Toronto Foundation Investment Performance in 2025
It was a strong year for the Foundation’s investment portfolio. Markets that weathered one shock after another continued to rise during the year. Despite enormous changes in the global trading system, global equities continued to make gains. By maintaining a diversified portfolio with long-term investment themes, the Foundation's investment portfolio delivered a net return of 12.2% in 2025, bringing the annualized 3-year net return to 12.2% against a policy benchmark of 11.9%, and the cumulative return over the last three years to 41.2%. We increased our investments to $422 million, up from $378 million in 2024, aligning with our commitment to strategic growth and long-term sustainability.
Within the portfolio, $177 million or 42% of the total asset value was intentionally invested to do good and the entire portfolio aims for alignment with the mission, values and culture of the Foundation. This includes 31% invested in intentional ESG strategies and 11% in thematic impact investments across health and wellness, industrial decarbonization, education, and economic inclusion, among others. A $10 million allocation to the RockCreek Global Equality ETF was funded through the sale of broad equity index ETFs. This investment reflects the conviction we have built over time that companies with diverse leadership, equitable pay practices, and inclusive cultures capture a genuine performance premium while generating meaningful social outcomes. Our commitment to private equity remains steady, guided by disciplined pacing and a long-term perspective.
The portfolio’s performance underscores the effectiveness of our investment strategy and our dedication to maximizing impact through prudent financial stewardship.
2025: Markets in Motion
Heading into 2025, the portfolio faced a set of meaningful risks: elevated equity valuations driven by a narrow cohort of mega-cap technology companies, ongoing geopolitical uncertainty disrupting global trade and supply chains, and the potential for a policy misstep by central banks navigating the last mile of inflation. Against this backdrop, the portfolio was deliberately positioned with a Canadian domestic bias and diversifying assets (notably gold and value-oriented, cyclically-sensitive sectors) to reduce dependence on the AI-driven, growth-concentrated trade that had dominated recent market returns. That positioning proved well-timed: Canadian equities surged 31.7% on the strength of materials and financials, while gold's 57.0% gain, with the price exceeding $6,000 per ounce, added meaningful cushion to the broader portfolio. Internationally, the portfolio's exposure to Europe and Asia provided further balance, as value and cyclical themes in those regions kept pace with, or outperformed, the more growth-skewed US market.
The trade-offs of this positioning were real, however. A domestic overweight and reduced technology exposure meant the portfolio participated less fully in the S&P 500's 12.4% gain, which was again propelled by mega-cap AI-related optimism. A portfolio with greater US growth-equity concentration would have captured more of that upside. Looking ahead, the portfolio retains vulnerabilities: a Canadian domestic bias is sensitive to any reversal in commodity prices and the materials sector can be volatile; the interest rate trajectory remains uncertain, with the pace and durability of the Federal Reserve's three cuts yet to be confirmed; and geopolitical and trade tensions, while navigated successfully in 2025, represent a persistent source of tail risk. The portfolio's diversified structure is designed to manage these exposures rather than eliminate them, and that balance continues to reflect the Foundation's long-term, mission-aligned investment objectives.
Highlighting specific opportunities for Toronto also continued to be of utmost importance to RockCreek Canada in 2025. We continue to evaluate opportunities for a Women and Sports Fund, with a particular focus on Canadian women’s sports. The Canadian market presents a compelling opportunity given the strong grassroots participation, growing national pride around women’s athletics, and the ability for teams and leagues to build deep, community-driven fan bases. These platforms are increasingly positioned not only
as competitive sports properties, but also as anchors for local engagement, brand partnerships, and long-term cultural relevance. The return potential from investing in women sports is on a strong upward trajectory globally and momentum in Canada is building.
Looking Ahead to 2026
As we look ahead, the key risks commanding our attention in 2026 are well-defined: a potential US-led economic slowdown driven by policy uncertainty and the lagged effects of tariffs, a reversal in the AI-driven equity premium if earnings fail to justify elevated valuations, persistent geopolitical fragmentation affecting trade and capital flows, and the possibility of renewed inflationary pressure complicating the path of central bank policy. These are not abstract risks as early 2026 has already delivered a sharp reminder of how quickly sentiment can shift, with significant equity market volatility testing portfolios built on narrower, more concentrated positions.
In this environment, liquidity management is a first-order consideration. The Foundation's portfolio has been structured with this in mind: the liquid portions of the portfolio - including public equities, fixed income, gold, and hedge funds, which together represent the majority of assets - provide meaningful flexibility to rebalance, meet any near-term cash requirements, and capitalize on dislocations as they arise. The private markets allocation, approximately 10% of the total portfolio at yearend, is sized deliberately to capture the illiquidity premium without compromising the portfolio's overall ability to respond to changing conditions. This balance between liquidity and long-term return is a deliberate trade-off, not an oversight.
Broadly, the Foundation's diversified, multi-asset approach has demonstrated a measurable degree of resilience relative to more conventional portfolio structures. A traditional 60/40 equity-bond portfolio entered 2026 with significant concentration in US large-cap equities, the very segment most exposed to valuation risk and policy sensitivity. By contrast, the Foundation's portfolio carries a more balanced geographic footprint, meaningful allocations to real assets and alternative strategies, and active management across equity sleeves that reduces benchmark-hugging risk. While no portfolio is immune to a difficult market environment, a diversified structure of this kind has historically demonstrated lower drawdowns and faster recovery profiles than more concentrated peers, and that characteristic matters significantly for a perpetual endowment whose obligations to the community do not pause during market downturns.
The integration of AI as both a thematic opportunity and an active risk consideration continues to shape how we evaluate managers and sectors. Rather than simply seeking AI-adjacent return, the focus remains on how this technology can be leveraged in ways consistent with the Foundation's mission in healthcare, financial inclusion, and environmental solutions, while being clear-eyed about the concentration and valuation risks that come with undisciplined AI exposure. That balance between capturing transformative opportunity and managing associated risks is central to how the portfolio is positioned for the period ahead.