The Canada Pension Plan Investment Board (CPP Investments) has successfully ended its second quarter for fiscal year 2025 on September 30, 2024, with net assets reaching $675.1 billion, marking an increase of $28.3 billion from the previous quarter. This growth, driven by $23.1 billion in net income and $5.2 billion in transfers from the Canada Pension Plan (CPP), highlights the continued strong performance of the Fund.
Robust Fund Performance in Q2 FY2025
In Q2, the CPP Investments Fund saw a net return of 3.6%, maintaining a 10-year annualized net return of 9.1%. Since its inception in 1999, the Fund has delivered $461.7 billion in cumulative net income. The strong quarter-end performance is part of a broader positive trend, as the Fund has grown by $42.7 billion over the first half of the fiscal year, which includes $29.3 billion in net income and $13.3 billion in CPP transfers.
Despite a volatile market, President & CEO John Graham emphasized that the Fund’s diversified portfolio delivered stable returns, with positive performances across various asset classes and regions. “The portfolio is performing as designed, and our focus remains on creating long-term value through market cycles in the best interests of CPP contributors and beneficiaries,” said Graham.
Key Drivers of Growth: U.S. Equities and Fixed Income
The positive performance of U.S. equities was a key contributor to the Fund’s growth in Q2 FY2025. Additionally, interest rate cuts in developed markets boosted fixed income investments, while infrastructure and credit investments also performed strongly. However, foreign exchange losses, driven by the appreciation of the Canadian dollar against the U.S. dollar, slightly impacted overall results.
Base and Additional CPP Accounts Performance
Base CPP Account
The base CPP account finished Q2 FY2025 with net assets of $626.1 billion, an increase of $22.5 billion from the previous quarter. This growth was mainly driven by $21.4 billion in net income and $1.1 billion in net transfers from the base CPP. The account’s net return for the quarter was 3.5%, with a five-year annualized net return of 8.0%.
Additional CPP Account
The additional CPP account, which operates under a different legislative funding profile and contribution rate, ended Q2 FY2025 with net assets of $49.0 billion, up by $5.8 billion from the previous quarter. This increase was driven by $1.7 billion in net income and $4.1 billion in transfers. The additional CPP account’s net return was 3.7%, with a five-year annualized net return of 5.1%. The faster growth in assets is expected, given the account’s distinct contribution and risk profile.
Long-Term Financial Sustainability of CPP
Every three years, the Office of the Chief Actuary of Canada assesses the long-term sustainability of the CPP. In the latest triennial review published in December 2022, the Chief Actuary confirmed the ongoing sustainability of both the base and additional CPP at the current contribution rates. For the period 2021 to 2096, the base CPP account is projected to earn an average annual real return of 3.69%, while the additional CPP account is expected to earn 3.27%.
Corporate Development and Accountability Initiatives
CPP Investments remains committed to maintaining transparency and accountability to over 22 million CPP contributors and beneficiaries. In October and November 2024, the organization hosted public meetings across Canada, with additional virtual meetings scheduled. These events provide an opportunity for Canadians to engage directly with CPP Investments’ senior leadership.
Executive Updates
John Graham, President & CEO of CPP Investments, was recently appointed Chair of the FCLTGlobal Board of Directors. FCLTGlobal is a non-profit organization focused on building a sustainable global economy, and CPP Investments is a co-founder of the organization.
Additionally, Richard Manley, Chief Sustainability Officer at CPP Investments, was appointed to the inaugural Steering Committee of the Greenhouse Gas Protocol, an internationally recognized body for greenhouse gas accounting standards.
Strategic Investment Highlights for Q2 FY2025
Active Equities and Credit Investments
CPP Investments made strategic exits and investments during the second quarter of fiscal 2025, including selling a 6% stake in Delhivery, India’s largest third-party logistics provider, for C$298 million. The Fund also committed US$73 million to Permira’s financing of PharmaCord, a patient services company in the U.S., and US$74 million to support Genstar Capital’s acquisition of AffiniPay, a fintech leader.
Private Equity and Real Assets
On the private equity front, CPP Investments committed US$50 million to Kohlberg Investors X and invested £40 million alongside Apax funds in Zellis Group, a U.K.-based provider of payroll and HR software. The Fund also made significant real asset investments, including US$843 million in Tallgrass Energy and a follow-on commitment of R$2.2 billion (C$532 million) to Iguá Saneamento, a Brazilian water and sanitation company.
2025 CRA Updates: New Tax Brackets, CPP, RRSP, and TFSA Contribution Limits
Important Updates from the CRA for October 2024
OTB Notice from the CRA 2024: Key Details and What You Need to Know
ACFB Notice from CRA & Income Criteria 2024
CPP Investments: Balancing Net-Zero Goals with Billions in Oil and Gas Investments
Key Updates for CPP Pensioners: What You Need to Know
Noteworthy Transactions
Post-quarter, CPP Investments completed a US$250 million anchor investment in the Antares Private Credit Fund and acquired a 24.5% stake in Keywords Studios, a leading global video game service provider, for US$515 million. The Fund also entered into a joint venture with Equinix and GIC to develop data centers in the U.S. for the world’s largest cloud service providers, including those driving the AI ecosystem.
A Focus on Long-Term Value
Despite global economic uncertainties, CPP Investments continues to deliver strong returns across its diversified portfolio. With strategic investments in equities, credit, private equity, and real assets, the Fund is well-positioned to meet the long-term financial obligations of the CPP. As always, the organization’s focus remains on ensuring the sustainable growth of assets to benefit future generations of Canadians.
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