Investment Guiding Principles

The Investment Guiding Principles, approved by the Board of Trustees, capture OPTrust’s investment beliefs and underpin the Member-Driven Investing (MDI) strategy.

  1. Pension investing must be driven by the pension promise
    • Pension investing is about investing assets to meet Plan liabilities to deliver pension security for our members.
    • Our success requires a clear investment objective: increase the likelihood of remaining fully funded over the long term by maximizing returns at an acceptable level of risk.
    • In line with this objective, we strive to maximize total fund risk-adjusted returns through our total portfolio approach, which centers on delivering the total return, after all costs, needed to keep the Plan sustainable.
  2. We must take an acceptable level of risk to earn sufficient returns to keep our Plan sustainable
    • We must take risk to earn the returns required to pay pensions now and into the future.
    • The risk we take must be aligned with our investment objective and governed by limits set by the Board of Trustees.
    • While funding risk is the key risk for a defined benefit pension plan, we must consider all types of risks associated with our investment program, and ensure we have sound governance, reporting and monitoring in place.
  3. We are a long-term investor, but must also manage shorter-term risks
    • Our long investment time horizon is aligned with our members’ interest. We also believe in the importance of adapting to changing market conditions and risks.
    • We acknowledge returns are volatile in the shorter term and they may deviate from what we expect to earn over the long term. At times, we will adjust our long-term portfolio composition to best position the Plan for success.
  4. Responsible Investing is key to long-term investment success
    • We believe that environmental, social and governance (ESG) factors can materially impact investment risk, return and reputation.
    • Responsible investing, entailing the identification, assessment and management of ESG risks and opportunities, contributes to making more informed investment decisions.
  5. Active management can improve Plan sustainability
    • We believe in actively managing our assets in areas where value creation potential is the greatest and then using passive programs to gain the exposure we need to balance out our total fund risk profile.
    • Active management can increase investment returns and improve risk management, which help ensure that our Plan remains sustainable over the long term.
  6. Governance is a critical enabler of investment success
    • A governance framework that is aligned with our investment objective and strategy and creates transparency, accountability and oversight is critical to our success.
    • We must ensure our organization maintains operating and reporting processes that support effective risk management, with a clear understanding of the roles and responsibilities of the Board of Trustees and management, while facilitating agile decision making.

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