University of Toronto's Pension and Endowment investment portfolios deliver strong returns
TORONTO, April 30, 2021 /CNW/ - University of Toronto Asset Management Corporation ("UTAM") is pleased to announce the publication of its 2020 Annual Report, titled NEXT. The report includes details about the performance of the Pension, Endowment and short-term working capital investments that UTAM manages on behalf of the University of Toronto. In addition, the report focuses on the strengths that continue to make UTAM a resilient organization, have helped it navigate the global pandemic, and have set it up well for the future.
"We're pleased with the Pension and Endowment returns in 2020, in what was a challenging investment environment. Over the last 10 years, we've exceeded the Reference Portfolio benchmark returns in Pension and Endowment by 1% annualized, which is a testament to the skill of our people and the quality of our processes," said Daren Smith, President and Chief Investment Officer of UTAM. "We're also pleased that we made substantial progress on a variety of responsible investing initiatives last year, including significantly reducing the carbon footprint of the Pension and Endowment portfolios."
2020 Highlights
Investment returns
- In 2020, the Pension and Endowment portfolios delivered returns of 11.7% and 11.6% (net of all fees and expenses), respectively, matching the Reference Portfolio return in Pension and underperforming the benchmark Reference Portfolio return in Endowment by 0.2%.
- The long-term performance of the Pension and Endowment portfolios continues to be strong. Over the last 10 years, Pension has generated an annualized net return, after all fees and expenses, including UTAM costs, of 8.7%, and the Endowment has generated 8.8%. These results exceeded the Reference Portfolio benchmark by 1.0% annualized in Pension and 1.1% annualized in Endowment, resulting in over $500 million in cumulative value add for both portfolios combined.
- As at December 31, 2020, Pension assets were valued at $6.3 billion; Endowment assets, $3.7 billion; and short-term working assets, $3.1 billion. Total assets under management equalled $13.0 billion, up from $11.4 billion at the end of 2019.
Responsible investing
- Portfolio decarbonization: UTAM made significant progress in 2020 towards its goal of reducing the carbon footprint of the Pension and Endowment portfolios by 40% compared to 2017 levels. The Pension portfolio's 2020 footprint of 87.7 tonnes of carbon dioxide equivalent per million dollars invested (tC02e/$M) represents a 37.0% cumulative reduction since 2017. (Since the Pension and Endowment portfolios are substantially similar, UTAM uses the carbon footprint of the Pension portfolio as a proxy for the footprint of the Endowment portfolio.) Importantly, the absolute carbon emissions of the Pension portfolio are 21.1% lower than 2017 levels.
- Principles for Responsible Investment (PRI): UTAM received straight A+ scores in its third annual PRI assessment, once again scoring higher than the median PRI signatory in all applicable categories.
Company engagements: As part of UTAM's commitment to active ownership, it engages with companies on environmental, social and governance (ESG) issues. UTAM undertakes select direct engagements, but more often it collaborates with other investors through informal and formal groups, including Climate Action 100+, CDP, the Canadian Coalition for Good Governance and others, as well as through its engagement service provider, EOS at Federated Hermes. In 2020, UTAM was pleased to see many milestones achieved at companies that were engaged, including new commitments to reduce carbon emissions.. - Recognition: UTAM was honoured to be nominated for awards from the International Corporate Governance Network (ICGN) and Canadian Investment Review, and to be included in the Institutional Limited Partners Association (ILPA) ESG Roadmap and Resources.
Download UTAM's 2020 Annual Report
About UTAM
UTAM is the investment manager of the University of Toronto's Pension, Endowment and short-term working capital assets. UTAM's Board of Directors delegates day-to-day investment management activities to UTAM. Our team of almost 30 professionals works closely with the Board, the expert Investment Committee, the university administration and various governance bodies in our management of the university's assets.
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SOURCE University of Toronto Asset Management Corporation (UTAM)
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