CPP Investments loses 0.5% as bond prices fall

BNN Bloomberg and Benefits and Pensions Monitor reported that CPP Investments, which manages the Canada Pension Plan’s fund, lost 0.5%, or $4.7 billion, in the quarter to September 30. Public equities, private equity and real assets all gained, but losses on bonds more than offset those gains. The cause was higher government bond yields in developed markets, which pushed bond prices down. Yields and prices move in opposite directions: a bond pays fixed interest, so when new bonds yield more, older ones that pay less lose value.

CEO John Graham said diversification offset some of the pressure. Net assets still rose to $866.2 billion from $863.6 billion, as $7.3 billion in net transfers from the Canada Pension Plan outweighed the loss. Over the longer run, the fund has returned 8.8% a year over ten years, net.

For context, in 1997, when a bill proposed creating the Canada Pension Plan Investment Board, the reserve fund held about $39 billion, two years of benefits, according to the Library of Parliament.

Sources: BNN Bloomberg · Benefits and Pensions Monitor · Library of Parliament (Government of Canada) · CPP Investments