Newspaper article The Canadian Press

Canada Pension Plan Fund Assets Grow to Record $161.6B, Diverts Cash from Stocks: CPP Assets Hit Record $161.6 Billion

Newspaper article The Canadian Press

Canada Pension Plan Fund Assets Grow to Record $161.6B, Diverts Cash from Stocks: CPP Assets Hit Record $161.6 Billion

Article excerpt

TORONTO - The Canada Pension Plan Fund hit a record high value of $161.6 billion last year, adding more than $13 billion to its assets as its investment manager diverted money from battered stock markets to ramp up its stake in private equity.

The $161.6 billion value of its assets at the end of its fiscal year pushed it past the nearly $159 billion worth of assets reported by the Caisse de depot et placement du Quebec at its fiscal year-end Dec. 31. That makes the Canada Pension Plan the biggest pension fund in Canada, based on latest reported results.

The CPPIB saw a 6.6 per cent rate of return in fiscal 2012, despite declines on the Toronto Stock Exchange and other public markets.

A big driver of growth in challenging market conditions lays in the CPP Investment Board's strategy of taking money out of public markets to capitalize on distressed assets in the private sector, including holdings in infrastructure and real estate, opportunities that are less tied to macro economic factors.

"We actually fund some of those investments by selling, reducing our public equities," said CPP Investment Board president and CEO David Denison.

"But I would say that when the market is struggling, versus buoyant, that's often when you can see real estate investments come to market, it's often when you see private debt opportunities also arise."

Total portfolio returns outperformed the CPP Reference Portfolio -- based on passive market investments -- by adding $3.1 billion to the fund.

Investments in public emerging market equities fell by 7.9 per cent compared to 11.2 per cent growth in the prior year. Private investments were up 6.6 per cent, compared to 17.1 per cent in 2011.

The strategy of diversification has helped the long-term investor -- which invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries -- to buffer against dramatic fluctuations in global capital markets, said Denison.

"It's always part of our conscious strategy to be looking in the private markets for better risk adjusted return opportunities than the public markets give us," he said.

"Our expectation going into fiscal 2013 is that we'll continue to see some really attractive private asset categories that will give us a better return profile than public equities will. …

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