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CPPIB CEO Mark Machin said it posted 'solid' net income across the globe, but its results were dampened by the strengthening Canadian dollar.Adrian Wyld/The Canadian Press

Canada Pension Plan Investment Board eked out a 1.1-per-cent return in the quarter ended June 30, but it was enough to allow it to report for the first time that the country’s pension fund had more than $400-billion in assets.

CPPIB CEO Mark Machin, in a prepared statement, said it posted “solid” net income across the globe, but its results were dampened by the strengthening Canadian dollar. Just 16 per cent of the Canada Pension Plan’s assets are held here, but it reports its results in Canadian dollars.

The Canadian dollar rose about 2 per cent in the quarter versus the U.S. dollar.

CPP’s gain of $8.6-billion in assets from the March 31 quarter was a mix of $4.1-billion in net income and $4.5-billion in contributions from Canadian workers.

Canada Pension Plan, founded in 1966, is the primary retirement-security program for working Canadians. The government created CPPIB in 1999 to professionally manage the Plan’s money. The past two decades have seen a shift first from bonds to stocks, then to assets like real estate, infrastructure and private equity. The government projects the CPP Fund will grow to $545-billion in assets by 2025 and $1.5-trillion in assets by 2040.

CPP said its five-year and 10-year returns through June 30 were both an annualized 10.5 per cent. All return percentages are net of costs, CPPIB said. Because the CPP must serve plan members for decades to come, CPPIB says long-term results “are a more appropriate measure of CPPIB’s investment performance compared to quarterly or annual cycles.”

CPPIB does not publicly compare its quarterly results to its benchmark, which at the end of its fiscal year in March was based on a blend of the S&P Global LargeMidCap Index (85 per cent) and an index of Canadian government bonds (15 per cent). The S&P index returned 2.87 per cent in the quarter.

While CPPIB did not break down exact returns by asset class, it said its department that managed its bonds was the top contributor, with private equity and its active equities departments also delivering positive results, “supported by the improved sentiment in global equity markets.” About one-third of the fund’s assets are in stocks traded on the public markets. A quarter of the portfolio is in private equity, which is the ownership of private companies, often aided by substantial borrowing.

CPPIB also said it opened a San Francisco office in the quarter to build relationships with tech investors. It’s the ninth global location for CPPIB and the second in the United States, after the New York office that opened in 2014.

Major deals in the quarter included:

  • Forming Maple Power, a 50/50 joint venture with Enbridge Inc. to invest in offshore wind projects in Europe. The venture follows CPPIB’s initial deal to purchase renewable-power assets from Enbridge in 2018.
  • Joining the founding family behind Lego and a unit of the Blackstone Group LP to purchase Merlin Entertainments PLC in a take-private deal that valued it at £4.65-billion ($7.7-billion). Blackstone and CPPIB will own half the company.
  • Spending $200-million to acquire a 7.1-per-cent stake in Richmond, B.C.-based Premium Brands Holdings Corp., the company that supplies Starbucks Corp. with its popular breakfast sandwiches.

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