The Canada Pension Plan Fund said Thursday its assets reached $123.8 billion at the end of its second quarter, a more than six per cent increase in the three months to September.

The fund's investment arm —the CPP Investment Board— said assets grew by $7.2 billion because of revived stock markets. The CPP Fund has grown $18.3 billion in the six months from April to September.

Returns at Quebec's pension fund will trail other major pension funds this year. (Canadian Press)

The story was different at Quebec's public pension fund, the Caisse de dépôt et placement du Québec.

Quebec Finance Minister Raymond Bachand has told the French arm of the CBC, Radio-Canada, that Quebec will trail behind other major pension funds this year.

"The Caisse was underweight in stocks, and given that stock markets have rebounded considerably, the Caisse's results will certainly not exceed those of competing pension funds or industry peers," he said.

Montreal's La Presse has reported the Caisse will earn five to six per cent on its investments for 2009, half the average for Canadian pension funds. The article did not identify its sources.

A spokesperson for the Caisse denied the report, but declined to divulge its yield up until Sept. 30.

Caisse lost $40B last year

The Caisse reported a $40-billion loss last year, a drop of 25 per cent, compared to an average return of minus 18 per cent for its rivals.

It also made major changes to its management and did not hire a new chief investment officer until July of this year, months after the stock market bounce-back had already begun.

The most recent report of the CPP's chief actuary, done in 2007, said the public pension plan is sustainable throughout its projected 75-year time frame, with a 4.2 per cent real rate of return. The next report isn't expected until 2010.

"Although our four-year results are currently below this long-term rate of return, we remain confident the CPP Fund will generate returns in excess of this 4.2 per cent threshold over its long investment horizon," president David Denison said in a statement.

The fund is now 55.8 per cent in stocks and 30.7 per cent in bonds and short-term debt.

The board is responsible for managing the assets of the fund to pay out present and future benefits to 17 million Canadians.