CPP Investments Net Assets Total $523 Billion at First Quarter Fiscal 2023 – CPP Investments

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First-Quarter Performance:
TORONTO, ON (August 11, 2022): Canada Pension Plan Investment Board (CPP Investments) ended its first quarter of fiscal 2023 on June 30, 2022, with net assets of $523 billion, compared to $539 billion at the end of the previous quarter.
The $16 billion decrease in net assets for the quarter consisted of a net loss of $23 billion and $7 billion in net transfers from the Canada Pension Plan (CPP).
In the five-year period up to and including the first quarter of fiscal 2023, CPP Investments has contributed $171 billion in cumulative net income to the Fund, and over a 10-year period it contributed $305 billion to the Fund on a net basis.
The Fund, which includes the combination of the base CPP and additional CPP accounts, achieved five-year and 10-year annualized net returns of 8.7% and 10.3%, respectively. For the quarter, the Fund returned negative 4.2%, outperforming returns for leading global indices that declined, on average, well into double-digit territory.
“Financial markets experienced the most challenging first six months of the year in the last half century, and the Fund’s first fiscal quarter was not immune to such widespread decline. However, our active management strategy – diversified across asset classes and geographies – moderated the impact on the Fund, preserving investment value,” said John Graham, President & CEO. “The uncertain business and investment conditions we noted in the previous quarter continue, and we expect to see this turbulence persist throughout the fiscal year. Our resilient portfolio was designed to create value over the very long term as demonstrated by our continued strong 10-year net return, even as we expect to experience double-digit percentage losses one year in twenty.”
The Fund’s quarterly results were driven by losses in public equity strategies, due to the broad decline in global equity markets. Investments in private equity, credit and real estate contributed modestly to the losses this quarter. Gains by external portfolio managers, quantitative trading strategies and investments in energy and infrastructure contributed positively to this quarter’s results. The Fund also experienced losses in fixed income due to higher interest rates imposed by central banks to fight inflation. These losses were offset by foreign exchange gains of $3.1 billion as the Canadian dollar weakened against the U.S. dollar.
“We know Canadians are concerned about the impact of market volatility on their retirement plans, and they can take comfort in the fact that the Fund is expected to deliver solid performance over the long term, even with periodic turbulence such as we are witnessing this year,” Graham said. “Looking ahead, I remain cautiously optimistic – cautious on the markets but optimistic and confident about CPP Investments’ ability to navigate markets and add value in the best interests of 21 million CPP contributors and beneficiaries.”
Performance of the Base and Additional CPP Accounts
The base CPP account ended its first quarter of fiscal 2023 on June 30, 2022 with net assets of $509 billion, compared to $527 billion at the end of the previous quarter. The $18 billion decrease in assets consisted of $22 billion in net losses and $4 billion in net transfers from CPP. The base CPP account achieved a negative 4.2% net return for the quarter, and a five-year annualized return of 8.7%.
The additional CPP account ended its first quarter of fiscal 2023 on June 30, 2022 with net assets of $14 billion, compared to $12 billion at the end of the previous quarter. The $2 billion increase in assets consisted of $647 million in net losses and $3 billion in net transfers from CPP. The additional CPP account achieved a negative 4.8% net return for the quarter, and an annualized return of 5.3% since inception in 2019.
The additional CPP was designed with a different legislative funding profile and contribution rate compared to the base CPP. Given the differences in their design, the additional CPP has had a different market risk target and investment profile since its inception in 2019. As a result of these differences, we expect the performance of the additional CPP to generally differ from that of the base CPP.
Furthermore, due to the differences in their net contribution profiles, the assets in the additional CPP account are also expected to grow at a much faster rate than those in the base CPP account.
net Nominal Q1f23 En
Long-Term Sustainability
Every three years, the Office of the Chief Actuary of Canada (OCA) conducts an independent review on the sustainability of the CPP over the long term. In the most recent triennial review published in December 2019, the Chief Actuary reaffirmed that, as at December 31, 2018, both the base and additional CPP continue to be sustainable over the 75-year projection period at the legislated contribution rates.
The Chief Actuary’s projections are based on the assumption that, over the 75 years following 2018, the base CPP account will earn an average annual rate of return of 3.95% above the rate of Canadian consumer price inflation. The corresponding assumption is that the additional CPP account will earn an average annual real rate of return of 3.38%.
net Real Returns Q1f23 En
CPP Investments continues to build a portfolio designed to achieve a maximum rate of return without undue risk of loss, while considering the factors that may affect the funding of the CPP and its ability to pay current benefits. The CPP is designed to serve today’s contributors and beneficiaries while looking ahead to future decades and across multiple generations. Accordingly, long-term results are a more appropriate measure of CPP Investments’ performance and plan sustainability.
Operational Highlights
Corporate developments
Executive announcements
First-Quarter Investment Highlights
Credit Investments
Private Equity
Real Assets
Asset Dispositions
Transaction Highlights Following the Quarter
About CPP Investments
Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the 21 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At June 30, 2022, the Fund totalled $523 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook or Twitter.
Disclaimer
Certain statements included in this press release constitute “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United States safe harbors. All such forward-looking statements are made and disclosed in reliance upon the safe harbor provisions of applicable United States securities laws. Forward-looking information and statements include all information and statements regarding CPP Investments’ intentions, plans, expectations, beliefs, objectives, future performance, and strategy, as well as any other information or statements that relate to future events or circumstances and which do not directly and exclusively relate to historical facts. Forward-looking information and statements often but not always use words such as “trend,” “potential,” “opportunity,” “believe,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions. The forward-looking information and statements are not historical facts but reflect CPP Investments’ current expectations regarding future results or events. The forward-looking information and statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including available investment income, intended acquisitions, regulatory and other approvals and general investment conditions. Although CPP Investments believes that the assumptions inherent in the forward-looking information and statements are reasonable, such statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. CPP Investments does not undertake to publicly update such statements to reflect new information, future events, and changes in circumstances or for any other reason. The information contained on CPP Investments’ website, LinkedIn, Facebook and Twitter are not a part of this press release. CPP INVESTMENTS, INVESTISSEMENTS RPC, Canada Pension Plan Investment Board, L’OFFICE D’INVESTISSEMENT DU RPC, CPPIB and other names, phrases, logos, icons, graphics, images, designs or other content used throughout the press release may be trade names, registered trademarks, unregistered trademarks, or other intellectual property of Canada Pension Plan Investment Board, and are used by Canada Pension Plan Investment Board and/or its affiliates under license. All rights reserved.
All figures in Canadian dollars unless otherwise noted.
Frank Switzer
Public Affairs & Communications
fswitzer@cppib.com
Tel: +1 416 523 8039
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