By Carolyn Cohn and Nell Mackenzie
LONDON (Reuters) – Canadian pension scheme HOOPP is betting on increased investment in UK and European property, infrastructure and private equity to lift its longer-term returns after a sub-benchmark performance in 2023, its chief investment officer told Reuters.
Healthcare of Ontario Pension Plan (HOOPP) has $113 billion under management and wants to use its new London office – the group’s first overseas outpost – as a platform to grow its European presence, Michael Wissell said on Thursday.
“We’re focusing predominantly on real estate, infrastructure and private equity, and those businesses are all incredibly well represented (in London),” he said.
HOOPP posted a 9.4% return overall in 2023, though this was below its benchmark. It has outperformed its benchmark on a 10-year basis.
The pension scheme’s aim, said Wissell, was to earn between four and five percentage points above the cost of lending, or risk-free rates.
“We absolutely have every confidence we’re going to earn a good return (in Britain) looking five, 10, 15 years out,” Wissell said.
Britain has been easing some of its financial rules to draw more international capital into its cash-strapped economy and to compete better with rival financial hubs in New York and the European Union.
Most of the top Canadian pension schemes already have offices in London, while Australian pension funds are also expanding in Britain.
The UK government has launched a review into pensions with a view to understanding why many international schemes are more enthusiastic than domestic players about investing in UK assets such as venture capital and infrastructure.
Canadian public sector pension schemes have 22% of their assets in private equity and 12% in infrastructure, compared with 6% and 5% for British local government pension schemes, according to a report last week from think tank New Financial.
HOOPP was one of several Canadian pension plans to meet with British Finance Minister Rachel Reeves in Canada in August, although Wissell said he was not present at that meeting.
The launch of the HOOPP London office was first reported by Reuters last year. The team will initially comprise 12 people, mostly senior investment professionals from Canada, with the plan to hire more junior staff locally.
“We feel the constant drumbeat of growth in our plans,” said Wissell.
Some 12% of HOOPP’s investments were in Europe at Dec 31, 2023. Wissell anticipates an increase in the overall assets of the pension plan, which represents health care workers in Ontario.
“The need for healthcare is not getting smaller,” he said.
(Reporting by Carolyn Cohn and Nell Mackenzie, editing by Sinead Cruise and David Evans)