With invested assets of $13.3 billion, OPTrust manages one of Canada’s largest pension funds. Our investment objective reflects our long-term commitment to provide our more than 83,000 members and pensioners with a secure lifetime income in their retirement.

Our investment strategy is designed to generate the long-term investment returns needed to provide our members and retirees with a secure pension, while keeping risk within acceptable limits.

Funding target return
To meet this funding requirement, it is expected that over the long term the Plan’s investment portfolio will achieve a real average annual return of 4% after inflation. Assuming inflation of 2.5% per year, the Plan’s nominal target return for 2011 is 6.5% for funding purposes. For 2010, OPTrust’s nominal funding target return was 6.75%, based on an assumed rate of inflation of 2.75%.

This long-term return objective is a key criterion in establishing our asset mix, developing the Plan’s investment strategy, and determining an appropriate level of investment risk for the Fund. The target return also provides a critical reference point for evaluating OPTrust’s investment performance against the Plan’s funding requirements, particularly over the long term.

Composite 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 the Fund’s investment performance to a composite benchmark that reflects OPTrust’s allocation to the various asset classes held by the Plan. Where possible, the performance of this benchmark portfolio mirrors that of widely recognized indexes for each asset class.

As a result, the composite benchmark provides a useful point of reference for measuring the added value generated by OPTrust’s active management of the Fund, relative to an equivalent passively managed portfolio.

Long-term performance*
In 2010, OPTrust’s investment portfolio achieved a robust 13.9% return, substantially outperforming our composite benchmark’s 10.9% gain for the year. Total investment earnings were $1,530 million in 2010, up from $1,348 million in 2009, when the Plan returned 13.6%. The added value generated by active management of the Fund was 2.9% or $363 million dollars in 2010.

Over OPTrust’s 16 years of operation, the Plan’s investment portfolio has realized an average gross annual return of 8.7%, exceeding both the 7.6% return for our composite benchmark portfolio and our 7.3% average funding target return for the same period.

OPTrust’s diversified portfolio achieved a 13.9% return for 2010, substantially outperforming both our 10.9% composite benchmark return and the Plan’s 6.75% funding target return for the year. OPTrust’s average return of 8.7% since the Plan’s launch in 1995 exceeds both our benchmark and the Plan’s funding target for the same period.

More information on OPTrust’s investment strategy and performance are available in our 2010 Annual Report. Detailed information on OPTrust's investment strategy is also available in our Statement of Investment Policies and Procedures (PDF, 129 KB).