August 10, 2007
TORONTO, ON (August 10, 2007): The CPP Fund grew to $120.5 billion for the quarter ended June 30, 2007, an increase of $3.9 billion from $116.6 billion at the end of the previous quarter. Of the $3.9 billion growth, a 0.7 per cent investment rate of return contributed $805 million in investment earnings, while inflows of CPP contributions not needed to pay current pension benefits added an additional $3.1 billion. For the four-year period ended June 30, 2007 – the end of the CPP Investment Board’s first quarter in fiscal 2008 – the CPP Fund earned $40.5 billion in investment income, representing a rolling four-year annualized investment rate of return of 12.2 per cent. The CPP Investment Board emphasizes four-year results to reflect its long-term investment horizon.
While the CPP Fund benefited from strong Canadian equity markets this quarter, the strength of the Canadian dollar against most major currencies largely offset gains in foreign equities in the portfolio. At June 30, 2007, equities represented 64.7 per cent of the fund or $78.0 billion. That amount consisted of 57.5 per cent public equities valued at $69.4 billion and 7.2 per cent private equities valued at $8.6 billion. Bonds represented 24.7 per cent of the portfolio or $29.7 billion. Inflation-sensitive assets represented 9.8 per cent or $11.8 billion. Of those assets, 4.6 per cent consisted of real estate valued at $5.6 billion, 3.4 per cent was inflation-linked bonds valued at $4.1 billion and 1.8 per cent was infrastructure valued at $2.1 billion. The final 0.8 per cent of the portfolio or $1 billion was held in money market securities.
CPP contributions are expected to exceed annual benefits paid until 2022, providing a 15-year period before a portion of the investment income is needed to help pay CPP benefits. The Chief Actuary of Canada estimates that the CPP Fund will grow to approximately $250 billion within the next 10 years, making it one of the largest single purpose pools of investment capital in the world, thereby helping to secure the CPP for the long term.
CPP Investment Board The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 16 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPP Investment Board is investing in publicly-traded stocks, private equities, real estate, inflation-linked bonds, infrastructure and fixed income.
The CPP Investment Board is accountable to Parliament and the federal and provincial finance ministers. Based in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. For more information about the CPP Investment Board, visit www.cppib.ca.
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