Public market investments make up the largest proportion of OPTrust’s $13.6 billion investment fund. These investments, which include Canadian and global equities and fixed income portfolios, accounted for more than 85% of the Plan’s assets at the end of 2007.

OPTrust invests in publicly traded securities primarily through external, active investment managers. The Trust’s market exposure is diversified by asset class, geographic region and investment style. 

Fixed income investments
The portfolio’s allocation to fixed income assets helps generate the income required to fund the Plan’s pension obligations.  Fixed income investments include traditional bonds and non-marketable provincial bonds, as well as government-issued bonds that are linked to the rate of inflation. In 2007, the Plan's fixed income investments represented 31.7% of the total fund.

Public equities
OPTrust’s allocation to equities offers capital appreciation opportunities, which are necessary for the preservation and enhancement of the Trust's value over the long term.  While a substantial portion of these investments are in Canadian companies, our portfolio is increasingly global in scope, including exposure to companies in emerging markets. In 2007, our Canadian and global equity portfolios accounted for 23.6% and 30.1% of the fund respectively.

Investment performance
Since 1995, these portfolios have generated average annual returns of 9.0% for fixed income, 12.7% for Canadian equities and 9.6% for global equities. These results exceeded the Plan’s composite benchmark returns for each asset class over the same period.

Given the Plan’s substantial investment in global equities, we hedge 50% of the portfolio’s foreign currency exposure, with the exception of our emerging markets investments, to reduce the impact of exchange rate fluctuations on fund performance.

Public Market Investments Group
Our Public Market Investments Group is responsible for carrying out the exhaustive analysis necessary to identify and select our external managers. Once managers are selected, we continuously monitor their investment activity and evaluate their performance on a regular basis.

At the end of 2007, OPTrust employed five external Canadian equity managers, nine managers for foreign equity mandates, three fixed income managers and one currency manager. [OPTrust’s external investment managers]

Fund diversification
As part of a multi-year diversification strategy approved by Board of Trustees, OPTrust has been gradually reducing the Plan’s public market holdings to fund increased investments in private equity, infrastructure and real estate. When fully implemented, this strategy will reduce OPTrust’s allocation to public markets to 65% of total Plan assets.