Brexit hasn't dimmed appetite for UK assets, Ontario's giant pension fund says

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at 2016.10.17
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Brexit hasn't dimmed appetite for UK assets, Ontario's giant pension fund says

Brexit hurt short-term returns at Ontario Teachers’ Pension Plan, but it hasn’t changed U.K. investment plans, said Andrew Claerhout, the fund’s senior vice president of infrastructure and natural resources.

“A 100 percent of our liabilities are Canadian-dollar denominated. So as the pound is dropping precipitously, that has hurt our short term performance in Canadian dollars,” Claerhout told CNBC’s “Squawk Box” on Monday.

The fund, which is Canada’s largest pension plan, had $171.4 billion in net assets at the end of 2015, with more than $15 billion in infrastructure assets.

In the wake of the late June referendum vote to exit the European Union, the pound has tumbled. At 10:13 a.m. HK/SIN, the pound was fetching $1.2151, compared with a high of $1.5018 before the vote.

But that’s not dampening the fund’s enthusiasm for British assets.

“The vote to leave the [European Union] has had short-term impacts on the pound, but it has not had a long-term impact on the desirability of the U.K. market,” he said.

“If you look at the reason we’ve invested in the U.K. historically — the fact that it is an open market, the fact that it is very transparent and that the rule of law is secure, the fact that the regulatory oversight to the extent that it’s a regulated asset is very strong — These things have not changed,” he said.

Claerhout noted that the pound’s drop could make U.K. assets more attractive, as the fund was a long-term investor, willing to hold asset for decades.

He said the fund was currently working on a deal in the U.K., although it wasn’t motivated by the pound’s drop.

“It’s an outstanding asset, but if we happen to buy it at a time of weakness in the pound, that’s a bonus,” he said.

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—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

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Published at Mon, 17 Oct 2016 02:26:15 +0000

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