Canada Pension Has 5.6% Quarterly Return on Stock Market Bounce

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Canada Pension Plan Investment Board, the country’s largest pension fund, returned 5.6% in the quarter ended June 30 as stock markets rebounded from a pandemic-induced selloff in March.

The fund’s growth to C$434 billion ($328 billion) was attributed to gains in a broad range of asset classes, CPPIB said in a statement on Friday, though a stronger Canadian dollar offset some gains. CPPIB holds $241 billion in public and private equities and 97% are in the U.S. and overseas markets.

“While global financial markets experienced a strong rebound from March, significant uncertainty in health, social and economic conditions persists,” Chief Executive Officer Mark Machin said in the statement. “Amid this environment, CPP Investments delivered solid performance, while our investment teams were active in creating long-term value across our diversified programs.”

Key Insights

  • New contributions were lower than historic averages as employment dropped because of the Covid-19 pandemic, the fund said
  • Ten-year and five-year annualized nominal returns were 10.7% and 8.9%, respectively, net of costs
  • CPPIB’s additional account reached C$3.3 billion in assets versus C$2.3 billion the quarter before. Investment returns were 5.3%
    • This account is made up of additional contributions CPPIB started receiving in January 2019 after the government decided to expand the plan. CPPIB invests this money differently than its base account
  • CPPIB holds C$44 billion in real estate. In May, Machin said office towers won’t stay out of favor forever.
    • “There’s probably going to be still robust demand for great office space in central locations,” Machin said in an interview with Bloomberg TV. “Once there is decent immunity across the population or some lowering of the mobility of the disease, you’ll get people wanting to be with each other. This is human nature and the office is a part of that.”
  • While tensions between China and the rest of the world have increased, Machin still sees value in investing in Asia. “The reason we invest in Asia, and any of the big, liquid emerging markets really, is that it is a huge market that we can diversify into that is relatively uncorrelated with the rest of the world,” he said in May.

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