August 10, 2012 / 2:22 PM / 6 years ago

Canada Pension Board ekes out small Q1 gains

(Reuters) - The Canada Pension Plan Investment Board, one of the world’s biggest pension funds, notched small investment gains in the first quarter as financial markets sagged, but said it remains on the lookout for more opportunities to create long-term value.

CPPIB, which manages Canada’s national pension fund, said on Friday its assets rose to a record C$165.8 billion ($167.2 billion) from C$161.6 billion three months earlier, as its investment portfolio returned 0.5 percent for the first quarter ended June 30.

“Our performance results for the fiscal first quarter reflect the fund’s resilience against continuing uncertainty, poorly performing equity markets and other global economic headwinds,” CPPIB chief executive Mark Wiseman said in a statement.

The C$4.2 billion increase in net assets included C$0.8 billion in investment income, C$3.5 billion in net CPP contributions and C$0.1 billion in operating expenses.

Wiseman said the fund, which ranks in the top 10 of global pension funds by assets, is alert to the kind of deals that emerge in tough market conditions.

“We continue to assess opportunities today with a long horizon view, especially where we can realize value by leveraging our unique set of comparative advantages,” Wiseman said.

“We are patient and will act, or not, on investment opportunities according to our ability to create value in the long run.”

CPPIB shifted to an active investment strategy just over six years ago in a bid to boost returns on its massive portfolio by buying real estate, infrastructure and other assets around the world, while providing both private equity and credit to partners looking for cash.

Its five-year annualized rate of return was 2.1 percent at the end of the quarter, while the 10-year rate of return was 6.3 percent.

CPPIB on Thursday announced its first direct investment in U.S. industrial real estate, launching a new logistics and industrial venture with Australian industrial property manager Goodman Group. The venture will make targeted investments in U.S. logistics hubs such as Los Angeles, San Francisco and Seattle on the West Coast, and New York, New Jersey and Philadelphia on the Eastern Seaboard.

The two firms said the venture will have a total equity investment of $890 million, with Goodman investing 55 percent, or $490 million, and CPPIB investing the remaining $400 million.

In December, Goodman and CPPIB expanded their joint venture in China, formed in 2009, to own and develop logistics assets in mainland China.

CPPIB invests on behalf of 18 million Canadian contributors and beneficiaries, and still has about nine years before benefits paid exceed contributions and investment income will be needed to help pay pensions, in 2021.

($1 = 0.99 Canadian dollars)

Reporting By Andrea Hopkins; editing by Sofina Mirza-Reid, Dave Zimmerman

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