Ontario's $190 billion Teachers Pension Plan said it is ditching the cryptocurrency sector after investing $95 million in digital exchange FTX after it failed.
OTPP was one of the main fund managers backing FTX with investments in 2021 and early 2022. The move was seen as a sign that high-profile investors gave the industry their stamp of approval. a rapidly growing but poorly regulated cryptocurrency.
However, in November 2022, OTPP canceled its entire stake following the sudden collapse of FTX. Well-known stock market founder Sam Bankman-Fried is now accused of fraud.
Joe Taylor, chief executive of Teachers, told the Financial Times: "We're still working out what's going on there and you better be careful."
"It would be unwise for us to enter into new cryptocurrency investments based in part on the opinions of our members," he added.
Although OTPP's investments are relatively small, accounting for less than 0.05% of total assets, the fund, like other FTX supporters, has come under scrutiny for investing in a company whose founder has been accused of securities fraud. goals. Bankman-Fried pleaded not guilty to the charges.
"We took our time and did our due diligence. Taylor, whose foundation provides grants to about 330,000 teachers and school staff, didn't turn out the way we thought it would.
"They didn't have to show us all the information we needed to make an informed decision," he said.
Teachers weren't the only Canadian pension fund to suffer from the cryptocurrency disaster. Caisse de depo et placement du Quebec, the country's second largest manager of pension funds, canceled a $150 million investment in crypto-lending platform Celsius after it collapsed last year.
CDPQ has stated that Celsius' investment marks the end of its foray into cryptocurrencies.
"We have achieved results through investment," Professor Taylor said. "We have received feedback from our members. We apologize on their behalf for the loss."
OTPP was one of the few pension plans in the world to turn positive in 2022, despite losses in the FTX that saw an unusual decline in listed stocks and bonds. The fund was supported by positions in private markets, which made up just over half of the portfolio.
The fund is now looking at new opportunities in real estate, an asset class that remains "cautious" as central banks around the world struggle to control inflation with aggressive interest rate hikes.
"The problem at this stage is in many ways the credit markets will probably be closed," Taylor said. "There is not a lot of activity to indicate the future transactions of many real estate appraisals."
The fund aims to gain exposure to private lending, where non-banks lend to private companies when traditional capital flows decline.
It plans to increase investment by $10 billion over the next three years and is supporting this real estate campaign.
He believes the market disruption benefits long-term investors, such as pension funds, who are less dependent on the stock and debt markets to raise funds.
"The opportunities we see in Europe [for real estate], and I'm talking about the UK, Germany, France, Spain and the Netherlands, have increased for long-term capital. Time dynamics that don't necessarily follow a normal market," said Nick Jansa, Ontario Teachers' Europe. , head of the Middle East and Africa investment organization.
“There are definitely opportunities that haven't existed in a long time...everything from housing to logistics to life sciences.