Public Equities, AI Investor Optimism Fuel CPP Investments’ 5.4% Q2 Return
The robust returns raised the pension giant’s asset value to C$777.5 billion.
Buoyed by public equities’ strong performance and “investor optimism” about artificial intelligence, CPP Investments reported a 5.4% return for its fiscal second quarter, raising its asset value to C$777.5 billion ($554.2 billion) from C$731.7 billion at the end of the first quarter.
Net income accounted for C$39.8 billion of the C$45.8 billion increase, while the remaining C$6.0 billion came from net transfers from the Canada Pension Plan.
The pension giant does not include performance by asset class or allocation on a quarterly basis, but it credited public equities as the main driver of the results. According to the Canada Pension Plan Investment Board, the sharp rise in equities during the quarter reflected “investor optimism around artificial intelligence, resilient corporate earnings and expectations of continued monetary easing in developed markets.”
The CPPIB’s credit, private equity, infrastructure and energy investments, within its real assets portfolio, also had a good quarter, while a strong U.S. dollar and other exchange movements also contributed to the results, the pension fund reported.
“CPP Investments delivered good results this quarter,” John Graham, CPP Investments’ president and chief executive officer, said in a statement. “At the same time, 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.”
The base CPP account—the original component of the pension plan—also reported a strong quarter with a 5.5% return, as well as 10-year annualized net returns of 8.9%. The account’s asset value ended the quarter at C$706 billion, up from C$668 billion the previous quarter.
The additional CPP account, which holds the earnings and contributions generated by the CPP enhancement, returned 4.2% for the quarter and has increased 6.3% since the enhancement launched in 2019.
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