CANADA - The Canada Pension Plan (CPP) reserve fund grew by CAN$5.7bn to CAN$87bn during the second quarter.
During the period ending June 30, the fund earned $3bn from investments in publicly traded stocks, private equity, real estate, infrastructure and government bonds, marking a return of 3.6%. Announcing the results, the CPP Investment Board said the fund grew by a further $2.7bn from CPP contributions not needed to pay current pensions.
“The strategy we announced earlier this fiscal year to further diversify the CPP reserve fund into real return assets such as real estate and infrastructure will continue to be our focal point for the balance of the year,” said David Denison, president and CEO, CPP Investment Board. “During the first quarter, we made notable progress on this objective with the purchase of a 50% interest in a portfolio of 11 Canadian core office properties from the Oxford Properties Group.”
During the past five years, the fund has earned a real rate of return of 4.6%, exceeding the 4.1% real rate of return set by Canada’s chief actuary to sustain the fund over the long term.
As at June 20, 2005, the fund’s asset allocation stood at 55.2% publicly traded stocks, 33.1% government bonds, 4.1% in cash and money market securities, 4% of real return assets and 3.6% private equity.
The fund has almost doubled since its inception in 1999, with about 60% or $24.9bn of the increase coming from investment gains.
The fund is estimated to grow to about $147bn by 2010. Based on actuarial projections, contributions are expected to exceed benefits until 2022.
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