By Staff
The Healthcare of Ontario Pension Plan reported a 9.7% return in 2024, bringing the plan’s net assets to C$123 billion as of Dec. 31, 2024, up from C$112.6 billion the year prior.
By the end of 2024, HOOPP had generated a 10-year annualized fund return of 7.5%. The plan’s funding status remained strong at 111%, though it saw a slight decrease from 115% in 2023, according to its latest annual report. HOOPP attributed the change in funded status to benefits improvement for active members, cost-of-living adjustments for retired and deferred members, and an adjustment to pension liabilities based on new research from the Canadian Institute of Actuaries that reflects increased longevity among Canadians.
In a press release, Jeff Wendling, the HOOPP’s chief executive officer who is set to retire at the end of March, said the return was supported by solid performances in both public and private equity markets, including results from the plan’s infrastructure investments, alongside absolute return strategies.
“Notably, the balance sheet management strategy performed well, effectively capitalizing on various market opportunities,” he added. “Most importantly, the plan’s funded status remains strong at 111%. In other words, the Plan has $1.11 in assets for every $1 that is owed in pensions.”
Indeed, amid a host of key economic challenges influencing Canadian, US and global financial markets, public equities delivered $5.3 billion in net investment income in 2024, supported by economic resilience, improving inflation and a shift by central banks toward monetary easing. Its private equity portfolio delivered a currency-hedged return of 12.7% and $1.9 billion in net investment income by year’s end.
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According to the report, HOOPP’s real estate portfolio generated more than $1 billion in total distributions, with a net return of 1.4% on a currency-hedged basis. Despite an adverse high-interest rate environment, the gross market value of its real estate’s portfolio increased to C$21 billion in 2024, up from C$19.5 billion. Notably, its infrastructure portfolio delivered an annual hedged return of 12.3%, with its net asset value growing to C$1.8 billion, reaching C$7.6 billion or approximately 6% of the fund by the year’s end.
Last year, HOOPP made several moves that aim to position its real estate favorably for the future, including divesting non-strategic industrial land holdings in the US, realizing a gain over carry value of $230 million; exercising discipline in new acquisitions, including a US$100 million commitment to a medical office fund and a €75 million follow-on investment to a European residential fund; and progressing development projects with nearly $1 billion invested in developing high-quality assets to enhance the portfolio and generate future cash flows.
Additionally, HOOPP’s credit portfolio saw total net investment income of $915 million, which it credited to strong performance of credit and insurance-linked securities portfolios and positive performance within the foreign exchange overlay program — a key benefit from exposure to a rising U.S. dollar.
It also described Canadian bonds as the backbone of the fund’s investing strategy, noting its fund includes more than $40 billion in total government bond holdings as of Dec. 31, 2024. Overall, more than $60 billion of its assets — 50% — are invested in Canada, followed by the U.S. (27%), Europe (14%) Asia (7%), and other regions (2%).
The pension plan has maintained a large position in inflation-protected securities, such as Canadian real return bonds and U.S. treasury inflation-protected securities. It has also invested over $1 billion in Canadian federal, provincial, and municipal green and sustainable bonds, which provide funding for projects across Canada, including public transit infrastructure and projects to protect communities from the physical impacts of climate change.
As well, the HOOPP shared that it aims to have 80% of its assets provide reported emissions for more accurate calculations, start Scope 3 portfolio emissions tracking, and exclude new direct investments in private thermal coal and oil exploration and production companies (though it also noted it may make exceptions for high-emitting assets with credible and fully costed decarbonization plans). The plan’s 2030 goals include committing over C$23 billion toward green investments and having 50% of its infrastructure and private equity portfolios covered by credible transition plans.
“As I like to say, HOOPP is a buyer when others are sellers,” said Michael Wissell, the plan’s chief investment officer, in the release. “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.”
