UTAM pension portfolio sees 13% return for 2019
BY Staff | April 27, 2020
The University of Toronto Asset Management Corp. has earned a 13 per cent return on its pension portfolio for 2019, and a 12.9 per cent return on its endowment portfolio, net of all fees and expenses.
While the 2019 results were strong, and beat the university’s target return of 6.2 per cent, they lagged the UTAM’s reference portfolio benchmark of 15.8 per cent.
“The main detractor was private equity investments that didn’t keep pace with the very strong performance of public equity markets during the year,” the annual report said. “Over the longer term, however, private equity investments have added significant value to the portfolios.”
Over the long-term, the UTAM has seen strong results. In particular, the pension and endowment portfolios each generated annualized net returns of 7.6 per cent during the past five years and 8.5 per cent over 10 years.
Further, since 2010, annual value added from the pension and endowment portfolios has averaged one per cent and 1.1 per cent respectively compared to the reference portfolio, representing a cumulative gain of more than $500 million.
“This record of resilience gives us confidence that UTAM will successfully navigate the challenges of the global pandemic and maintain our 20-year trajectory of sound, sustainable growth,” it noted.
The UTAM’s total assets under management reached $11.4 billion at year-end 2019, broken down into $5.6 billion for the pension portfolio, $3.2 billion for the endowment portfolio and $2.5 billion in a short-term working capital pool.
“We’ve built the pension and endowment portfolios for the long term, carefully balancing the mix of equity and fixed income investments, and implementing strategies to weather significant market movements – even as dramatic as what we’ve seen in early 2020,” said Daren Smith, the UTAM’s president and chief investment officer, in the annual report. “There is no need for a major shift in allocations at this time.”