February 06, 2008
TORONTO, ON (February 6, 2008): The CPP Fund reported assets of $119.4 billion for the third quarter ended December 31, 2007, compared to $121.3 billion at the end of the previous quarter. Given the challenging market conditions that prevailed during the quarter, investment performance was marginally negative, with a return of negative 0.14 per cent. Consistent with the seasonal timing of cash flows to and from the CPP, the quarter also saw an outflow of $1.7 billion for CPP benefits. The CPP Fund routinely receives inflows of CPP contributions well in excess of benefits during the first part of the calendar year, and returns a portion of those funds for benefits in the last calendar quarter, resulting in a net inflow each year. For the first nine months of the fiscal year, the CPP Fund grew $2.8 billion, comprised of $2.2 billion in CPP contributions not needed to pay current pension benefits and $0.6 billion in investment income, representing an investment rate of return of 0.54 per cent. The CPP Investment Board emphasizes four-year results to reflect its long-term investment horizon. For the four-year period ended December 31, 2007, the CPP Fund earned $35.4 billion in investment income, representing a rolling four-year annualized investment rate of return of 10.1 per cent. “The CPP Fund’s results during the quarter reflected the markets’ volatility, and in the early part of 2008, we are seeing volatility intensify,” said David Denison, President and CEO of the CPP Investment Board. “As market participants with a very long-term investment horizon, we expect, and are prepared, to manage the fund through difficult markets like these periodically. These short-term fluctuations are within our risk parameters, given that we are investing the fund for decades and generations.” At December 31, 2007, equities represented 63.5 per cent of the fund or $75.8 billion. That amount consisted of 54.0 per cent public equities valued at $64.4 billion and 9.5 per cent private equities valued at $11.4 billion. Nominal fixed income, which includes bonds and money market securities, represented 25.6 per cent or $30.6 billion. Inflation-sensitive assets represented 10.9 per cent or $13.0 billion. Of those assets, 5.4 per cent consisted of real estate valued at $6.5 billion, 3.3 per cent was inflation-linked bonds valued at $3.9 billion and 2.2 per cent was infrastructure valued at $2.6 billion. The Chief Actuary of Canada estimates that CPP contributions will exceed annual benefits paid through to the end of 2019, providing a 12-year period before a portion of the CPP Fund’s investment income is needed to help pay CPP benefits. The Chief Actuary also forecasts that the CPP Fund will grow to approximately $250 billion by 2016, making it one of the largest single-purpose pools of investment capital in the world, thereby helping to secure the CPP for the long term.
CPP Investment Board The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPP Investment Board is investing in publicly-traded stocks, private equities, real estate, inflation-linked bonds, infrastructure and fixed income. The CPP Investment Board is accountable to Parliament and the federal and provincial finance ministers. Based in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. For more information about the CPP Investment Board, visit www.cppib.ca.
For further information contact: Joel Kranc Manager, Communications (416) 874-5163 jkranc@cppib.ca