November 29th, 2020

CPP Investments grows 5 per cent in Q2 with widespread positive returns

By The Canadian Press on November 16, 2020.

Information regarding the Canada Pension Plan is displayed of the service Canada website in Ottawa on Tuesday, January 31, 2012. THE CANADIAN PRESS/Sean Kilpatrick

TORONTO – CPP Investments has a cautious outlook for the months ahead despite strong returns through the July-to-September period, with net assets up $22.3 billion or five per cent since the previous quarter.

The independent investment manager for the Canada Pension Plan on Monday reported $456.7 billion in assets as of Sept. 30, up from $434.4 billion at the end of June.

Most of the growth came from $21.6 billion in net income from investments. In addition, there was $700 million in net contributions from the Canada Pension Plan.

The Toronto-based fund attributed growth to a continued recovery of public equity markets in July and August, which affected both its publicly traded and private equity holdings. Those gains were partly offset by a retreat of public markets in September amid concerns about further COVID-19 lockdowns.

On a longer-term basis, after adjusting for inflation, the second quarter of fiscal 2021 had a 10-year annualized net real return of 8.8 per cent and a five-year annualized net real return of 8.0 per cent.

Canada’s chief actuary has estimated CPP Investments needs an average real rate of return of 3.95 per cent over 75 years to meet its financial obligations.

Chief executive Mark Machin says all the fund manager’s investment departments generated positive returns during the quarter but the organization remains cautious given the uncertain economic fallout of COVID-19.

“Our investment professionals continue to pursue opportunities that will bring value to the Fund over the long term,” Machin said in a statement.

This report by The Canadian Press was first published Nov. 16, 2020.

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