Despite various political risks in the U.S. in 2017, the “strong foundations” of its economy continue to inspire confidence in Canadian investors, according to Hugh O’Reilly.
O’Reilly is the President and CEO of OPTrust, which oversees one of the largest pension funds in Canada. OPTrust manages over $19 billion ($15.6 billion USD) in net assets and administers the Ontario Public Service Employees Union Pension Plan; its global investment portfolio also includes stocks and currencies, infrastructure, fixed income, private equity, and real estate.
At the recent Milken Institute Asia Summit 2017, O’Reilly spoke of the U.S.’s economic and structural foundations and its “well-run” and “transparent” system. “There’s a lot of political change happening in the U.S.,” he said. “We think the United States is one of the strongest [globally], it’s a leading economy in the world…and it has a lot of structural advantages.”
O’Reilly speaks amid a rather turbulent political climate in the United States; while a recent U.S. bill raised the nation’s borrowing limit for three months and prevented a government shutdown, research from Moody’s Credit Outlook suggests that it may also spoil plans for major tax reform before the end of 2017. And while some investors are concerned about overvaluations in the real estate market, which are often associated with increased risks, O’Reilly believes the overvaluations are more of a global phenomenon which is affecting other regions as well as the U.S. “We understand the risks we’re taking on and we’re confident in the investments we’ve made,” he said.
Outside the U.S., Asia Pacific is another key investment destination for OPTrust based simply on opportunity: the area is home to nearly two-thirds of the global population and accounts for about one-third of the world’s gross domestic product. “We have significant exposure in Asia,” O’Reilly said. “We have significant infrastructure and private equity investments. We also have some direct infrastructure investments in other areas in Asia, as well as private equity.”