Ontario Teachers’ Pension Plan Abandons Crypto After FTX Loss
Canada’s Ontario Teachers’ Pension Plan (OTPP) has announced that it will avoid investing in cryptocurrencies, after writing off its $95 million investment in FTX, the failed cryptocurrency exchange. OTPP was one of the big-name investors that backed FTX, with investments made in 2021 and early 2022.
According to FT, Canada's Ontario Teachers' Pension Plan said it is avoiding the cryptocurrency space and focusing on real estate after writing down its entire $95 million investment in FTX last year. The OTPP has $190 billion in assets and provide pensions to 330,000 teachers…
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The move was considered a sign that highly respected investors were providing their approval to the fast-growing but lightly regulated cryptocurrency sector. However, in November 2022, OTPP wrote off its entire stake after FTX’s dramatic collapse, with its high-profile founder Sam Bankman-Fried now facing fraud charges.
FTX Loss and Fraud Accusations
OTPP CEO Jo Taylor stated that the fund is still trying to understand what occurred with FTX, and that it would be unwise to rush into another crypto investment based in part on feedback from members. While OTPP’s investment was relatively small at less than 0.05% of its total assets, the fund has still come under scrutiny for investing in a company whose founder is accused of securities fraud and looting the platform for personal gain.
OTPP was not the only Canadian pension fund to be burned by crypto failures. Caisse de dépôt et placement du Québec, the country’s second-largest pension fund manager, wrote off a $150 million investment in crypto lending platform Celsius after its collapse last year. CDPQ has also since stated that the Celsius investment marked the end of its foray into crypto.
Positive Returns
Despite its losses on FTX, OTPP was one of only a few global pension plans to deliver positive returns in 2022, a year hit by an unusual slump in both listed stocks and bonds. The fund was buoyed by its private market positions, which make up just over half the portfolio. The fund is now looking for fresh opportunities in real estate, an asset class where it remains “cautious” as central banks around the world battle to get inflation under control with aggressive rate rises.
The fund is also looking to increase its exposure to private credit, where non-banks lend to private companies as flows of traditional capital dry up. It plans to expand its investment in this area by CA$10 billion over the next three years and is hiring to support this drive, with real estate an area of focus. The fund believes that market dislocation plays to the advantage of long-term investors like pension funds, which are not as reliant on capital and debt markets for fundraising.
