Canada Pension Plan Investment Board earned 3.4 per cent in its latest quarter, adding $14.6-billion to its assets with help from strong gains from stocks and bonds to end the calendar year.
CPPIB ended 2023 with nearly $591-billion in assets, up from $576-billion at the end of the previous quarter.
Over 10 years, its annualized return is now 9.3 per cent, down from 9.6 per cent one quarter earlier. In dollar terms, CPPIB said it has added $319-billion of profit to the fund from its investing over the past decade.
The plan’s gains in its third fiscal quarter, which ended Dec. 31, were an improvement after two tepid quarters when CPPIB reported modest losses and gains of less than 1 per cent each time, as volatile stock and bond markets and fluctuating foreign currency valuations have weighed on returns. Toward the end of the year, however, public markets for stocks and bonds rebounded as inflation cooled and central banks signalled that a series of rapid interest-rate increases could be over.
The pension fund manager said its public stocks and bonds, credit investments, private equity, energy and infrastructure assets all made gains in the quarter, returning $19.3-billion after expenses. Those results were dragged down by currency losses as the Canadian dollar strengthened relative to its U.S. counterpart.
Its investments gains were also partly offset by $4.7-billion in net flows of funds to pay pensioners. Typically, payments outweigh new contributions coming in during the back half of the year.
The median return in the same quarter for Canadian defined benefit pension plans tracked by RBC Investor Services was 8.2 per cent, according to a recent report.
The Canada Pension Plan, launched in 1966, is the primary national retirement program for working Canadians, and CPPIB has managed and invested its funds on behalf of members since 1999.
On Thursday, the pension fund manager announced that it will close its office in Luxembourg, which opened in 2015 and has supported investments in Europe. “This decision was a result of thorough analysis of business activities that best serve our global operations,” CPPIB said in a statement.
CPPIB’s headquarters is in Toronto, and its global investment team is spread across offices in New York, London, Hong Kong, Mumbai, Sydney, São Paolo and San Francisco.
James Bradshaw