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For the five-year period ended June 30, 2010, the CPP Fund has generated an annualized investment rate of return of 3 percent; for the 10-year period the Fund has generated an annualized rate of return of 5.1 percent.
Toronto (11 August 2010) – The Canadian Pension Plan (CPP) Fund ended the first quarter of fiscal 2011 on June 30, 2010 at $129.7 billion compared to $127.6 billion at the end of fiscal 2010, on March 31, 2010.
The $2.1 billion increase in assets after operating expenses this quarter was the result of contributions, which totaled $3.8 billion in the first quarter, offset by an investment return of negative 1.3 percent, or negative $1.7 billion. The investment result was primarily due to the decline in public equity markets, and this was reflected in CPPIB’s public markets investment portfolio.
As global financial stimulus efforts tapered off and concern about economic conditions in Europe increased, many public equity market indices dropped significantly in the three-month period ended June 30, 2010. For example, the S&P 500 fell by 11.9 percent, and the TSX was down 6.2 percent.
“This was a challenging quarter for public equity markets around the world, many of which experienced double-digit declines,” said David Denison, President and CEO, CPP Investment Board. “This was also a quarter where the CPP Fund benefited from diversification into private equity, real estate, infrastructure and private debt holdings.”
For the five-year period ended June 30, 2010, the CPP Fund has generated an annualized investment rate of return of 3 percent, or $13.8 billion of investment income. For the 10-year period ended June 30, 2010, the Fund has generated $36.6 billion in investment income, reflecting an annualized rate of return of 5.1 percent.
Long-term sustainability
The CPP Fund is sustainable for the next 75 years, according to the most recent projection by the Chief Actuary of Canada. The report indicates that CPP contributions are expected to exceed annual benefits paid until 2021, providing an 11-year period before a portion of the investment income from the CPPIB will be needed to help pay pensions.
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