November 14, 2000
The Canada Pension Plan Investment Board received $923 million from the Canada Pension Plan in the second quarter of our current fiscal year. These funds were invested as soon as they were received. As a result, the market value of invested assets at September 30, 2000 was $5.9 billion compared with $4.8 billion at June 30, 2000.
The share of the Canada Pension Plan assets managed by the CPP Investment Board is presently small, but will grow steadily in the coming years. Today the Canada Pension Plan has total assets of approximately $41.1 billion. In addition to the funds under management at the CPP Investment Board, the assets include a portfolio of $30.1 billion (at cost) in provincial and federal government bonds as well as a short-term operating reserve. Both the bond portfolio and the operating reserve are administered by the Federal Government. In determining our asset mix, we have taken into consideration the amounts that are already invested in government bonds and as a result, 100% of new investments by the CPP Investment Board are allocated to equities.
Until recently, the CPP Investment Board was required by regulation to make its Canadian equity investments only through funds that substantially replicate widely-accepted market indexes. In late August 2000 the federal and provincial governments finalized an amendment to the CPP Investment Board regulations that allows the active management of up to 50% of Canadian equities, on a book value basis.
Given the scope provided by this amended regulation, and following approval of its Board of Directors in September, the CPP Investment Board began a program to reduce its Nortel Networks Corporation portfolio weight, which then exceeded 25% of total fund. At quarter end Nortel represented approximately 14.6% of total fund at market value. At the completion of the program it was reduced to approximately 13.6% at market value, the lowest level achievable under the asset allocation policy and the amended regulation.
In the future the CPP Investment Board will be in a position to more consistently implement a core principle of prudent risk management : namely, limiting portfolio exposure to any single stock.
At a meeting of the Board of Directors on November 7, the Directors approved a proposal to increase the permissible foreign content in the CPP Investment Board portfolio to 25% in 2000 and 30% in 2001, the maximum permitted under amendments to the Foreign Property Rule.
Public meetings required by legislation are scheduled for January 2001. For information on the public meetings, please check our Website at www.cppib.ca.
We are pleased to announce that our Board of Directors has approved the appointment of Mark Weisdorf as our first Vice President – Private Market Investments. He joined the CPP Investment Board on October 16, 2000. Mr. Weisdorf brings extensive experience from 18 years of involvement in public and private markets as an investment banker and senior executive in the investment business.
The CPP Investment Board was created by an Act of Parliament in December 1997. It receives funds not needed by the Canada Pension Plan to pay current pensions and invests them in capital markets. By increasing the long-term value of these funds, the CPP Investment Board will help the Canada Pension Plan to keep its pension promise to Canadians. The CPP Investment Board is a corporation governed and managed separately from the Canada Pension Plan.
The Canada Pension Plan itself is the joint responsibility of the federal and provincial governments which set contribution rates and benefit levels. The plan is administered by the federal government, which collects contributions and pays pensions and other benefits.
For further information contact:
Canada Pension Plan Investment Board
181 University Avenue
Toronto, Ontario M5H 3M7
Telephone : 416-868-4075
Facsimile : 416-868-4083
Website : www.cppib.ca