Ontario Teachers' fund sees '20 boost
The Ontario Teachers Pension Plan posted an 8.6-per-cent return in pandemic-beset 2020, aided by fixed-income and equity investments and a 16-per-cent return from a recently launched innovation investment platform.
“(It's) a new activity for us — we are trying to grow it,” chief executive Jo Taylor said in an interview Tuesday. “The pleasing thing for me was, in 2020, it was generating a 16-per-cent return, which I think is very encouraging to show that that portfolio, which includes SpaceX, is actually doing pretty well.”
The strategy behind the Teachers' Innovation Platform (TIP), formed in April 2019, is to make late-stage venture capital and growth equity investments in companies that use technology to disrupt incumbents and create new sectors.
Elon Musk's SpaceX, the inaugural investment for that platform, which represents a very small part of Teachers' overall investment portfolio, suffered a setback Tuesday when a test rocket launched in Texas exploded. Taylor said that mishap won't deter Canada's largest single-profession pension fund from investing in innovative companies as part of a balanced portfolio, including SpaceX.
Ziad Hindo, Teachers' chief investment officer, said SpaceX has been a good investment and its value was marked up at year-end. He added that Teachers has participated in three funding rounds since 2019, “showing the conviction we have in that business.”
The investment thesis is based on the company's “proven track record of space launches and significant future growth potential of their Starlink satellite broadband service offering, which they are successfully rolling out globally including in Canada,” he said.
Taylor said the investment in Musk's company builds on past satellite technology investments by the Teachers' fund, and decisions about putting money into innovative or disruptive technologies involve weighing risks and reward.
Hindo said Teachers has ambitions to increase investments through the new innovation platform “significantly” over the next few years, though the pension fund investment manager does not give specific targets for asset classes.
Teachers, which closed out 2020 with net assets of $221.2 billion, up $13.8 billion from a year earlier, invested in SpaceX in 2019. Financial terms of the investment were not disclosed.