Ontario Municipal Employees Retirement System (OMERS) gained 6 per cent on its investments in 2025, lagging its benchmark but earning positive returns across most its portfolio in what chief executive Blake Hutcheson called “one of the most difficult years in my career to invest.”

The pension fund manager’s annual performance was hampered by a weakening U.S. dollar, which dragged returns down by 1.3 percentage points, and poor performance from private equity investments, which lost 2.5 per cent.

All other asset classes had positive returns for the year, led by a stock portfolio that gained 12.3 per cent, as public markets surged largely on optimism about technology and artificial intelligence.

That market optimism was overshadowed by political turmoil and wars around the world, as well as the disorienting effect that shifting tariff policy has had on investors. The uncertainty stemming from U.S. President Donald Trump’s protectionist push affected currencies, interest rates and asset prices, “and frankly, it impacted our day-to-day decision making,” Mr. Hutcheson said in an interview.

“All I want to know is that I’ve got an environment where someone doesn’t wake up and break your jaw,” he added. “Why I think it’s difficult now is it’s just so unpredictable, the goalposts keep getting moved.”

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OMERS fell short of its internal benchmark for returns, which was 7.5 per cent, though currency losses accounted for much of that gap and aren’t accounted for in the target. OMERS was able to offset a further 70 basis points of potential currency losses by hedging against fluctuations in the market.

“Given all that … it’s an acceptable outcome,” Mr. Hutcheson said.

OMERS invests on behalf of nearly 665,000 Ontario public service workers at school boards, transit systems, electrical utilities and emergency services, among other employers. Its assets increased to $145.2-billion at the end of 2025, up from $138.2-billion a year earlier.

The plan has earned an average annual return of 7.7 per cent over the past five years, and 7.1 per cent over 10 years.

Even now, the United States is “not a market you would ignore,” accounting for 26 per cent of global economic output, and it will remain a big part of OMERS’s strategy, Mr. Hutcheson said. “Having said that, it’s a cautionary time.”

OMERS is looking at whether it can “pivot to Canada” for some of its deals at a pivotal moment for the country’s economy – as long as any potential transactions meet the bar for risk and return that guides the fund’s mandate.

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“We want to do more in Canada,” where OMERS has a home-field advantage and a significant portfolio of real estate and other investments, he said. But infrastructure investment has been harder for the pension plans, with too few opportunities that they deem to be attractive.

“Actual opportunities have to be put on the table,” he said, and OMERS is “encouraged that those are on the horizon.”

OMERS’s global infrastructure portfolio gained 6 per cent last year.

In private equity, buyers and sellers are starting to be more realistic about what companies are worth, chief financial officer Jonathan Simmons said. But for deals to pick up, company profits need to start rising in a meaningful way, and interest rates need to stay low.

For private equity investors, “it was a very difficult year, let’s not kid ourselves on that front,” Mr. Hutcheson said, and a full recovery for the sector could take years. “This doesn’t turn on a dime.”

OMERS had stronger performance from its private credit book, which earned 8.3 per cent in 2025. More recently, stock prices for large private credit lenders have wobbled as U.S.-based Blue Owl Capital Inc. halted redemptions for one of its funds and sold a US$1.4-billion portfolio of loans to several pension funds, with OMERS reportedly one of them.

The fund declined to comment on Blue Owl’s sale, but said it has stuck to a strategy “to hold the pen on credit underwriting and not to give it away, and that is serving us well,” Mr. Simmons said.

OMERS improved from being 98-per-cent funded in 2024, based on projected payouts to pensioners, to 99 per cent at the end of last year. The plan expects to be fully funded soon, and to manage $200-billion of assets by 2030.