Skip to main content

Canada Pension Plan Investment Board reported a 1.9-per-cent return for the quarter ended Dec. 31, trailing the broader markets and the benchmark measure it uses to evaluate its annual returns.

The latest quarterly return fell short of the S&P Global LargeMidCap Index’s Canadian-dollar return of 4.4 per cent in the quarter. When CPPIB releases annual results, it uses that stock index for 85 per cent of its “reference portfolio,” a comparison with passive investing that demonstrates how much value it has added through its investing efforts. (Canadian bonds, as measured by the FTSE Canada All Government Bond Index, make up the rest.)

CPPIB’s reference portfolio had a return of roughly 3.7 per cent in the quarter, The Globe and Mail calculates.

CPP and OAS: How the financial supports affect your retirement plans

While CPPIB reports quarterly, it only uses the reference portfolio as a comparison for annual returns. Instead, it points to its multigenerational mandate and emphasizes the long-term returns.

CPPIB said Thursday its annualized 10-year return was 10 per cent and its five-year return was 8.1 per cent. The Dec. 31 quarter is CPPIB’s third fiscal quarter; it will wrap up its year March 31.

CPPIB closed the quarter with assets of $536-billion, compared with $529-billion at the end of the previous quarter. The $7-billion increase consisted of $10-billion in investment earnings less $3-billion in net outflows from the Canada Pension Plan, as payments to pensioners exceeded contributions.

All CPPIB returns are reported after costs.

The Canada Pension Plan, founded in 1966, is the primary national retirement program for working Canadians. The government created CPPIB in 1999 to professionally manage the plan’s money. Over time, CPPIB has embraced active management and its blend of stocks, bonds, real estate, infrastructure, private equity and other specialized investments has outperformed public markets and its reference portfolio.

CPPIB does not release quarterly investment returns for each investment segment, but offered general comments, saying the rebound in public equity markets in the quarter was offset by private asset values that “remained relatively flat.” Private assets include real estate and infrastructure holdings.

In a statement, CPPIB chief executive officer John Graham said “despite the enduring global economic headwinds, our active management strategy enabled us to outperform markets over the first nine months of our fiscal year.”

For the nine-month fiscal period, the fund reported a portfolio loss of 2.2 per cent.

In a recent interview with The Globe and Mail, Mr. Graham said he sees CPPIB at the beginning of “the decade of alpha” – a period when active investors with the luxury to pick and choose between countries, companies and assets should be able to beat benchmarks and stand out.

“Just harvesting market returns has been a very successful strategy over the past 20 years because of these tailwinds. And right now, it is about picking your spots. It’s about picking the right geographies, the right asset classes and the right securities.”