CPP Investment Board

CPP Investment Board

February 10, 2011 09:00 ET

CPP Fund Ends Fiscal Third Quarter at $140.1 Billion

TORONTO, ONTARIO--(Marketwire - Feb. 10, 2011) - The CPP Fund ended the third quarter of fiscal 2011 on December 31, 2010 at $140.1 billion compared to $138.6 billion at the end of the second quarter on September 30, 2010. 

The $1.5 billion increase in assets after operating expenses this quarter was the result of investment income of $3.9 billion, representing an investment return of 3.0%, offset by seasonal cash outflows of $2.4 billion to pay CPP benefits. The CPP Fund routinely receives more CPP contributions than are required to pay benefits during the first part of the calendar year and then returns a portion of those funds for benefit payments in the latter part of the year.

For the nine month fiscal year-to-date period, the CPP Fund has increased by $12.5 billion from $127.6 billion at March 31, 2010. This increase in assets after operating expenses is comprised of $10.6 billion in investment income, representing an 8.3% rate of return, combined with contributions of $1.9 billion.

"We are pleased with the continued positive performance of the CPP Fund," said David Denison, President and CEO, CPP Investment Board. "This quarter's results were primarily due to a continued uptrend in the global equity markets."

For the five-year period ended December 31, 2010, the CPP Fund generated an annualized investment rate of return of 3.5% or $20.1 billion of investment income. For the 10-year period ended December 31, 2010, the Fund generated $47.1 billion of investment income reflecting an annualized rate of return of 5.6%.

Investment Portfolio Update

CPPIB has announced a number of sizeable and complex investments in private equity, real estate and infrastructure through the first nine months of its current fiscal year.

"One of the investment highlights was the completion of the Tomkins plc acquisition alongside Onex Corporation, which was the largest private equity transaction globally in calendar 2010," said Mr. Denison. "This marks the second consecutive year that CPPIB has participated in the largest global private equity transaction, as our investment in IMS Health Inc. alongside TPG Capital was the largest in 2009."

Other investment highlights in the quarter included:

  • Completion of the $3.4 billion acquisition of Intoll which includes a 30% stake in 407 ETR and a 25% interest in Australia's Westlink M7;
  • Purchase of a 10% stake in 407 ETR from Cintra Infraestructuras S.A. for $894 million;
  • Equity investment of $487 million for the acquisition of a 25% interest in Westfield Stratford City, a major retail and entertainment development adjacent to the 2012 London Olympics site;
  • Commitment of $607 million as part of a consortium bid to acquire the ING Industrial Fund, a portfolio of prime industrial properties primarily in Australia;
  • Joint venture with U.S. REIT Vornado Realty Trust to invest in two prime office buildings in Washington, D.C. for $93 million; and
  • Acquisition alongside LaSalle Investment Management of Hürth Park Shopping Centre, CPPIB's first direct real estate investment in Germany, representing an equity investment of $69 million.  

Long-term sustainability reaffirmed

Retirement security has been a key issue for Canadians and policy makers throughout 2010. Importantly in November 2010, the Chief Actuary of Canada reaffirmed through his triennial review that the CPP remains sustainable at the current contribution rate of 9.9% throughout the 75-year period of his report. The report also indicates that CPP contributions are expected to exceed annual benefits paid until 2021, providing a 10-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 $75.3 billion or 53.7% of the investment portfolio. That amount consisted of public equities valued at $54.1 billion or 38.6% and private equities valued at $21.2 billion or 15.1%.

  • Fixed income, which includes bonds, money market securities, other debt and debt financing liabilities, represented $42.2 billion or 30.2%.

  • Inflation-sensitive assets represented $22.6 billion or 16.1%. Those assets consisted of:

    • Real estate valued at $9.2 billion or 6.6%

    • Infrastructure assets valued at $9.5 billion or 6.8%

    • Inflation-linked bonds valued at $3.9 billion or 2.7%.

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 December 31, 2010, the CPP Fund totaled $140.1 billion. For more information about the CPP Investment Board, please visit www.cppib.ca.

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