CPPIB return drops to 3.4%, lowest since 2009

May 19, 2016 | Last updated on May 19, 2016
3 min read

This story originally appeared on BenefitsCanada.com

The Canada Pension Plan Investment Board saw its net investment return for the fiscal year ended March 31, 2016 drop to 3.4 per cent, a decline of nearly 15 percentage points since last year’s return of 18.3 per cent, and the lowest return since 2009’s -18.6 per cent.

However, Canada’s largest pension fund ended the fiscal year with net assets of $278.9 ­­billion, compared to $264.6 billion at March 31, 2015. The $14.3 billion increase in assets consisted of $9.1 billion in net investment income after all CPPIB costs and $5.2 billion in net CPP contributions.

“Over the past twelve months, despite one of the more challenging investment environments in recent years and predominately negative equity markets, the CPP Fund generated a moderate gain,” said Mark Wiseman, president and chief executive officer of CPPIB, in a news release on Wednesday.

“This outcome demonstrates the benefits of a resilient, highly diversified global portfolio. This year’s results highlight the real-time impact of short-term market volatility, reinforcing why we focus on long-term results.”

Despite volatility in quarterly results, CPPIB credits its $9.1-billion gain in net investment income to private equity assets and real estate and fixed-income holdings. And though the Canadian dollar’s currency dropped during the fiscal year, the pension fund’s diversification across currencies helped bring in returns, it said.

The fund’s portfolio is made up of 19.1 per cent of Canadian assets and 80.9 per cent of foreign assets.

CPPIB’s investment highlights for the fiscal year ended March 31, 2016 include:

Private investments

Public investments

Real estate investments

established with Goodman Group in 2009 to own and develop logistics assets in Mainland China.

  • A strategic joint venture with Unibail-Rodamco, the second largest retail REIT in the world, to grow CPPIB’s German retail real estate program. The joint venture was formed through its initial equity investment of €394 million. In addition, CPPIB has committed a further €366 million in support of Unibail-Rodamco Germany’s investment strategies.

Investment partnerships

Asset dispositions

  • The sale of 45 per cent interest in two Florida assets, Oakwood Plaza shopping centre and Dania Pointe development project. CPPIB received approximately US$91.3 million from the sale.
  • The Capital London Fund, in which CPPIB is an 80 per cent equity holder, sold an office building in London. Proceeds to CPPIB from the sale were approximately £150 million.
  • The sale of a 45 per cent indirect stake in a Midtown Manhattan office building. Proceeds to CPPIB from the sale were approximately US$79 million.