CPPIB’s alternatives exposure grows

The Canadian pension suffered a negative 8.5% return in the second quarter owing largely to a decline in its public equities portfolio, which has in turn increased its exposure to private equity, real estate and infrastructure.

The Canada Pension Plan Investment Board’s private equity portfolio comprised 13.1 percent of its total assets, or $15.4 billion, as of 30 September. That’s up from 11 percent, or $14.1 billion, in the first quarter.

The increase is in part due to a decline in its public equities portfolio, which as of September, accounted for 59.9 percent, or $70.4 billion, of total assets, down from 62 percent, or $79.2 billion, in June.

While the pension did not release returns information for individual asset classes, it said it had suffered a $5.3 billion decline in assets and an overall negative return of 8.5 percent in the second quarter. It had a negative 7.5 percent return in the previous quarter.

“While the fund was adversely impacted by broad declines in public equity markets, I had virtually no losses due to credit or counterparty exposures in this period,” David Denison, president and chief executive officer of CPPIB, said in a statement.

CPPIB’s real estate portfolio increased to 6.2 percent of assets at a value of $7.3 billion as of 30 September, an increase from 5.6 percent, or $7.2 billion in June.

The percentage of its portfolio invested in infrastructure also rose to 3.1 percent at a value of $3.6 billion, in contrast to its former 2.6 percentage at $3.3 billion in June.

The pension’s four-year annualised investment rate of return through September 2008 was 6.6 percent, resulting in a $22 billion, for the four-year period. 

CPPIB invests in private equity via limited partnerships and direct investments. It has direct investments with a value of $3.8 million and has offices in Canada, Hong Kong London.