‘Sig­nif­i­cant up­lift’

CPPIB gets boost from global eq­uity mar­kets in lat­est quar­ter

Cape Breton Post - - Obituaries/Business -

The head of the coun­try’s big­gest pub­lic pen­sion fund says it ben­e­fited from “a sig­nif­i­cant up­lift” from global stock mar­kets dur­ing its most re­cent quar­ter and will be look­ing for buy­ing op­por­tu­ni­ties if a re­cent re­treat re­sults in bet­ter pric­ing.

Mark Machin, chief ex­ec­u­tive of the Canada Pen­sion Plan In­vest­ment Board, said the CPP Fund achieved “solid” re­turns dur­ing the first quar­ter of its 2017-18 fi­nan­cial year.

The fund earned 1.8 per cent, net of all costs, for the three­month pe­riod.

But in­vestors can’t as­sume mar­kets will al­ways go up and the CPPIB’s strat­egy is to have a di­verse port­fo­lio that will hold its value over the long term. Short-term de­clines are seen as buy­ing op­por­tu­ni­ties, Machin said in an in­ter­view Fri­day.

“We will look for things that dis­lo­cate be­low what we think are their fun­da­men­tal val­u­a­tions,” he said.

Global stock mar­kets have been rat­tled in re­cent days as the ten­sions be­tween United States and North Korea have risen.

As for the prospect of a big­ger sort of down­turn, Machin said the plan does reg­u­lar risk as­sess­ments, but it mostly re­lies on spread­ing out its in­vest­ments to a va­ri­ety of as­set classes and ge­o­graphic mar­kets.

“You can’t, ob­vi­ously, pro­tect against a re­ally broad mar­ket down­turn com­pletely, but you can cush­ion that by di­ver­si­fi­ca­tion across mar­kets that are go­ing to be less im­pacted in a shock sit­u­a­tion.”

The CPP Fund’s pub­licly traded eq­ui­ties were worth $126.9 bil­lion at June 30, or 38.9 per cent of the to­tal hold­ings.

It also in­vests in pri­vate eq­uity, gov­ern­ment bonds, credit in­vest­ments, real es­tate, in­fra­struc­ture and other as­sets. But CPPIB doesn’t in­vest di­rectly in gold - of­ten seen as a pro­tec­tion against po­lit­i­cal or eco­nomic up­heaval.

“We do in­vest in com­modi­ties, but we do not have any di­rect ex­po­sure in gold as a spe­cific com­mod­ity,” Machin said.

Nei­ther does CPPIB en­gage in cur­rency hedg­ing.

The Toronto-based fund man­ager ended the quar­ter with $326.5 bil­lion in net as­sets, up $9.8 bil­lion from March 31 when CPPIB’s 2017 fi­nan­cial year ended.

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