The Canada Pension Plan Investment Board announced on Wednesday that had achieved an 8% return in its fiscal year 2024, a period that ended March 31.
Net assets of the fund increased to CAD 632.3 billion ($462.66 billion) an increase from CAD 570 billion the previous fiscal year.
Strong performance in public equities, infrastructure, energy and credit boosted the fund’s returns, while weak performance in emerging markets and real estate negatively impacted returns.
“The CPP Fund’s growth this year continued the trend of reaching heights several years ahead of initial actuarial projections,” said John Graham, president and CEO in a statement. “Solid performance by all of the investment departments and key corporate functions helps demonstrate how our strategy is on track.”
CPPIB, which manages the assets of the Canada Pension Plan, has 22 million contributors and beneficiaries, more than half of the population of Canada. The fund has returned 7.7% and 9.2% over the past five and 10 years annualized.
Returns by Asset Class and Geography
The CPP Investments portfolio has a 28% allocation to public equities and a 31% allocation to private equity. Government bonds make up 12%, credit, real estate and infrastructure compose 13%, 8% and 8% of the portfolio respectively.
Public equities returned 13.8% in fiscal 2024, and private equity returned 10.4%. Credit and infrastructure returned 10.8% and 2.6% respectively. The only asset classes with negative returns were government bonds, which returned negative 0.4%, and real estate, which returned negative 5%.
In fiscal 2024, the fund cut its holdings in infrastructure and real estate by one percentage point each and increased its allocation to public equities by four percentage points, also reducing private equity by two percentage points, compared with fiscal year 2023.
From fiscal 2023 to 2024, the fund increased its investments in the United States to 42% of the portfolio from 36%. CPPIB also decreased its allocation to investments in Canada to 12% from 14% of the portfolio. Exposure to Europe increased 1% and exposure to Asia Pacific decreased to 21% from 26%.
Investments across all geographies had positive returns in fiscal 2024. U.S. investments returned 9.4%. CPP Investments noted in its fiscal 24 annual report that its U.S. investments were responsible for 59% of the fund’s 7.7% 5-year annualized returns.
Investments in the Asia Pacific region returned 0.1%, something that CPPIB attributed to currency losses and underperformance from Chinese investments. The fund also returned 5.9% in fiscal 2024 from its Canadian investments, which are primarily in government bonds and infrastructure investments.
The Latin America region returned 11.5%, primarily driven by Brazilian equities. CPPIB’s European investments returned 5.8%, with positive returns in public and private equity but weaker returns from the utilities sector and infrastructure, an impact from the war in Ukraine.
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