With invested assets of $13.6 billion, OPTrust manages one of Canada’s largest pension funds. Our investment objective reflects our long-term commitment to providing our 80,000 members and pensioners with a secure lifetime income in their retirement.

Our investment strategy is designed to achieve the necessary growth of the pension fund over the long term, while keeping risk within acceptable limits.

Funding target return
To meet our funding obligation, OPTrust’s $13.6 billion investment portfolio must generate an average real rate of return (after inflation) of 4.0%, over the long term. Assuming inflation of 2.75% per year, the Plan’s nominal target return is 6.75% for funding purposes.

This target provides a valuable reference point for evaluating OPTrust’s investment performance, particularly over the long term. It is also a key criterion in establishing the Plan’s asset mix and determining the amount of investment risk that it must assume.

Weighted market benchmark
Over short-term time horizons, we expect the Plan’s returns to rise and fall from year to year, in response to the same factors that shape the overall performance of the markets in which we invest.

We therefore compare our investment performance to a composite “benchmark portfolio” that mirrors OPTrust’s asset mix and the performance of each asset class. This provides a useful way to gauge the added value produced by OPTrust’s active investment managers, compared to an equivalent passively managed portfolio.

Long-term performance
In 2007, OPTrust achieved a nominal return of 5.6%.¹ This result bettered the 4.2% nominal return for our composite benchmark, and compared well with the returns achieved by most other Canadian pension plans.

Our 2007 return fell short of the Plan’s funding target and was down from the 13.4% return we achieved in 2006, reflecting challenging market conditions over the year.

In contrast, OPTrust’s portfolio has produced an average annual return of 12.6% over the past five years, outperforming both our funding target return and the 11.1% average for our benchmark. Over our 13 years of operation, OPTrust has achieved an average annual return of 10.3%, versus 9.2% for the benchmark.

OPTrust’s investment goals and results are described in detail in our 2007 Annual Report.

Detailed information on OPTrust's investment strategy is available in our Statement of Investment Policies and Procedures (PDF, 89 KB).

OPTrust achieved a 5.6% investment return in 2007, bettering the Plan’s weighted benchmark for the eighth consecutive year. Our 2007 return was below the Plan’s 6.75% funding target, reflecting the market impact of global credit concerns and the rise in the Canadian dollar over the year. Over the long term, OPTrust’s returns have substantially exceeded the Plan’s funding requirements.