LONDON, Sept 12 (Askume) – Canadian pension plan HOPP is betting on increasing investments in British and European real estate, infrastructure and private equity to boost its long-term returns after underperforming its benchmark in 2023, its chief investment officer told Askume.
The Ontario Health Care Pension Plan (HOPP) manages $113 billion and plans to use its new London office, the group’s first overseas outpost, as a platform to expand its European operations, Michael Wiesel said Thursday.
“We focus primarily on real estate, infrastructure and private equity, and all of those businesses are incredibly well represented (in London),” he said.
HOOPP’s total return in 2023 was 9.4%, although lower than its benchmark. It has outperformed the benchmark for a decade.
Pension plans aim to have an income that is four to five percentage points above the cost of debt, or the risk-free rate, Wiesel said.
“We believe in five, 10, 15 years we will see good returns in the UK,” Wiesel said.
UKIt is relaxing some financial regulations to attract more international capital into its cash-strapped economy and better compete with rival financial centers such as New York and the European Union.
Most of Canada’s top retirement plans already have offices in London, while Australian retirement funds are also expanding into the UK.
The UK government has launched a pension review aimed at understanding why many international schemes are more keen to invest in UK assets such as venture capital and infrastructure than domestic players.
According to a report last week by New Financial, a think tank, Canada’s public sector pension plan has 22% of its assets invested in private equity and 12% in infrastructure, while British local government pension plans have 6% and 6% of their assets invested in private equity and 5% in infrastructure, respectively.
HOOPP was one of several Canadian pension plans to meet with British Finance Minister Rachel Reeves in Canada in August, though Wiesel said he was not present at that meeting.
Askume first reported the establishment of HOOPP’s London office last year . The team will initially consist of 12 people, most of whom are senior Canadian investment professionals, with plans to hire more junior staff locally.
“We feel like the pulse of our program is constantly growing,” Wiesel said.
As of Dec. 31, 2023, approximately 12% of HOOPP’s investments were located in Europe. Wiesel is expected to increase the total assets of the pension plan representing Ontario’s health-care workers.
“The demand for health care hasn’t gone down,” he said.
