Pension giant reports 10-year annualized net return
Canada Pension Plan Investment Board (CPP Investments) has reported an increase in net assets by $5 billion by Q1 of fiscal 2024 ended June 30.
The pension fund achieved a 10-year annualized net return of 9.8% and in the 10-year period up to and including Q1 of fiscal 2024 has contributed over $314 billion in cumulative net income.
About $9 billion in net transfers from the CPP offset a net loss of $5 billion to increase net assets by $5 billion. Among the factors that negatively offset gains include the strengthening of the Canadian dollar and higher interest rates as a result of the inflation. The fund’s net return for the first quarter was negative 0.8%.
"The quarter's results reflect gains across most asset classes, which were offset by the impact of foreign exchange losses due to a stronger Canadian dollar relative to the U.S. dollar," said John Graham, president and CEO of CPP Investments.
"While we anticipate periods of uncertainty to persist, we expect our portfolio will continue to be resilient and create value for CPP contributors and beneficiaries for generations to come."
The base CPP account achieved a $1 billion increase in net assets to $547 billion by Q1 of fiscal 2024 ended June 30, 2023. The increase consisted of a net loss of $4 billion and $5 billion in net transfers from the CPP. As a result, a five-year annualized net return of 7.4% was achieved.
The additional CPP account ended its Q1 of fiscal 2024 with $28 billion in net assets. The net return was negative 0.9% for the quarter, and the annualized net return was 5.0% since inception in 2019.
In the most recent triennial review by the Office of the Chief Actuary of Canada, published in December 2022, both the base CPP and the additional CPP continue to be sustainable in the long term at the legislated contribution rates. The base CPP account is projected to earn an average annual rate of return of 3.69% above the Canadian consumer price inflation rate, while the additional CPP account is projected to earn an average annual real rate of return of 3.27%.
CPP Investments manages the fund for more than 21 million contributors and beneficiaries of the Canada Pension Plan.
