Canada Pension Plan Investments Lose 0.7% in 1st Half of Fiscal 2024

The Canada Pension Plan Investment Board reported a 0.7% investment loss for the first half of fiscal 2024 after eking out a 0.1% return for the second quarter that ended Sept. 30. The pension giant’s asset value nudged up to C$576 billion ($418.1 billion) from C$575 billion at the end of the first quarter.

The pension fund also reported a 10-year annualized net return of 9.6% and a five-year annualized net return of 7.3%. According to the board statement, during the 10-year period up to the end of the second quarter of fiscal 2024, it has earned approximately C$311 billion in cumulative net income.

Despite registering an investment loss for the first half of the fiscal year, the pension fund’s asset value still grew by C$6 billion, as C$10 billion in net CPPIB contributions offset a net loss of C$4 billion. The roughly C$1 billion increase in net assets for the second quarter was the result of C$488 million in net income and C$700 million in net transfers from the Canada Pension Plan.

“Our diversified portfolio remains resilient, and while we expect these challenging investing conditions to persist for the near term, we are confident that our active management strategy will continue to deliver positive long-term results for CPP contributors and beneficiaries,” CPPIB President and CEO John Graham said in a statement.

Within its investment portfolio, the pension fund reported a positive performance among its credit and private equity investments, as well as among U.S. dollar-denominated assets, which benefited from the U.S. dollar’s relative strength as compared with the Canadian dollar. However, returns were offset by fixed-income losses that the board attributed to continued high interest rates and a weak public equities performance as global markets slid.

Earlier this week, the CPPIB also completed the sale of a portfolio of 20 limited partnership fund interests in mostly North American and European buyout funds. The pension fund sold the portfolio, which represents commitments made over approximately 20 years, to Paris-based private investment house Ardian for net proceeds of C$2 billion.

“This transaction was undertaken as part of our active portfolio management activities,” Suyi Kim, CPPIB’s global head of private equity, said in a statement. “As a systematic buyer and seller in the secondaries market, we see this sale as an attractive opportunity to optimize the construction of our portfolio and to allow us to further support future investments.”

Meanwhile subsidiary CPPIB Renewables Europe agreed last week to sell its 24.5% stake in two German offshore wind assets to a subsidiary of Canadian pipeline and energy company Enbridge Inc. for net proceeds of C$374 million.

The wind farms are located off Germany’s North Sea coast and began operating in 2019 and 2020. They produce a combined 2.5 million megawatt hours of electricity and provide energy to more than 700,000 homes. CPP Investments acquired the assets as development projects from Enbridge in 2018.

“The European offshore wind market has continued to mature, and we’ve realized solid returns during our ownership,” Bill Rogers, CPPIB’s global head of sustainable energies, said in a statement. “The renewable energy sector, and offshore wind specifically, remains an important investment strategy for us, and we will continue to seek opportunities in the sector that best fit the scale and flexibility of our capital.”

The deal is expected to be completed by the end of 2023.