International equity markets boost CPPIB fund by nearly $9 billion in fourth quarter
The Canada Pension Plan Investment Board saw a net increase of $8.9 billion in assets during the final quarter of 2017, bringing its total to $337.1 billion.
“Exceptional performance across public equity markets internationally during the third quarter helped bring the CPP fund to a new high in line with our dual focus on total, as well as value-added, returns,” said Mark Machin, president and chief executive officer of the CPPIB, in a press release.
“Our emphasis on diversification contemplates the role private assets play in strengthening the resiliency of portfolios over extended durations. To create value-building growth over multiple generations of beneficiaries, our investment portfolio is designed to benefit from, yet not mirror, public markets even during periods of rapid market growth.”
During the last quarter of the year, the fund achieved a four per cent net gain, with a 10-year annualized return of 7.4 per cent. “Extreme market movements resulting in short-term upswings and declines, as we’ve seen recently, illustrate why we emphasize 10-year returns, which is well above the chief actuary’s assumption to help ensure the sustainability of the fund,” said Machin.
At the end of 2017, the CPPIB’s asset mix stood at 40.5 per cent public equity, with non-Canadian holdings making up the largest portion at 30.5 per cent. The 19.4 per cent of the mix held in private equity was mostly in foreign investments. The fund also holds 25.6 per cent of its assets in government bonds and six per cent in credit investments. Of real assets, 12.7 per cent was in real estate and 7.5 per cent was in infrastructure at the end of 2017.
Investment highlights for the final quarter of the year include:
- The acquisition of the south portion of New York City’s St. John’s Terminal site, alongside Oxford Properties Group, for US$700 million;
- The partnership agreement with Thomson Reuters for its financial and risk business;
- The agreement with Longfor Properties Co. Ltd. for real estate development projects in China for a commitment of $800 million; and
- The US$144-million investment in Indian renewable energy developer ReNew Power Ventures Pvt. Ltd.
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