The Plan achieved a net investment return of 2.3% against a challenging backdrop, in a year when virtually all major public markets were down. Our five-year net return was 8.1%.
While returns were below our absolute return benchmark of 7.3%, our diversified portfolio of high-quality assets protected OMERS from capital loss during a period of market stress.
In 2018, our smoothed funded ratio increased by two percentage points to 96%, reflecting improvement for the sixth consecutive year. On a fair-value basis, the funded ratio declined by four percentage points from 101% to 97%, as the net return was below the discount rate of 6%.
We undertook a rigorous assessment of the challenges that will influence the long-term health of OMERS, providing an opportunity for further dialogue on the risks facing our Plan.
In 2018, we made progress toward our 2020 Strategy:
- We deployed $10 billion in private market assets, in pursuit of our asset mix targets.
- We directly engaged our stakeholders on the challenges facing our Plan. Based largely on the feedback received, the SC Board made two changes that will address issues of fairness and equity.
- We opened a new investment office in Singapore to support our objective of gradual deployment of capital into higher-growth, Asia-Pacific markets.
- Member satisfaction remained high at 91%.
Since the first year of our 2020 Strategy in 2015:
- Our investment teams have generated $4.1 billion of net returns above our discount rate.
- Net assets have grown by $20 billion to $97 billion.
- We have reduced our discount rate by 0.25% to 6% – three years ahead of the schedule set out in the Strategy.