The Ontario Teachers’ Pension Plan, one of Canada’s largest pension funds, is reportedly increasing its exposure to bonds, citing yields that have turned attractive following the worst sell-off in a generation.
What Happened: OTPP, which manages C$243 billion ($177 billion), is raising its holdings of inflation-protected debt, along with some investment-grade and junk notes, the fund’s president and CEO, Jo Taylor, said, according to a Bloomberg report.
The move comes after the fund trimmed the weightings of bonds last year in favor of infrastructure and property investments to hedge against inflation, as per the report.
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“What do we think about bonds? … getting more attractive. We’ll probably increase our allocation to fixed income a little bit but we are still lightly allocated compared to what we might have been,” Taylor was quoted as saying.
Holdings: The fund’s top holdings include GFL Environmental Inc GFL, Microsoft Corporation MSFT, and Amazon.com, Inc. AMZN according to whalewisdom.com.
OTPP plans to shift into longer-term bonds after earlier seeking refuge in shorter-duration debt to better withstand the surge in borrowing costs. “We may change that a little bit, where we are picking to have longer-duration bonds because they offer us interesting interest rates,” he said, citing Australian government bonds yielding 4% to 5%.
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