Teachers to consolidate its public- and private-capital investing teams

Ontario Teachers' Pension Plan is shaking up its equities division.

The fund, which manages nearly $200-billion across all types of assets, has confirmed to The Globe and Mail that it is consolidating its public- and private-capital investing teams under one expanded equities department.

This is first major step that the Teachers' new chief investment officer, Ziad Hindo, has taken to make the fund more competitive globally and with other large pools of capital.

The restructuring has led to the dismantling of the public-equities investing team, which was responsible for investing in publicly traded companies and had historically invested in a wide array of stocks in order to outperform equity indices.

Now, the equities team will be more selective and focus on investing in a smaller number of stocks and companies.

That public equities investing team will be split up and moved into other areas of the fund’s investing universe, with those focused on index investing falling under the fund’s capital markets division and employees who choose individual stocks joining the private-capital division.

“We are going to do all of the direct investing under one umbrella,” said Jane Rowe, head of private capital with Teachers'. “If the company is public or private we will have the same department looking at the opportunity.”

The restructuring has led to six employees being laid off.

The changes take effect in January and come about six months after Mr. Hindo assumed the chief investment officer position. Mr. Hindo was previously at the helm of Teachers' capital markets division.

Teachers, which provides retirement income to 323,000 retired and active teachers, also invests in real estate, commodities, bonds and other asset classes. The fund generated a net investment return of 3.2 per cent in the first six months of the year, according to its most recent financial results.

The pension plan, which has 1,100 employees, has investment professionals in Canada as well as in London and Hong Kong.

As of mid-year, the public-equity portfolio represented 18 per cent, or $35.1-billion, of Teachers’ total assets, according to its financial results. Private equity accounted for 17 per cent or $32.1-billion of the fund’s total assets.