CPP assets soar on stock rally
Upward momentum from stock markets helped push the Canada Pension Plan Investment Board's assets up by almost $10 billion in the quarter that ended in September, the national pension plan said Wednesday.
The CPP ended its fiscal second quarter with $138.6 billion in assets, well above the $129.7 billion it had at the end of the previous quarter and the $123.8 billion in assets it held during the same period a year ago.
The CPPIB manages the national pension plan for 17 million Canadian contributors and beneficiaries across the country. The chief actuary of Canada has declared the fund actuarially sound for at least the next 75 years. Contributions are expected to exceed annual benefits paid until 2021.
The $8.9 billion quarterly increase was the result of $8.4 billion in profits — a 6.6 per cent return on investment — plus $500 million in new contributions from members.
"All major equity market indices realized gains this quarter, in particular U.S. markets, which posted their best September results in 70 years," CEO David Denison said.
In recent months, the CPP has moved to acquire a number of global infrastructure assets. It likes those investment opportunities because they have a predictable cash flow, offer inflation protection and are easy to maintain.
Earlier this month, it announced it is joining with a partner to acquire a regional shopping centre near Cologne, Germany, for the equivalent of $223.4 million.
It paid $237 million for a 45 per cent stake in two Washington, D.C., properties last month.
It also plans to acquire a 30 per cent stake in Ontario's busy 407 Express Toll Highway indirectly through a $3.2-billion proposed takeover of Australian toll operator Intoll Group, formerly Macquarie Infrastructure Group. The CPPIB is also acquiring an additional 10 per cent stake from the highway's major shareholder, Cintra, for $894 million.
With files from The Canadian Press