Strong stock markets help CPP Investment Board earn 1.6 per cent return in Q1

TORONTO - The Canada Pension Plan Investment Board says it earned a gross investment return of 1.6 per cent in its fiscal 2015 first quarter, an improvement over the same period a year earlier but, as expected, down from the stellar returns it enjoyed at the end of last year.

The board, which manages one of the world's largest pension funds, had a return of 1.1 per cent in the first quarter of fiscal 2014.

“Several factors contributed to the fund’s results this quarter, beginning with the continuing advance of public equities globally, led by the Canadian market,” Mark Wiseman, CPPIB's president and CEO said in a statement Thursday. “All of our programs reported positive investment returns during the quarter."

Meanwhile, the board said its focus would remain on long-term profitability, as opposed to quarterly performance.

"To meet long-term investment objectives, CPPIB is building a portfolio and investing in assets designed to generate and maximize long-term returns, " it said in a statement. "Long-term investment returns are a more appropriate measure of CPPIB’s performance than returns in any given quarter or fiscal year."

At the end of the previous quarter, Wiseman cautioned that the board's annual return of 16.5 per cent in fiscal 2014 was likely not going to be repeated.

CPPIB said it had net assets of $226.8 billion at the end of June 30, up from $219.1 billion at the end of fiscal 2014.

The board has been diversifying into other forms of assets domestically and abroad, including equity in private companies and investments in infrastructure such as highways and real estate, as a way for it to lessen the volatility from publicly traded stocks and low returns from government bonds.

On Thursday, CPPIB announced that it would invest an additional US$500 million in the Goodman North American Partnership (GNAP), a joint venture formed in 2012 between CPPIB and the Goodman Group. It has now allocated a total of US$900 million representing a 45 per cent interest in the joint venture, with Goodman's aggregate allocation totalling US$1.1 billion representing a 55 per cent interest.

The GNAP partnership invests in modern logistics and warehouse facilities in major U.S. markets and is committed to six development projects in California with a total potential gross leasable area of 6.5 million square feet.

Last month, the board signed a deal to acquire a 39 per cent stake in Interparking, one of Europe's largest parking lot management companies, for about $546 million. Based in Brussels and with operations across nine countries in Europe, Interparking owns 657 car parks in 350 cities.

In June, it also bought a six per cent stake in U.K.-based financial information company Markit Ltd., for US$250 million.

The Canada Pension Plan Investment Board invests money not needed by the Canada Pension Plan to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries.