Canada Pension Plan Investment Board earned a 5.4-per-cent return in its second fiscal quarter, driven by its stock portfolio and a strengthening U.S. dollar.
The country’s largest pension fund manager had $777.5-billion in assets as of Sept. 30, up from $731.7-billion in the previous quarter.
The fund returned $39.8-billion of new income in the quarter, as investors continue to be bullish about artificial intelligence, central banks have cut their benchmark interest rates, and corporate earnings have mostly held up well despite tariffs and trade tensions. A stronger U.S. dollar relative to the loonie also helped boost results, as CPPIB ultimately pays pensions in Canadian dollars.
CPPIB also had a $6-billion surplus in transfers from the Canada Pension Plan, as it collected more in contributions than it paid out in benefits.
Over 10 years, its investments have gained 8.8 per cent annually, on average.
“Returns from public equities drove performance this quarter,” CPPIB said in a news release.
But chief executive officer John Graham cautioned in a statement that exuberance among stock market investors means that “many markets are pricing assets at robust levels.”
“In this environment, we remain disciplined in line with our purpose to help pay pensions not only today, but for many decades to come, through many different economic cycles,” he said.
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The fund manager said investments in private assets – particularly credit, private equity, infrastructure and energy - “also performed well” in the quarter.
CPPIB made several credit investments in the quarter, including two in Canada: a US$100-million commitment to a preferred equity issuance by Toronto-based CI Financial, and $225-million toward a loan to expand an AI-focused data centre in Cambridge, Ont.
After the quarter ended, CPPIB also disclosed that it had committed an additional US$87-million to FNZ Group, as part of a US$650-million equity funding round by the New Zealand-based financial software provider, despite a lawsuit from minority shareholders alleging the company unfairly diluted their shares in previous funding rounds.