CPPIB Returns 1.9% in Q3 of Fiscal 2023 | Chief Investment Officer

The Canada Pension Plan Investment Board reported a 1.9% investment gain for fiscal 2023’s third quarter, which ended December 31, 2022. The return raised its total asset value to C$536 billion (US$402 billion) from C$529 billion at the end of the previous quarter.

By comparison, the portfolio returned 0.2% during the previous quarter and 2.4% during Q3 of fiscal 2022.

For the nine-month fiscal year-to-date period ending December 31, 2022, the fund decreased by C$3 billion, the result of a C$12 billion decline in net assets partially offset by C$9 billion in net contributions. For the nine-month period, the fund’s net return was negative 2.2%.

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“Our diversified portfolio delivered gains this quarter due to a rebound in public equity markets, while our private asset values remained relatively flat,” John Graham, CPPIB’s president and CEO, said in a release. “Despite the enduring global economic headwinds, our active management strategy enabled us to outperform markets over the first nine months of our fiscal year.”

The pension fund also reported five- and 10-year annualized net returns of 8.1% and 10.0%, respectively.

The base CPP account, a partially funded plan is intended to maintain a stable contribution rate, ended fiscal Q3 with assets of C$517 billion, up from C$512 billion at the end of the previous quarter. The base CPP account also earned a 1.9% net return for the quarter and reported a five-year annualized net return of 8.1%.

The additional CPP account, which is more conservatively invested, ended Q3 with net assets of C$19 billion, up from C$17 billion at the end of Q2. The additional CPP account had a 1.2% net return during the quarter and a 5.0% annualized net return since its inception in 2019. The additional account was designed with a different legislative funding profile and contribution rate compared to the base CPP. It also has a different market risk target and investment profile than the other funds.

The CPPIB announced that Canada’s Office of the Chief Actuary’s most recent triennial report evaluating the financial sustainability of the pension fund was published in December 2022.

“The chief actuary has concluded through her most recent review that the Canada Pension Plan remains sustainable for the long term at current contribution rates,” Graham said. “Notably, the report outlines that due to strong investment performance over the three-year period from 2018 to 2021, investment income was more than C$100 billion higher in 2021 than expected in the previous report.”