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CPPIB annual net assets rise even as virus erodes returns

Published 2020-05-26, 08:20 a/m
Updated 2020-05-26, 10:54 a/m
© Reuters.

TORONTO (Reuters) - The Canada Pension Plan Investment Board (CPPIB) reported a 4.5% increase in net assets at the end of fiscal 2020 from a year earlier, but the net annual return fell.

Canada's biggest pension plan said steady gains from global active investment programs over the first three quarters of the fiscal year ended March 31 helped its fund performance.

Fixed-income investments performed well in the fourth quarter, driven by investors' search for safer investments and the expectation for lower interest rates across major markets, it said.

"However, the steep decline in global equity markets in March 2020 had a significant effect on results as the financial impacts of the COVID-19 pandemic tore through virtually every economy," the CPPIB said.

Net annual return fell to 3.1% from 8.9% in 2019.

The investments division of CPPIB contributed an annualized C$123.4 billion in net income to the fund after costs, over a five-year period.

The contribution for fiscal 2020 was C$12.1 billion.

The CPPIB closed the fiscal year with net assets of C$409.6 billion, compared with C$392 billion a year earlier.

CPPIB's energy investments posted returns of -23.4% during the year, compared with -0.6% a year ago, hit by the global slump in oil prices.

Chief Executive Officer Mark Machin, however, said the fund's long-term returns continue to secure Canadians' retirement benefits.

The CPPIB has diversified to become one of the world's biggest investors in infrastructure, real estate and private equity to reduce its reliance on volatile stock markets and low-yielding government bonds.

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Investments in private equities rose to 24.7% of the total asset mix in the fiscal year 2020 from 23.7% last year. Spending on public equities fell to 28.2%.

Investments in government bonds increased from a year earlier.

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