The $71 billion Ontario Teachers’ Pension Plan has found that even its hedge fund investments failed to rid the portfolio of market risk, after its investments lost 18% in 2008.
The pension fund lost nearly $16 billion over the course of the year, resulting in a $2 billion shortfall. The shortfall is likely to grow larger unless the investment climate improves. The diversity that has traditionally cushioned the fund in a downturn failed to stem the tide. Ontario's fixed-income asset class lost $5 billion, largely due to credit products such as externally managed hedge funds, which account for