Canada Pension Plan Investment Board said it lost 2.9 per cent in the volatile March quarter, but beat broader market indexes and the typical Canadian pension fund.
The loss put the plan’s return for the full fiscal year ended March 31 at 6.8 per cent. It reported $539-billion in assets.
“I would describe them as strong returns considering the the turbulent and volatile backdrop, especially in the first quarter of the calendar year,” CPPIB chief executive officer John Graham said Thursday in an interview with The Globe and Mail.
The first three months of 2022 saw equity market volatility caused in part by Russia’s invasion of Ukraine. At the same time, the air came out of the tech and growth-stock balloon, with even established names, building on their late-2021 losses. Skyrocketing inflation and rising interest rates roiled bond markets.
CPPIB said the S&P Global LargeMidCap Index, a measure of stocks that CPPIB uses as 85 per cent of its benchmark reference portfolio, fell 6.5 per cent in the quarter. The FTSE Canada Universe All Government Bond Index, the remaining 15 per cent of the benchmark, fell 7.2 per cent. Blended, that means CPPIB beat a benchmark of negative 6.6 per cent by more than three percentage points.
A broader measure of Canadian pension plan investment performance produced by the bank Northern Trust came in at a 6.4 per cent loss for the first quarter of 2022, CPPIB noted.
The pension manager posted a 10-year return of 10.8 per cent, nearly as high as it was the year before.
Mr. Graham said “inflation is probably the topic that we spend the most time thinking about right now … we were probably surprised that inflation has been as persistent as it is and the disruption of supply chains are so persistent.”
“But if we take a step back, we have built this portfolio to basically perform through cycles – it’s there as a long term portfolio – with a view that inflation in time will go back into the targeted level.”
For the fiscal year, CPPIB’s public equities investments – about a quarter of the portfolio – returned 1.3 per cent. The manager said the stocks it actively picked were down 5.8 per cent, “driven by the performance of its investments in China.” In its annual report, CPPIB cited “the public equity market reaction to new regulatory interventions, a resurgence of COVID-19 in the fourth quarter and investor fears of the potential for sanctions from Western countries if China were to support Russia in Ukraine.”
“As you expect in a diversified portfolio, some things perform really well and some things perform less well on a relative basis,” Mr. Graham said “The Chinese equity markets performed less well. But on a five-year basis, Asia-Pacific is still our second-highest performing geography. So we still believe the principles and the underlying rationale for being global investors there.”
Fixed income – bonds and similar investments that make up just 7 per cent of the portfolio – fell 3.8 per cent for the year. CPPIB’s credit department, which does lending or offers debt-like instruments directly to companies – returned 0.7 per cent. Credit is now 16 per cent of the CPPIB portfolio.
CPPIB’s private-equity department – its largest at nearly one-third of the portfolio – returned 18.6 per cent.
Real estate returned 10.2 per cent, while infrastructure returned 10.8 per cent. Each department represents about 9 per cent of CPPIB’s portfolio.
The Canada Pension Plan, founded in 1966, is the primary national retirement program for working Canadians. The government created CPPIB in 1999 to professionally manage the plan’s money. Over time, CPPIB has embraced active management and its blend of stocks, bonds, real estate, infrastructure, private equity and other specialized investments has outperformed public markets and its reference portfolio.
CPPIB said its calendar year 2021 return was 13.8 per cent, comparing favorably to the five large Canadian pension plans that close their books at Dec. 31.
Each of the “Maple Eight” big Canadian public pension plans serve a different demographic of benefit recipients, with a different mix of liabilities. So, their portfolios – and the returns they should expect – differ.
The Caisse de dépôt et placement du Québec, with $419.8-billion in assets, posted a 13.5-per-cent return for 2021. The Ontario Teachers’ Pension Plan, with $221-billion in assets, reported an 11.1-per-cent return. The Healthcare of Ontario Pension Plan (HOOPP), with $114.2-billion in assets, recorded an 11.28-per-cent return on investments.
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Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts
NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.
Apple supplier Foxconn aims to double India jobs and investment
Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.
Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.
V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.
He did not give more details.
Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.
In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.
The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.
Taiwan election: Foxconn’s Terry Gou taps star-powered running mate
Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.
He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.
The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.
Foxconn to double workforce, investment in India by ‘this time next year’
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