2024's volatility proved to be an opportunity for the plan
Managing any portfolio means balancing risk and opportunity, especially when markets are volatile. And for a major Canadian pension plan, they have judged it right.
Healthcare of Ontario Pension Plan (HOOPP) has announced today that it achieved a 9.7% return for 2024, boosting the net assets it manages for almost half a million healthcare professionals to $123 billion at the end of last year. It improved on the 9.4% return achieved in 2023.
With a continuation of its long-term financial resilience, the plan’s funded ratio as of December 31, 2024, was 111% or $1.11 in assets for every dollar owed in pensions.
The strong performance for HOOPP should be viewed against a backdrop of significant market volatility in 2024 as the world grappled with conflict, inflation, and a US presidential election.
For the plan’s portfolio managers, this was challenging, but they benefited from holding a substantial level of Canadian investments, accounting for more than $60 billion or 50% of the assets managed, including $40 billion in government bonds.
The strong focus on Canadian bonds, the backbone of HOOPP’s investment strategy, provide the plan with liquid collateral to support other investments, particularly as markets fluctuate. It also enables diversification of assets across classes and geographies. As well as the 50% Canadian share, HOOPP invested 27% in the US, 14% in Europe, 7% in Asia Pacific, and 2% elsewhere.
“As I like to say, HOOPP is a buyer when others are sellers,” said Michael Wissell, HOOPP’s Chief Investment Officer. “As a result of our focus on ensuring liquidity, the global economic volatility we saw in 2024 was an opportunity for us rather than a barrier to success.”
What worked well?
Looking at returns for individual asset classes, public equities came out top at 17.9% followed by private equity (12.7%), infrastructure (12.3%), private credit (11.3%), bonds (1.9%), and real estate (1.4%).
But as well as investments, the pension plan also made some operational improvements, added 32 employees, opened an office in London, and announced that incorporated physicians would be eligible to become members of HOOPP as of Jan. 2, 2025.
“HOOPP continues to evolve our operations to align with the growth of our Plan assets and our membership,” added Wissell. “Being able to perform at our best as investment professionals requires a lot of teamwork from our internal partners who are working with and developing these new technologies.”
