Ontario Pension CEO: Alternatives Are “Too Expensive”

Editor’s note: A full analysis on this issue and Ron Mock’s statement can be read here.

Speaking at the Milken Institute Global Conference, Ontario Teachers Pension Plan (OTPP) CEO Ron Mock said Wednesday that his fund may “step back” from “expensive” alternative asset classes.

Pensions & Investments first reported the statement. More details from P&I:

“There’s a lot of money crowded into the broadly defined alternatives space,” Mr. Mock said. “We find it too expensive. It’s time for us to step back.”

Instead, Ontario Teachers executives are investing “between the asset classes where we found the most interesting deals today,” he said.

For example, Ontario Teachers is an investor in the U.K. and Irish lotteries for their stable cash flows and high rate of return, which can be improved with technological upgrades, Mr. Mock said.

“(The lottery investment) is almost like an infrastructure asset,” he said.

Even though Ontario Teachers is being more cautious in its infrastructure investments, Canada’s eight pension funds are “dying to come into the U.S. to fund (the country’s) infrastructure needs” using direct investments, Mr. Mock said. “We are working with the government because there are impediments.”

OTPP manages $126.4 billion in assets for the province’s teachers.

Photo by  Dirk Knight via Flickr CC License