The Canada Pension Plan fund reported a 3.3-per-cent return in the three months ended Dec. 31, saying its globally diverse portfolio of assets helped insulate it from the impact of falling oil prices late last year.
The Canada Pension Plan Investment Board, which manages CPP's investment portfolio, reported Friday that the fund finished its fiscal third quarter, ended Dec. 31, with total assets of $238.8-billion, up from $234.4-billion at the end of the prior quarter.
CPPIB chief executive officer Mark Wiseman said the fund benefited in the quarter by gains in public stock markets internationally, offsetting some of the turmoil in Canadian markets from tumbling oil prices.
Mr. Wiseman said the steep decline in oil is hitting the Canadian economy but is expected spur economic growth in other countries where CPPIB has major investments, including the United States and developing countries like India.
"When we talk about the all-weather portfolio we've constructed at CPPIB with the diversification, this is exactly the circumstance where we fare quite well – I'd suggest substantially better than the Canadian stock market indices, which are much more heavily weighted than we would be to movements in oil prices," Mr. Wiseman said in an interview Friday.
Mr. Wiseman said CPPIB is looking at buying opportunities while oil companies are discounted due to low prices.
"In the long run, we think oil will be more highly valued than it is today as markets readjust and this supply-demand imbalance comes back to equilibrium. This is an opportunity for us as a long-term investor to take advantage of market dislocation."
The fund reported Friday that the $4.4-billion increase in assets for the quarter included $7.3-billion in net investment income less $2.9-billion in cash outflows to pay retirement benefits.
CPPIB said its assets climbed by $19.7-billion in the first nine months, earning a return of 8.4 per cent for the nine-month period.
Mr. Wiseman said the fund was not materially helped in its most recent quarter by the fall in the Canadian dollar against the U.S. dollar because the loonie appreciated against other global currencies, so there was little net impact.
However, he said it is likely the Canadian dollar's further fall since the beginning of January will be beneficial for the CPP fund in the final fiscal quarter of the year, ended March 31. About half of CPPIB's total portfolio is exposed to foreign currencies, he said.
"You would expect to see more of the positive accounting impact on the CPP reserve fund in our fourth quarter than would have been in the quarter we're reporting on," he said.
CPP had 49.5 per cent of its assets invested in equities as of Dec. 31, with 30.9 per cent held in publicly traded stocks and 18.6 per cent held in private company ownership. CPPIB said 34 per cent of its assets are in fixed income investments such as bonds, while 16.5 per cent are in real estate and infrastructure holdings.
Canada's Chief Actuary has estimated that the Canada Pension Fund needs to earn a long-term real rate of return of 4 per cent annually, after inflation, to sustain its payouts for the next 75 years at current contribution levels. The fund's average annual 5.5-per-cent real rate over return over the past 10 years is above the required threshold, suggesting CPP will be able to cover its anticipated costs.