CPP Investment Board

CPP Investment Board

November 10, 2010 09:00 ET

CPP Fund Ends Fiscal Second Quarter at $138.6 Billion

TORONTO, ONTARIO--(Marketwire - Nov. 10, 2010) - The CPP Fund ended the second quarter of fiscal 2011 on September 30, 2010 at $138.6 billion compared to $129.7 billion at the end of the first quarter on June 30, 2010. 

The $8.9 billion increase in assets after operating expenses this quarter was the result of investment income of $8.4 billion representing an investment return of 6.6%, as well as an inflow of contributions which totaled $0.5 billion. This quarter's results were primarily attributable to the strong performance in the global equity markets which was reflected in CPPIB's listed equity holdings.

For the six month fiscal year-to-date period, the CPP Fund has increased by $11 billion from $127.6 billion at March 31, 2010. This increase in assets after operating expenses is comprised of $6.7 billion in investment income representing a 5.2% rate of return combined with contributions of $4.3 billion.

"All major equity market indices realized gains this quarter, in particular U.S. markets, which posted their best September results in 70 years," said David Denison, President and CEO, CPP Investment Board.

For the five-year period ended September 30, 2010, the CPP Fund generated an annualized investment rate of return of 3.4% or $18.3 billion of investment income. For the 10-year period ended September 30, 2010, the Fund generated $44 billion of investment income reflecting an annualized rate of return of 5.5%.

Investment Portfolio Update

CPPIB continued to be active across the spectrum of our investment programs in the second quarter. Investment highlights included the completion of the acquisition of Tomkins plc alongside Onex Corporation, investments in eight regional shopping malls in Canada including the purchase of Hillside Centre in Victoria, B.C., an investment in Australia's Colonial First State Global Asset Management Property Retail Partnership, and a joint venture with U.K. property manager and developer Hammerson plc to acquire 10 Gresham Street, an office building in the City of London. 

Since the end of the second quarter, CPPIB has also announced a joint venture with U.S. REIT Vornado Realty Trust to invest in two prime office buildings in Washington, D.C., the acquisition alongside LaSalle Investment Management of Hürth Park Shopping Centre, CPPIB's first direct real estate investment in Germany, and CPPIB continues to pursue the completion of our previously announced offers to acquire interests in the 407 ETR.  

"This recent activity reflects our ongoing focus on acquiring long life assets such as infrastructure and core real estate that we believe will generate strong risk-adjusted returns for the CPP Fund over many years," said Mr. Denison.

Long-term sustainability

The CPP Fund is sustainable throughout the 75-year period of the Chief Actuary of Canada's report. The report indicates that CPP contributions are expected to exceed annual benefits paid until 2021, providing an 11-year period before a portion of the investment income from the CPPIB will be needed to help pay pensions.

Asset Mix

  • In nominal dollar terms, equities represented $73.8 billion or 53.2% of the investment portfolio. That amount consisted of public equities valued at $53.5 billion or 38.6% and private equities valued at $20.3 billion or 14.6%.

  • Fixed income, which includes bonds, money market securities, other debt and debt financing liabilities, represented $45.3 billion or 32.7%.

  • Inflation-sensitive assets represented $19.6 billion or 14.1%. Those assets consisted of:

    • Real estate valued at $9.1 billion or 6.5%

    • Infrastructure assets valued at $6.2 billion or 4.5%

    • Inflation-linked bonds valued at $4.3 billion or 3.1%.

CPP Investment Board

The CPP Investment Board is a professional investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPP Investment Board invests in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in London and Hong Kong, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm's length from governments. At September 30, 2010, the CPP Fund totaled $138.6 billion. For more information about the CPP Investment Board, please visit www.cppib.ca.

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