OMERS, the defined benefit pension plan for Ontario's broader municipal sector employees serving nearly 665,000 members, reported a 2025 net investment return of 6%, generating $8.2 billion in net investment income and growing net assets to $145.2 billion at 31 December 2025. The result came in below OMERS's benchmark but represented positive performance across all asset classes except private equity, in what chief executive Blake Hutcheson described as "one of the most difficult years in my career to invest."
The headline figure was materially impacted by currency movements. The weakening US dollar reduced returns by 1.3 percentage points - the fund's largest single negative factor for the year. Active hedging decisions protected 70 basis points, but the net drag reflects the structural challenge facing all Canadian institutional investors with large international portfolios when the US dollar underperforms.
"OMERS performance in 2025 demonstrates the resilience of our plan amidst a turbulent market. We are a proud Canadian investor with a long and enduring commitment to investing in this country. Where opportunities present themselves that meet our return requirements, we will pursue them."
- Blake Hutcheson, President and CEO, OMERS, February 2026Asset class breakdown - what worked and what did not
The performance picture across OMERS's portfolio in 2025 was sharply bifurcated. Public equities delivered 12.3% as large-cap technology and AI-adjacent holdings drove market returns. Government bonds, public credit and private credit each delivered positive returns primarily through interest income and a decline in bond yields. Infrastructure and real estate contributed positively. Private equity was the outlier - losing 2.5% in a year when exit activity remained subdued and carry was limited.
The private equity loss is notable context for the broader Canadian pension fund landscape. OMERS's PE book lost 2.5% - the fund's first PE loss since 2020. This is consistent with the broader PE market dynamic in 2025: high-quality portfolio companies held well but exit multiples remained compressed, distributions were limited, and the denominator effect that pushed several Canadian pension funds over their target PE allocations in 2022-2023 continued to constrain new deployment. OMERS has been among the Canadian funds restructuring its direct ownership approach as the challenging deal environment persists.
The domestic pivot - $10 billion Canadian investment target
The more strategically significant news coming out of OMERS's 2025 results was the announcement of a formal domestic investment target. Hutcheson told the Globe and Mail that OMERS aims to increase its Canadian allocation from approximately 18% of its $145 billion portfolio to 25% over the next five years - representing at least $10 billion in new Canadian investments across infrastructure, real estate and defence.
OMERS is not alone. The Maple 8 - Canada's eight largest pension funds collectively managing over $2.5 trillion - have been under sustained political pressure from both federal and provincial governments to increase domestic investment. Canadian Prime Minister Mark Carney's federal budget introduced nation-building initiatives focused on critical minerals, clean technology and infrastructure, explicitly targeting pension fund capital. CPPIB CEO John Graham has signalled cooperation with the new policy framework, and PSP CEO Deborah Orida told Bloomberg that her fund is actively asking whether it has been underleveraging its home-ice advantage. The domestic pivot is a coordinated institutional shift, not an isolated OMERS decision.
What this means for institutional investors watching the Canadian pension model
OMERS's 2025 results and the accompanying strategic announcements tell several important stories for institutional investors globally who benchmark against or study the Canadian model.
- Currency exposure is a first-order portfolio construction question. The 1.3 percentage point drag from US dollar weakness in 2025 is a stark illustration of the concentration risk that comes with international portfolios dominated by USD-denominated assets. For pension funds globally - not just Canadian ones - the combination of a Moody's downgrade, elevated US fiscal deficits and a de-dollarisation trend in central bank reserves is making currency hedge ratios a more strategically important decision than at any point in the last decade.
- The PE distribution gap is structural, not temporary. OMERS's 2025 PE loss and the broader Canadian fund PE restructuring reflect a distribution gap that Bain & Company's 2026 Global PE Report estimates will take several years to resolve. Institutional allocators with large PE commitments made in 2019-2022 need to model cash flow pacing assumptions that reflect lower near-term distributions, not revert to pre-2022 baseline assumptions.
- The domestic investment opportunity set is expanding. For institutions seeking infrastructure, real estate and private credit exposure in a jurisdiction with stable rule of law, strong credit quality and policy tailwinds, Canada's nation-building agenda is creating a genuine investment opportunity. OMERS, CPPIB, PSP and the other Maple 8 funds moving domestic capital will crowd some deals - but will also establish benchmarks and create co-investment opportunities for international LPs willing to participate alongside them.
- Funded status monitoring requires scenario analysis, not just a single ratio. OMERS's smoothed funded status of 99% looks comfortable against its 100% target. But the Milliman scenario analysis for US corporate plans - which showed a range from 92% to 129% by end-2027 depending on returns and rates - illustrates how quickly funded status can move. Any pension fund managing to a funded status target in the current environment needs continuous scenario monitoring, not annual snapshots.
AlternativeSoft provides pension funds and institutional allocators with multi-asset risk analytics, scenario modelling and alternatives portfolio construction tools covering hedge funds, private equity, private credit and public markets - enabling continuous funded status monitoring and strategic allocation review in a single integrated framework.