US Equities Buoy Canada Pension Plan’s 3.6% Return in Q2

The Canada Pension Plan Investment Board reported a 3.6% net return for the second quarter of fiscal 2025 that ended September 30, lifting its total asset value to C$675.1 billion ($481.4 billion) from C$646.8 billion the previous quarter.

According to the pension giant, C$23.1 billion of the C$28.3 billion quarterly gain in net assets came from the portfolio’s investment returns, while the remaining C$5.2 billion came from net transfers from the Canada Pension Plan. The quarterly returns were buoyed by rising U.S. equities, while its fixed-income assets benefitted from interest rate cuts in developed markets.

CPPIB’s infrastructure and credit investments also contributed to the gains. However, the returns were offset by the appreciation of the Canadian dollar against the U.S. dollar, which had an overall negative impact on the portfolio, according to the pension fund.

CPPIB also reported a 10-year annualized net return of 9.1%, and a five-year annualized return of 8.0%. For the six months that ended September 30, the portfolio had a net return of 4.6%, which translated to a C$42.7 billion increase in value. The six-month gain was comprised of C$29.3 billion in investment income, plus C$13.3 billion in net transfers from the CPP.

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“Despite heightened market volatility during the quarter, our diversified investment portfolio delivered stable returns, with positive performance across asset classes and geographies,” CPPIB President and CEO John Graham said in a statement. “The portfolio is performing as designed. Our focus remains on creating long-term value through market cycles in the best interests of CPP contributors and beneficiaries.”

The pension fund does not report its asset allocation on a quarterly basis; however, for the fiscal year that ended March 31, it reported 41% in public fixed income, 28% in public equity, 26% in real assets, 23% in private equity and 14% in credit. This was countered by a negative 32% allocation for cash and absolute return strategies, which often include shorting equities.

On a geographical basis, the pension fund’s asset allocation as of the end of September was 44% in the U.S., 20% in the Asia-Pacific region, 19% in Europe, 12% in Canada and 5% in Latin America.

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The New York State Common Retirement fund committed $4.56 billion in investments during September, more than half of which was allotted to its opportunistic absolute return strategies and credit portfolios, according to the fund’s monthly transaction report.

The pension fund invested $1.76 billion of its total monthly commitments to its opportunistic absolute return strategies portfolio, $500 million of which was earmarked for the TPG GP Solutions fund managed by TPG. The fund invests exclusively in general partner-led transactions.

The NYSCRF also committed $600 million to be divided evenly between two funds from General Catalyst Group Management LLC: the General Catalyst Group XII fund and the General Catalyst Excelsior Fund. The General Catalyst Group XII funds are commingled vehicles, while the General Catalyst Excelsior Fund is a fund-of-one coinvest vehicle to the other General Catalyst Group XII funds. It is the first time the pension fund has invested with General Catalyst.

The retirement fund committed another $360 million to the Blue Owl Strategic Equity Partners fund managed by the firm of the same name. The investment is a closed-end commingled fund centered around single-asset GP-led secondaries.

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The NYSCRF also earmarked a total of $1.15 billion within its credit portfolio, $900 million of which was divided equally among three funds. The Neuberger Berman Loan Adviser Holdings fund from Neuberger Berman Investment Advisers will invest mainly in the equity of collateralized loan obligations originated by Neuberger Berman. The FP Credit Partners III Aggregator fund from Francisco Partners Management LP invests in senior secured direct lending to middle market companies that the firm has had previous or current relationships with. Finally, the OCU Empire Fund managed by ORIX Advisers LLC is a fund-of-one that provides flexible debt capital to “well-equitized, high-growth, late-stage tech companies underserved by traditional lenders.” The investment marks the first time the NYSCRF has invested with ORIX.

Another $250 million within the credit portfolio has been set aside for the Blackstone Capital Opportunities Fund from Blackstone, which will extend loan packages to performing companies in the upper and middle markets.

A total of $850 million of the NYSCRF’s September commitments were made within its real estate portfolio, $400 million of which was earmarked for the WCP NewCold III fund. The global cold-storage fund managed by Westport Capital Partners LLC is a new relationship for the pension fund. The fund also committed $250 million to the Fairfield U.S. Multifamily Value-Add Fund IV from Fairfield Residential Holdings LLC. The fund is the fourth in a series of closed-end, value add real estate investment funds. Additionally, $150 million was committed to the Fairfield U.S. Multifamily Value-Add Fund IV Co-Investment fund, a sidecar that co-invests with Fairfield U.S. Multifamily Value-Add Fund IV.

The NYSCRF also spent $49.6 million to acquire Tamarron Homes, a 164-unit residential rental community in Katy, Texas, west of Houston.

Within its private equity portfolio, the fund committed $800 million, all to two Blackstone funds. The pension fund is investing $500 million in the Blackstone Capital Partners IX Supplemental Account, which will be paid in two tranches of $300 million and $200 million. The fund will invest additional capital alongside the Blackstone Capital Partners IX fund that will focus on investments in the U.S., Western Europe and Asia. The other $300 million was committed to the Blackstone Capital Partners fund, which aims to invest in digital media and technology services, travel and leisure, software, essential health care products, life sciences services, essential component and systems manufacturing, essential business services and the energy transition.

Within NYSCRF’s emerging manager program, which invests in newer, smaller and diverse investment management firms, the fund is investing approximately $16.2 million in the Trident American Dreams Fund I advised by HarbourVest Partners LLC. The fund will invest in lower middle market companies in the U.S. among the industrial, consumer and health care sectors. Trident is also a new relationship for the pension fund.