The Canada Pension Plan Fund ended the second quarter of fiscal 2009 on Sept. 30 with assets of $117.4 billion, reflecting an investment return of negative of negative 8.5% for the quarter, the CPP Investment Board said Wednesday.
The fund declined $5.3 billion in value for the fiscal year to date and $10.3 billion since the previous quarter, the CPP IB said.
The fund’s four-year annualized investment rate of return through September 30 was 6.6%, which has generated $22 billion of investment income for the fund over the four-year period.
“The CPP Fund is invested for the long term, has a broadly diversified portfolio and steady cash inflows, and is structured to withstand stock market cycles in order to help secure CPP pensions for decades and generations,” said David Denison, president and CEO, CPP IB, in a release. “While the fund was adversely impacted by broad declines in public equity markets, it had virtually no losses due to credit or counterparty exposures in this period.”
“While market conditions have worsened since the end of the quarter, we remain confident in our ability to generate superior long-term risk-adjusted returns to help sustain the CPP for the benefit of 17 million Canadians. Given our mandate, the CPP Investment Board invests not for the quarter, but for the quarter century and beyond,” Denison said.
The fund’s decline during the quarter was the result of a negative investment return of 8.5%, or negative $10.8 billion, and a net inflow of $0.5 billion in CPP contributions not needed to pay current pension benefits.
“Given our significant strategic weighting in equities, the 19.3% decline in Canadian public equity markets and the broad decline in global markets, for instance the 12.9% drop in the FTSE 100 and the 9% drop in the S&P 500, during our latest quarter were the primary factors affecting our results,” said Denison. “Our equities strategy is consistent with our very long investment horizon and our view that equities will deliver higher risk-adjusted returns over longer time periods.”
At Sept, 30, 2008, equities represented 59.9% of the fund’s investment portfolio or $70.4 billion. That amount consisted of 46.8% public equities valued at $55.0 billion and 13.1% private equities valued at $15.4 billion. Fixed income, including bonds, money market securities, and other debt represented 26.8% of the portfolio or $31.5 billion. Inflation-sensitive assets represented 13.3% or $15.6 billion. Of those assets, 6.2% consisted of real estate valued at $7.3 billion, 4.0% was inflation-linked bonds valued at $4.7 billion, and 3.1% was infrastructure valued at $3.6 billion.
IE
CPP Fund posts negative return in second quarter
Broad decline in equity markets trims fund by $10.3 billion
- By: IE Staff
- November 12, 2008 October 31, 2019
- 16:25