OMERS, one of Canada’s largest defined benefit pension plans, has wrapped up 2024 with remarkable results, reporting an investment return of 8.3% or $10.6 billion net of expenses. This accomplishment not only surpasses the year’s 7.5% benchmark but also stands above the long-term average return of 7.1% over the past decade. The plan’s net assets have grown to $138.2 billion from $128.6 billion the previous year, reflecting strategic decisions and effective management aimed at ensuring the financial security of Ontario’s nearly 640,000 public sector employees.
According to President and CEO Blake Hutcheson, the strong performance can be attributed to the organization’s active strategies and the quality of its portfolio and leadership. "Our strong result in 2024 reflects the quality of our people and portfolio, our active strategic decisions, and our steady progress as a long-term investor,” Hutcheson stated. This year’s achievements are indicative of the forward-thinking strategies implemented since he took on the leadership role, resulting in an average annual net return of 8.1% over the past four years.
The most significant drivers of OMERS’ success were its diversified investments, particularly within public equities which alone reported returns of 18.8%. Private credit also contributed substantially, with returns of 12.6%. Jonathan Simmons, OMERS’ Chief Financial and Strategy Officer, emphasized the importance of diversification, saying, "Our actions to diversify the global portfolio positioned the Plan well in 2024." He credited the fund's sustained investment performance to strong contributions from private credit and infrastructure.
Despite these gains, real estate investments slightly faltered, posting negative returns of 4.9% due to lower valuations. OMERS has adeptly managed its asset allocation, with 53% of its assets located within the United States, alongside 19% in Canada and 17% across European markets. Notably, the pension fund has also focused on elevatory green investments, which have now reached $23 billion, marking its commitment to environmentally responsible investing.
OMERS reported significant strides toward sustainability, achieving a 58% reduction in portfolio carbon emissions intensity since 2019. This reduction aligns with global trends as investment organizations increasingly prioritize sustainability alongside financial performance. The strategic move not only caters to ethical standards but also reflects OMERS’ recognition of changing market expectations.
Looking forward, OMERS has committed to maintaining its strategic focus on diversification and long-term growth, with plans to continue exploring attractive return opportunities across various asset classes. Hutcheson acknowledged the unpredictability of global markets yet remains optimistic about OMERS’ capacity to navigate challenges through its disciplined investment approaches.
With the upcoming release of its 2024 Annual Report scheduled for February 28, 2025, OMERS will provide stakeholders with comprehensive insights detailing performance metrics, expenditure, and future strategies. The continued high ratings from independent credit agencies, such as ‘AAA’ ratings from S&P, Fitch, and DBRS, showcase the organization's solid standing within the investment community.
Overall, OMERS’ remarkable achievement for 2024 signals not only effective management and planning but also emphasizes its commitment to delivering on pension promises for its members. This results-oriented drive, complemented by sustainable initiatives, positions OMERS strongly as it moves forward, aiming to adapt smartly within the fluctuated global economic arena.