Q&A with our Chief Investment Officers
In January 2024, Ontario Teachers’ appointed Gillian Brown and Stephen McLennan as Chief Investment Officers (CIOs), making them the fifth and sixth CIOs in the plan’s history. This marked the first time the CIO responsibilities were shared between two individuals.
At a glance
- Chief Investment Officers of Ontario Teachers, Gillian Brown and Stephen McLennan look back on 2024 and ahead at the opportunities they see in 2025.
- We formed an in-house real estate group. We also announced the formation of Portfolio Solutions, a new department which aims to elevate and align our value creation efforts across the portfolio.
- We believe that value creation is essential to drive returns in this new environment and as a result have been even more intentional in driving improved business performance through a focused value creation program.
- Given the uncertain outlook, we are focused on building a resilient portfolio that will be well prepared for shocks and opportunities.
One year into their roles, Gillian and Stephen share their perspectives on the progress made, focuses for the near term, and explore the opportunities they see in the years ahead.
Q: What stands out to you as you reflect on your first year as CIOs?
Stephen McLennan: Reflecting on the past year, three key things stand out. First, it was a year of significant volatility, particularly global events like the U.S. election at the close of 2024, which created an unpredictable and muted investment environment. Second, our portfolio’s resilience by design played a crucial role in delivering strong performance in 2024, even despite a rapidly changing and unpredictable landscape.
Finally, it was a year of growth and learning in our new roles, and both Gillian and I had the opportunity to collaborate across teams at our global offices, deepening our insights and understanding. The support from our teams was invaluable, and we saw strong capabilities not only within the investment team, but also across the organization broadly.
Gillian Brown: We undertook some significant changes during the year. Notably, we established two new investment departments. First, as we announced last year, we formed an in-house real estate group. The team has had an active first year, shaping a revised real estate strategy and exiting some non-core holdings. We are confident that the new strategic direction will deliver success for our real estate asset class and help us build a more geographically and sectoral balanced real estate portfolio.
Additionally, we announced the formation of Portfolio Solutions, a new department which aims to elevate and align our value creation efforts across the portfolio. Portfolio Solutions will be accountable for monitoring and enhancing private asset performance, improving best-practice sharing across the fund, and providing more centralized value creation oversight.
Q: How did the fund’s portfolio perform in 2024?
Stephen: The plan saw good performance across most asset classes in 2024. Our teams worked to generate a 9.4% total-fund net return, which is in line with our returns since inception. We had contributions across asset classes, with particularly strong contributions from many asset classes ranging from venture growth, inflation sensitive, listed equities and credit. Our results were further buoyed by a foreign currency exchange gain of $6.9 billion, largely due to the strength of the U.S. dollar, where we have more than 30% of our assets. Overall, our portfolio demonstrated resilience, and we remained well-positioned in a shifting investment landscape.
Q: How did the fund perform against its benchmark?
Gillian: Our relative returns continued to be challenged last year. This was due to a combination of some asset under performance and some strong benchmark performance, as many of our asset classes are benchmarked against public market indices. We missed our benchmark by 3.5%, which resulted in negative value add of $7.6 billion. We are not where we aim to be in terms of performance. We are working with our portfolio companies to generate more value out of the portfolio.
Q: Where is Ontario Teachers’ focused in terms of value creation in the portfolio?
Gillian: Value creation – helping our portfolio companies become more profitable, grow quicker, or reposition themselves strategically – has always been a priority for Ontario Teachers’. The current environment, marked by an end to the secular tailwinds of low inflation and interest rates, presents significant challenges to strategies that have been very successful for us in the past. We have also seen fewer private asset transactions and slower volumes in the market.
We believe that value creation is essential to drive returns in this new environment and as a result have been even more intentional in driving improved business performance through a focused value creation program. The Portfolio Solutions team and the increased focus on value creation reflect our goal to create excellence in active management.
Q: How would you describe the outlook for 2025 and where do you see opportunities?
Stephen: The road ahead for the global economy and financial markets is uncertain, with the distribution of potential economic and asset market outcomes still wide, and in large part dependent on global political developments. But we enter 2025 from a position of strength given our healthy funding surplus based on prudent assumptions, as well as our strong and experienced in-house, investing teams and our network of high-calibre partners who can help us be smarter and capture the best opportunities. Given the uncertain outlook, we are focused on building a resilient portfolio that will be well prepared for shocks and opportunities.