CPP Fund Review: Total First Quarter Fiscal 2019 Hits $366.6 Billion

On June 30 of 2018, the CPP Fund ended the first quarter of fiscal 2019, with a net asset of $366.6 billion. Compared to 2018’s net assets of $356.1 billion, it increased for $10.5 billion consisting the $6.6 billion in net income in exchange for all CPPIB costs and the $3.9 billion in net CPP contributions.

The Canada Pension Plan Investment Board is a professional and competent investment management organization that utilizes the excess and unneeded funds of the Canada Pension Plan (CPP) into investments. These funds are then used to settle current benefits on behalf of the 20 million beneficiaries and contributors. In order to construct a variegated portfolio of the held assets of the CPP, the CPPIB organization invests in public and private equities, real estate, fixed income instruments and various infrastructures.

The Investment Portfolio was able to achieve 8% 10-year and 12.3% 5-year annualized net nominal returns covering the quarter, which are net of all CPPIB costs.

Mark Machin- the President & Chief Executive Officer of the Canada Pension Plan Investment Board (CPPIB)- said that the private assets of the organization was doing great while maintaining a solid performance across investment departments. Today’s solid performance insulates the Fund for an imminent market drop in the future, as they focus and fixate on stretching their returns beyond 5 and 10 years. He believes that their investment strategy will continuously benefit the Fund through multiple economic cycles.

In accordance to their goal of achieving a maximum rate of returns in the future, but of course, with minimal risk level, their long-term results are the focus of CPPIB rather than the returns that comes in between quarters or in a single fiscal year.

CPPIB’s 8% nominal rate of return (10-year annualized net rate), or the net real rate of return basis of 6.4%, is definitely above the Chief Actuary’s assumption of only an average of 3.9% return for the 75-year projection period. It is said that the real rate of return is the net of all CPPIB costs, which is to maintain consistency with the Chief Actuary’s approach.

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