Canada Pension posts 5% return

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Canada Pension Plan Investment Board returned 5 per cent in the quarter ended Sept. 30 on the strong rebound in equity markets, which lifted the value of public and private holdings in the country's largest pension fund.

The fund's growth to $456.7 billion in its fiscal second quarter was attributed to gains in a broad range of asset classes, CPPIB said in a statement Monday. A stock market pullback in September, driven by concerns over renewed lockdown measures and the lack of a new stimulus package in the U.S., tempered some of these gains.

“CPP Investments' diversified fund performed well this quarter, generating strong returns,” chief executive Mark Machin said in the statement. “However, we continue to be cautious about the months ahead given the highly uncertain economic fallout of Covid-19 and its effect on markets.”

CPPIB holds nearly $44 billion in real estate. In May, Machin said office towers won't stay out of favour forever. “There's probably going to be still robust demand for great office space in central locations,” Machin said in an interview with Bloomberg TV. “Once there is decent immunity across the population or some lowering of the mobility of the disease, you'll get people wanting to be with each other. This is human nature and the office is a part of that.”

CPPIB held $143.6 billion in public equities and $112.2 billion in private equities as of Sept. 30, while government bonds accounted for $97.4 billion of the portfolio and credit was $55.2 billion.

Machin told Bloomberg News last month that the fund is looking at deals in the travel industry, confident that it will enjoy a strong recovery when the COVID-19 pandemic eases. The fund subsequently said it would invest more in Viking Cruises.

Key Insights:

❚ Ten-year and five-year annualized nominal returns were 10.5 per cent and 9.6 per cent, respectively, net of costs;

❚ CPPIB's additional account reached $4.1 billion in assets versus $3.3 billion the quarter before. Investment returns were 3 per cent. This account is made up of additional contributions CPPIB started receiving in January 2019 after the government decided to expand the plan. CPPIB invests this money differently than its base account;

❚ “All of our investment departments generated positive returns this quarter. Our investment professionals continue to pursue opportunities that will bring value to the fund over the long term,” Machin said;

❚ In September, CPPIB promoted Edwin Cass to the newly created role of chief investment officer amid a push to more than double its assets under management.