Canada’s OPTrust Fund Forced to Take Risks to Shore Up Returns
Frustrated by poor returns, OPTrust Chief Executive Officer Hugh O’Reilly is moving into riskier investments as contributors to the retirement pot age.
“We can’t just match cash flows, we have to take risks,” O’Reilly, whose company oversees $19.2 billion of investments for Ontario government workers, said in an interview. “We don’t want to increase contributions or reduce future benefit accruals where the active members will bear the whole risk.”
OPTrust is starting a C$300 million ($233 million) venture-capital portfolio and is considering derivatives linked to insurance risk, O’Reilly said. The firm has allocated 1.5 percent to these riskier assets and 3 percent in hedge funds, though the latter is under review, O’Reilly said without elaborating. The fund more than doubled assets in hedge funds in 2016 compared with the previous year, according to the 2016 annual report.
“We want to allocate relatively small amounts of capital into new and different investment areas,” O’Reilly said. OPTrust will then “see if they’re viable, see if they make sense, see if we can incubate them and bring them back and put them where they best belong on the investment team.”
Read full news here: Bloomberg
