3 - 5 minute read
A Teachers’ Pension Plan from Canada is writing off its losses after being exposed to FTX, the crypto exchange that collapsed in late 2022, according to a new report from the Financial Times (FT). The Ontario Teachers’ Pension Plan (OTPP) suffered $95 million in losses due to FTX. FTX shut down in November of last year when it was unable to fulfill its customers’ withdrawal amid allegations of misappropriation of funds.
The OTPP has come under scrutiny for its move, given the charges FTX executives now face. Despite the investment only amounting to 0.05% of the fund’s total assets, OTPP Chief Executive Jo Taylor says they are still working through what exactly happened there and need to be careful. Taylor says, “It’d be unwise for us to rush into another crypto investment based in part on feedback from our members.”
With crypto no longer on the table, Nick Jansa, the OTPP’s investment lead for Europe, the Middle East, and Africa, says that real estate opportunities in Europe may be next on the fund’s radar. Jansa has seen opportunities for long-term capital that isn’t reliant necessarily on some of the normal market dynamics in countries like the UK, Germany, France, Spain, and the Netherlands.
The OTPP’s decision to write off their losses from the FTX collapse is a reminder of the risks associated with investing in cryptocurrency. The lack of regulation in the crypto market is a concern for institutional investors like pension funds. OTTP’s move away from cryptocurrency and towards real estate opportunities signals a shift in investment strategy.
According to Taylor, pension funds are looking for investments that have a low correlation to the equities market and can offer a reliable return. Real estate has traditionally been seen as a safe haven asset class that can provide stable long-term returns. Jansa’s comments suggest that the OTPP is looking to invest in real estate projects that have a long-term horizon and are not reliant on the normal market dynamics.
The move away from cryptocurrency and towards real estate opportunities may be a signal for traders to follow suit. The cryptocurrency market is volatile and risky, making it unsuitable for many investors. Real estate opportunities, on the other hand, offer a more stable investment option that can provide reliable returns over the long term.
The Bottom Line
The OTPP’s move away from cryptocurrency due to the FTX collapse is a reminder of the risks associated with investing in cryptocurrencies. Pension funds like OTPP are looking for investments that have a low correlation to the equities market and can offer a reliable return. Real estate opportunities, in countries like the UK, Germany, France, Spain, and the Netherlands, may be the next big thing for institutional investors looking for stable long-term returns.
