Canada Pension Plan Investment Board scored across-the-board investment gains in its most recent quarter, matching returns from a benchmark that it uses to evaluate its performance.
CPPIB, the investment manager for the Canada Pension Plan, reported a 5-per-cent return, after investment costs, for the three months ended Sept. 30. CPPIB’s “reference portfolio” of global stocks and bonds, which it says represents a passive approach to investing, returned just over 5 per cent in the quarter in Canadian dollars.
CPPIB’s broad blend of investments – including stocks, bonds, real estate, private equity and infrastructure – helped as stock markets crashed in February and March owing to fears of the economic impact of COVID-19. CPPIB posted a loss of just 3.7 per cent in the quarter ended March 31 as global stock markets saw losses of 20 per cent or more.
When equities roared back to life in the June 30 quarter, however, CPPIB lagged badly with a 5.6-per-cent return – a dozen percentage points behind many major stock indexes. The results for the quarter ended Sept. 30, announced on Monday, erased the wild dichotomies.
CPPIB said the fund’s 10-year and five-year annualized returns, net of costs, are 10.5 per cent and 9.5 per cent, respectively. CPPIB closed the quarter with $456.7-billion in assets.
Chief executive Mark Machin cited gains in public and private equity holdings as contributing to the latest quarter’s returns, noting they were tempered when stock markets retracted in September. Mr. Machin said in a statement that CPPIB is “cautious about the months ahead given the highly uncertain economic fallout of COVID-19 and its effect on markets.”
Separately, CPPIB filed documents with U.S. securities regulators showing it cut its holdings in Shopify Inc. by 74 per cent, leaving it with 99,978 shares, valued at US$102-million, according to an analysis by Bloomberg. (All numbers in the filings are as of Sept. 30.)
The board also cut holdings in the pharmaceutical and health sector, with its Amgen Inc. position down 99 per cent to US$1.99-million, AbbVie Inc. down 60 per cent to US$90.1-million and Johnson & Johnson down 33 per cent to US$392.1-million.
CPPIB loaded up on shares of Netflix Inc., adding 625,621 shares to reach a total of 693,575 shares, valued at US$346.8-million. The board also added significantly to its holdings of Mastercard Inc., Amazon.com Inc. and Akamai Technologies Inc.
Its top holdings on U.S. exchanges are Alibaba (US$4.68-billion); Mastercard (US$1.79-billion) IHS Markit Ltd. (US$1.73-billion); Alphabet Inc. ($1.67-billion) and Facebook Inc. (US$1.15-billion). All told, Bloomberg said, CPPIB had US$53.1-billion of U.S.-listed public equities at Sept. 30.
In CPPIB’s own recap of the quarter, it noted a US$50-million investment in Perfect Day Inc., an animal-free dairy maker, its first in its Climate Change Opportunities strategy. It said it has made a commitment to acquire up to US$1-billion of home improvement consumer loans from ECN Capital Corp. The board’s private equity group invested in information technology, software and education companies in the quarter.
CPPIB also noted it lost its investment in Neiman Marcus Group LTD LLC when the luxury retailer exited Chapter 11 proceedings in U.S. Bankruptcy Court, but continued to be a majority investor in Mytheresa GmbH, an online ultraluxury fashion retailer. Bloomberg reported last week that Mytheresa is exploring a U.S. initial public offering with a valuation of about US$1-billion to US$1.5-billion, which would blunt the Neiman Marcus losses.
CPPIB also said Monday that Frank Ieraci will become a senior managing director and its global head of active equities. He was previously head of research and portfolio strategy. He replaces Deborah Orida, who moved over to become global head of real assets earlier this year.
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