The Fund’s portfolio performance is measured by two key metrics:

  1. Generating long-term returns on invested assets in excess of the Funding Policy’s 6% discount rate
  2. Exceeding the return of the Policy benchmark on a 4-year annualized basis.

For the year ending December 31, 2021, the Fund achieved both performance targets. In terms of the primary target, the 10-year net annualized return of 10.3% is well ahead of the Plan’s 6% discount rate. On a four-year net annualized basis, the Fund achieved a return of 9.3% versus a policy benchmark of 7.7%, producing 1.6% of annual value added and exceeding the secondary target.

This outperformance, or “added value,” allows for the evaluation of the effectiveness of the investment strategy and its implementation at the total Fund level. Benchmarks are valuable tools Provident10 uses to measure performance of individual asset classes and the managers who invest in them on Provident10’s behalf.

Provident10 uses a thorough and rigourous risk-controlled approach by choosing an optimized risk level within a multi-year framework and by selecting and weighting asset classes to achieve a target return. By identifying an acceptable risk threshold, Provident10 can determine the mix of assets with the best chance to achieve its goal.

The Fund earned a net 2021 return of 11.2% compared to the benchmark policy return of 9.0%, producing 2.2% of added value. On an absolute basis, Canadian, global, and private equites primarily contributed to the Plan’s overall return for 2021. Value added was largely attributed to the Plan’s private assets and mainly via the Plan’s private equity allocation.


Canadian and global equites performed well on an absolute basis, generating returns of 24.1% and 14.6% respectively. Overall value added for public equities was negative for the year, largely attributed to growth style managers which struggled to keep up with benchmarks in the wake of a broader reopening of the economy. 2021 saw a general reversal of the impressive returns
generated in 2020 in the wake of pandemic oriented technology disruptors. In contrast, value managers exceeded benchmarks year-on-year in 2021, in comparison to under-par performance in 2020. Overall, the Plan has benefitted from the diversification of offsetting growth and value styles over a total market cycle. Despite a challenging year, the Plan’s public equity value add remains strong over a four-year horizon and beyond.


The Plan’s Canadian and global public fixed income generated negative returns driven mainly by rising yields. Canadian fixed income returned -1.7% and global credit generated -0.3% on an absolute basis. On a relative basis, both asset classes exceeded benchmark with Canadian managers achieving 0.8% of value added and global managers contributing 0.7% of value added. Relative to benchmarks, the Plan benefited from managers’ active security selection and harvesting of credit premia. Commercial mortgages generated satisfactory absolute returns of 3.1% and superior value added of 4.2%, benefiting from an overall lower duration profile in the wake of rising yields and active harvesting of illiquidity premiums.


The Plan’s most impressive returns in 2021 were contributed by private equity. On an absolute basis, private equity generated returns of 52.0% and value added of 32.5%. These extraordinary results – which are not expected to set a precedent for the upcoming year – are a function of the stage of life of the program. After a patient 5 years of progressively investing along what is
known as the “J-Curve,” the Plan’s program is approaching a maturity phase where various buyout and growth-oriented programs have achieved their business plan and valuation objectives. This has led to significant exits or realized distributions and unrealized gains to the Plan. Private equity valuations, in general, remain anchored by strong investor demand for the asset class.


Real assets have provided strong absolute returns and impressive value add in 2021. Real estate was a strong contributor, earning 16.8% on an absolute basis and 8.1% of value add relative to benchmark. The Plan’s core Canadian held portfolio has benefited largely from investments in the industrial sector, based on strong logistical demands of the economy. Paired with lagging supply, industrial properties have experienced strong rental growth and investor demand which have moved property valuations significantly higher in 2021.

Similarly, the Plan’s infrastructure program produced strong returns of 15.1% and value add of 5.4%. Within the infrastructure program, the Plan has benefited from strong investor and economic demand for digital infrastructure assets—such as data centers—a need which has been further catalyzed by lasting structural consumer demands of the pandemic. In addition, strong investor demand for energy transition assets such as wind, solar and smart monitoring technology has furthered the Plan’s gains in the asset class. Similar to private equity, overall institutional demand and commitment to the asset class has, in general, been increasing and has maintained strong returns in the asset class in most categories.

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