Canada's national pension plan had $328.2 billion in assets at the end of September, having posted a net return of 0.7 per cent from the end of June.
The Canada Pension Plan Investment Board, which invests the funds not needed to pay beneficiaries of the Canada Pension Plan, reported quarterly profits on Friday and they showed an increase in $1.7 billion compared with the previous quarter.
The fund actually earned $2.3 billion from its investments over the quarter, but paid out $600 million more in benefits than contributions it took in from members.
It's common for the fund to pay out more in benefits than it takes in contributions later in the year, after contributors max out their annual dues, which leads to a temporary outflow.
"On an annual basis, contributions to the fund continue to exceed outflows," the CPPIB said.
The gains came from all types of investments, including stocks, bonds, private equity and infrastructure. "It was a pretty steady-as-she-goes quarter," CEO Mark Machin told CBC News in an interview.
One drag on returns, however, was the rising Canadian dollar, which appreciated by 6.6 per cent versus its American counterpart.
Since the CPP has such a long investment horizon, it does not implement a hedging strategy. So while the loonie was a drag on returns this quarter, when it depreciates it will temporarily boost the fund's returns. "The key is the long term," Machin said. "We want to be there for people in their retirement."
Because of its long-term horizon, the fund tends to be drawn to long-term assets such as infrastructure, and Machin said the fund has had some difficulty in that asset class of late because so many deep-pocketed pension funds around the world are interested in the same asset class.
"There's so much money looking at infrastructure," Machin said, "that it pushed prices up to a very high level."
"We found ourselves being outbid."
Nonetheless, Machin pointed to two major investments in the space in the past quarter, including a $750 million investment in Calpine Corporation, one of the largest independent power generators in the United States, and a 20 per cent stake in Gas Natural Fenosa, the largest gas distribution network in Spain.
On a rolling annual basis, the fund has returned 6.9 per cent over the past decade. Over the past five years, the fund has gained an average of 11.8 per cent per year.
In 2014, the Chief Actuary of Canada determined that the fund is actuarially sound for the next 75 years, which means it will be able to pay out its obligations on its current path for at least that long.