After a setback on FTX, the Canadian pension fund no longer touches cryptocurrencies, turning to real estate and private lending investments.

According to a report from the Financial Times, the Ontario Teachers' Pension Plan (OTPP) of Canada has decided to steer clear of investments in the cryptocurrency space after suffering losses from its investment on the digital currency exchange FTX. Other prominent fund managers who invested in FTX alongside OTPP have also incurred losses in the collapse of FTX, leading Canadian pension funds to become more cautious about such investments.

Ontario Teachers' Pension Plan Becomes Cautious on CAD Currency After FTX Setback

Ontario Teachers' Pension Plan (OTPP), a major Canadian retirement fund, has decided to steer clear of the cryptocurrency space after its investment in the FTX exchange turned sour.

In 2021 and early 2022, OTPP and other prominent fund managers invested in FTX. However, following the collapse of FTX and fraud allegations against its founder Sam Bankman-Fried (SBF), OTPP wrote down its entire stake in FTX in November 2022. OTPP CEO Jo Taylor stated that they are still investigating the situation and will approach new cryptocurrency investments with caution.

Not the Only Pension Fund to Step Back

Ontario Teachers' Pension Plan is not the only Canadian pension fund to suffer losses in cryptocurrency investments. Caisse de dépôt et placement du Québec (CDPQ), the second-largest pension fund manager in Canada, also wrote down a $150 million investment last year due to the bankruptcy of the cryptocurrency lending platform Celsius.

As a result, CDPQ has announced the end of its foray into the cryptocurrency space. These investment failures have made Canadian pension funds more cautious, with Jo Taylor of OTPP expressing regret for the losses and acknowledging feedback from members.

Ontario Teachers' Pension Plan Shifts Focus to Real Estate and Private Credit Investments

Despite the loss on FTX, Ontario Teachers' Pension Plan achieved positive returns in 2022 due to the performance of its private market positions, which make up over half of its investment portfolio.

OTPP is now looking to invest in real estate and expand its private credit investments, planning to increase its investment in these areas by $10 billion CAD over the next three years.

Real estate is an area of focus as OTPP believes that market inefficiencies favor long-term investors like pension funds, which do not rely on fundraising like capital and debt markets. The fund plans to hire more staff to assist in advancing its private credit investments, with real estate being one of its target areas.