World News: 13:00 GMT Friday 9th November 2018. [L’Office d’investissement du RPC via Globe Newswire via SPi World News]
TORONTO, Nov. 09, 2018 (GLOBE NEWSWIRE) -- The CPP Fund ended its second quarter of fiscal 2019 on September 30, 2018, with net assets of $368.3 billion, compared to $366.6 billion at the end of the previous quarter. The $1.7 billion increase in assets for the quarter consisted of $2.3 billion in net income after all CPPIB costs, less $0.6 billion in net Canada Pension Plan (CPP) cash outflows. The CPP Fund routinely receives more CPP contributions than required to pay benefits during the first part of the calendar year, partially offset by benefit payments exceeding contributions in the final months. On an annual basis, contributions to the Fund continue to exceed outflows.
The Investment Portfolio achieved 10-year and five-year annualized net nominal returns of 9.1% and 12.1%, respectively, and 0.6% for the quarter. These returns are net of all CPPIB costs.
For the six-month fiscal year-to-date period, the CPP Fund increased by $12.2 billion consisting of $8.9 billion in net income after all CPPIB costs, plus $3.3 billion in net CPP cash inflows. The portfolio delivered a net return of 2.5% after all CPPIB costs during the period.
“While returns were relatively flat in the second quarter, our teams performed well against our underlying investment strategy,” says Mark Machin, President & Chief Executive Officer, Canada Pension Plan Investment Board (CPPIB). “Foreign currency exchange-rate declines relative to the Canadian dollar were the Fund’s main headwind during the quarter, offsetting strong local currency performance.”
CPPIB’s investment teams developed new partnerships around the world and executed large-scale transactions in the quarter, which further positioned the portfolio to meet long-term objectives. “Especially during times of increased market volatility, CPPIB has taken advantage of the Fund’s long horizon and pursued diverse and innovative investment approaches, just as our teams did during the quarter,” added Mr. Machin.
CPPIB also continued to advance its preparations to accept, invest and manage the Additional CPP contributions set to begin flowing into the Fund on January 1, 2019which is the beginning of our fourth quarter. These added contributions will have the full advantage of CPPIB’s investment structure and risk governance framework CPPIB will report on the performance of the combined total Fund, as well as the Base CPP and Additional CPP components, in our news release and annual report at the end of this fiscal year.
CPPIB continues to build a portfolio designed to achieve a maximum rate of return at an appropriate risk level, having regard to our exceptionally long investment horizon. Accordingly, long-term results are a more appropriate measure of CPPIB’s investment performance than returns in any given quarter or single fiscal year.
Every three years, the Office of the Chief Actuary of Canada conducts an independent review of the sustainability of the CPP over the next 75 years. In the most recent triennial review released in September 2016, the Chief Actuary of Canada reaffirmed that, as at December 31, 2015, the CPP remains sustainable at the current contribution rate of 9.9% throughout the forward-looking 75-year period covered by the actuarial report. The Chief Actuary’s projections are based on the assumption that the Fund’s prospective real rate of return, which takes into account the impact of inflation, is expected to average 3.9% over the 75-year period.
The Chief Actuary’s report confirmed that the Fund’s performance was ahead of projections for the 2013-2015 period as investment income was 248%, or $70 billion, higher than anticipated.
Globe Newswire: 13:00 GMT Friday 9th November 2018
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