OPB’s annualized rates of net investment return for the one-year, five-year, 10-year and since-inception periods ending December 31, 2023, are as follows:
Investment Performance
While we still face headwinds, in 2023 OPB delivered positive returns in a challenging year marked by ongoing market volatility and high inflation.
Total Return
3.1%
versus -7.8% in 2022
Funded status
85%
at year-end compared to 89%, funded on a financial statement basis, in 2022
Net Assets
$31.7B
versus $31 billion in 2022
| 1-year | 5-year | 10-year | Since Inception | |
|---|---|---|---|---|
| Total Fund return | 3.1% | 4.2% | 5.3% | 7.5% |
| Benchmark return | 5.2% | 4.5% | 5.6% | 7.3% |
|
Note: Returns are net of all Plan administration and investment management expenses. The benchmark return shows what we expect the return would have been without active management. Beating the benchmark return means we outperformed the market return and delivered additional value to the Plan. |
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Investment Asset Mix
Asset mix is a critical driver of investment returns and risk. At OPB, our Strategic Asset Allocation (SAA) sets out the Board’s target investment allocations – often referred to as ‘weights’ – for each major asset class.
At the close of 2023, IMCO was near the end of phasing in our SAA, and the Plan’s asset mix was generally where we intended it to be, with the exception of our allocation to public market alternatives (PMA). PMA are diverse assets that aim to deliver absolute returns. Our SAA originally had a 10% weight for PMA, but OPB decided to pause the planned increase in this allocation at 7%. We expect to review the long-term PMA allocation, as well as the other components of the SAA, through a comprehensive asset/liability study in 2024.
The table below illustrates the Plan’s actual asset mix at December 31, 2023, alongside the long-term policy weights according to the updated SAA.
SAA Implementation Plan
| Asset Class | Dec. 31, 2023 Actual |
Dec. 31, 2023 Target |
|---|---|---|
|
Portfolio Leverage |
-7.9% |
-10.0% |
|
Money Market |
0.2% |
1.0% |
|
Long Government Bonds |
13.3% |
12.5% |
|
Inflation-Linked Bonds |
10.6% |
12.5% |
|
Global Credit |
11.7% |
13.0% |
|
Canadian Public Equities |
2.5% |
2.5% |
|
Global Public Equities |
11.6% |
14.0% |
|
Emerging Markets Public Equities |
6.0% |
5.5% |
|
Real Estate (Net of Debt) |
15.8% |
15.0% |
|
Infrastructure |
13.5% |
14.5% |
|
Private Equity |
15.9% |
12.5% |
|
Public Market Alternatives |
6.8% |
7.0% |
|
Total |
100.0% |
100.0% |
INVESTMENT HIGHLIGHTS
2
investment pools – global credit and private equity – launched by IMCO in 2023
Strong absolute and relative performance across the public equities strategies
Disposition of several shopping mall assets, consistent with the long-term real estate strategy to significantly diversify the portfolio
US$400M
invested, alongside the Public Equities team, in Northvolt, a battery sector leader focused on sustainable battery cells. Currently, Northvolt has more than $55 billion in long-term revenue contracts and is involved in research, development, manufacturing and recycling of battery cells.
Acquisition Highlights
Invested in Trinity House, in partnership with Breakthrough Properties. Located in Oxford, England, Trinity House is an advanced life science laboratory. In November 2023, construction began on what will be a world-class life sciences environment featuring 210,000 square feet of custom-designed laboratory facilities, offices and lifestyle amenities.
Acquired NeXtWind Capital Ltd., as part of an investment consortium. NeXtWind is a German renewable energy company specializing in onshore wind farms. Operating with a newly strengthened balance sheet, NeXtWind is well positioned to execute its strategy of acquiring and repowering German wind assets to become a leading renewable company based in Europe’s largest onshore wind market.
In 2023, IMCO continued to demonstrate an ability to do transactions that would’ve been very challenging for OPB to do on its own. The investments in Northvolt and NeXtWind are good examples of this capability.”
Chris Kautzky, Chief Investment Officer
Learn more about OBP’s approach to long-term sustainable investing in our 2023 ESG Report, available at our ESG Report microsite.
Service Highlights