Canada Pension Plan Investment Board, the country’s largest pension manager, returned 17 percent in fiscal 2014, its best performance since 2004 as private-equity returns surged.
Assets rose 20 percent to a record C$219.1 billion ($202 billion) from the same period last year and generated a record C$30.1 billion in investment income for the year ended March 31, the Toronto-based fund manager said in a statement today. Private equities returned 30 percent in Canada, 35 percent in foreign developed markets and 37 percent in emerging markets.
“My view is that in at least my career as an investor, this is probably the toughest market today to operate in as a value investor,” he told reporters.
The board’s 17 percent return beat the 15 percent median of Canadian pension funds in the 12 months ended March 31, according to RBC Investor Services.
The fund’s equity holdings in foreign developed markets grew 18 percent to C$75.6 billion from a year ago, and made up 35 percent of its equity portfolio at the end of March. Its stake in Canadian equities rose 22 percent to C$18.6 billion compared with a year ago, for 8.5 percent of its equity portfolio.
Emerging markets fell to 5.7 percent of its equity portfolio at the end of March from 6.7 percent a year ago.
Bonds made up 25 percent of the board’s fixed-income portfolio, down from 29 percent a year ago. Other debt rose to 5.2 percent from 4.7 percent while money market securities increased to 8 percent from 4.8 percent a year ago.
The fund, which manages the retirement savings of 18 million people in every province except Quebec, said it aims to continue to grow in foreign markets with 69 percent of the fund invested internationally at the end of March, compared with 63 percent last year.
“When you look around the world, you don’t see that assets are grossly overpriced, and you don’t see assets that are grossly underpriced,” Wiseman said.
This has forced Canada Pension to be “patient” and “pick its spots” in niche markets where the fund can leverage its long-term investment strategy to find value, like it did with the acquisition of Brazil’s Aliansce Shopping Centers SA, Wiseman said.
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