Ontario Teachers CEO says new innovation platform returned 16% in 2020, undeterred by SpaceX setback

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Overall posts 8.6% return in pandemic year

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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.

The inaugural investment for that portfolio, Elon Musk’s SpaceX, suffered a setback Tuesday when a test rocket launched in Texas exploded.

But Teachers’ chief executive Jo Taylor said Canada’s largest single profession pension fund remains committed to investing in innovative and disruptive companies through the Teachers’ Innovation Platform as part of a balanced portfolio.

“(It’s) a new activity for us — we are trying to grow it,” he said in an interview Tuesday shortly after Musk appeared to confirm in a series of tweets that the SpaceX rocket had been destroyed.

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“I think 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.”

Taylor said the stake in Musk’s company builds on past satellite technology investments, and that decisions about putting money into innovative or disruptive technologies involves weighing risks and reward.

“The … question is making sure we get the right balance in the number of those investments we make and the level of risk it’s appropriate to take,” he said. “And when we’re taking that risk are we getting paid for it, are we getting the returns that we would hope to see.”

Ziad Hindo, Teachers’ chief investment officer, said diversification across asset classes and geographies provides a buffer to allow the long-term investor to seek high returns from innovative and disruptive assets.

“We don’t put our eggs all in one basket,” he said. “We diversify into innovation related and disruptive related assets, but we invest also in core infrastructure assets, in private equity, (and) in credit.”

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Hindo said SpaceX has been a good investment and its value was marked up at year-end, adding that Teachers has participated in three funding rounds since 2019, “showing the conviction we have in that business.”

The investment thesis in SpaceX is based on their proven track record of in 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.

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. The innovations investments were valued at $3.2 billion at the end of December and represented two per cent of overall assets.

Teachers, which closed out 2020 with net assets of $221.2 billion, invested in SpaceX in June 2019, two months after launching the new platform. Financial terms were not disclosed.

• Email: bshecter@postmedia.com | Twitter:

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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