund. * Categories include temporary cash balances.