CPP Fund boosted by global equity rally

The CPP Fund ended its second quarter of fiscal 2011 with a balance of $138.6 billion, up from $129.7 billion at the end of the first quarter on June 30, 2010.

The second quarter was kind to global equity markets, and investment returns accounted for $8.4 billion of the increase—a return of 6.6%. Inflows of new contributions added $0.5 billion to the fund’s assets under management.

“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 of the CPP Investment Board.

Year to date, the fund’s assets have increased by $11 billion, with $6.7 billion coming from investment returns, while the remaining $4.3 billion came from additional contributions.

In the medium term, the fund has managed to earn an annualized investment rate of return of 3.4% over the past five years. The fund has done even better over the past 10 years, generating an annualized rate of return of 5.5%.

The fund is sustainable throughout the 75-year period of the Chief Actuary of Canada’s report, and the Canada Pension Plan will not need to tap into its assets until 2011.

The fund holds roughly 53.2% of assets in equities, including 38.6% in publicly traded equities and 14.6% in private equity. The fixed income portion of the fund (32.7%) includes bonds, money market securities, other debt and debt financing liabilities.

The fund holds 6.5% of its assets in real estate, 4.5% in infrastructure assets and 3.1% in inflation-linked bonds.

(11/10/10)