Ron Mock will be a tough act to follow when he retires at the end of the year after nearly two decades at Ontario Teachers’ Pension Plan, the last six of them as chief executive.
But Jo Taylor, named last week as Mock’s successor, is well placed to lead the $144 billion fund in the next phase of its development. He has worked across its Toronto, London and Hong Kong offices, and overseen its international operations, including those in Asia, which are poised for a major expansion drive.
Taylor was in Hong Kong this week reacquainting himself with the landscape, along with the development plans under Asia head Ben Chan and with Ontario Teachers’ partner firms.
“I need to make sure I continue to understand what happens in the market place, and the best way to do that is to go there,” Taylor told AsianInvestor yesterday (July 18). “I already have good familiarity with our key partners, and I’m looking to fully understand what Ben’s challenges are and to make sure I'm up to date with his plans for Asia."
The main reason to be in Hong Kong now, he added, is to check in with the local team, but the broader plan is to travel often througout the region to meet asset managers, consultants and other companies the fund works with in its focus markets of China, India, Australia, Vietnam, Indonesia and the Philippines.
Taylor told AsianInvestor in April that the 25-strong headcount in Asia is set to grow substantially, with a focus on private market investments. Private equity has been the main focus in the region, but Ontario Teachers next aims to build out its infrastructure and natural resources capabilities, with real estate likely to receive more attention further down the line.
Moreover, as OTPP expands its team and investment commitments, Taylor sees more offices being set up to help pursue the strategy of building local teams and working with local partners. This has been the approach pursued by the two largest Canadian pension plans, Caisse de dépôt et placement du Québec and Canada Pension Plan Investment Board.
Likewise, players such as the Ontario Municipal Employees Retirement System and Montreal-based Public Sector Pension Investments have set up offices in the region – the former last year and the latter this year. Other Canadian funds are widely expected to follow in the next year or two. And others, such as the Healthcare of Ontario Pension Plan, are eyeing more Asian exposure too.
GROWTH AND TRADE CONCERNS?
Despite the fact that emerging Asia’s GDP growth is slowing off a little, Ontario Teachers' outlook remains bullish on the region in the long term. China’s growth slowed to 6.2% in the second quarter and the Asian Development Bank just this week cut India’s growth forecast to 7% for 2019 – yet these remain notably healthier figures than those for Europe and the US.
Taylor shrugged off geopolitical concerns such as the prevailing US-China trade tensions and fears over a potential global downturn as relatively short term issues.
“Our thinking for Asia is to build up capabilities, putting the right people in the right places so that we are ready to take opportunities when they come our way,” he said.
Under Mock’s leadership, Ontario Teachers’ net assets have grown to C$191.1 billion ($144 billion) as at December 31, 2018, from C$140.8 billion five years earlier. During this period the fund achieved an annualised total-fund net return of 8%, which is 1.5% above the policy benchmark.
Asia is set to become an increasingly important driver of the institution’s returns from here on in – and Taylor looks well set to help it harvest them.