Tight lipped

Executives at some of the largest Canadian pension fund managers say their funds are doing OK during the market turmoil, although they’re light on specifics.

Officials at the Caisse de Dépôt et placement du Québec, Montreal, one of Canada’s largest institutional funds with net assets totaling C$155.4 billion (US$158.4) as of Dec. 31, 2007, have been tight-lipped in recent weeks about performance. While rumors had the fund losing as much as 24% in the markets’ sell-off this year, officials say only that the Caisse is in good shape to weather the storm, with some C$20 billion in liquid assets. Executives have rejected calls to provide a status update before the traditional annual report in February or March.

“It is not in the interest of the Caisse, or its depositors,” Pierre Brunet, Caisse chairman, said in a statement issued on Nov. 21, “to take action that could deviate from the rules that have always governed it, including in a period as turbulent as the one we are experiencing.

“Moreover, the Caisse has always published complete, audited figures.”

A significant portion of the Caisse’s investments, such as its real estate and private equity holdings are subject to year-end valuation by independent committees, in a highly regulated process that ensures the integrity thereof,“ he continued, “to publish interim data would therefore mean publishing incomplete, unaudited figures.”

In Toronto, the Canada Pension Plan Investment Board ended the second quarter of its fiscal year at C$117.4 billion on Sept. 30 — a decline of C$10.3 billion since the previous quarter. No more recent figures were available.

The fund’s four-year annualized investment rate of return through Sept. 30 was 6.6%.

“The CPP Fund is invested for the long term, has a broadly diversified portfolio and steady cash inflows, and is structured to withstand stock market cycles in order to help secure CPP pensions for decades and generations,” said David Denison, president and chief executive officer, last month in a statement. “While the fund was adversely impacted by broad declines in public equity markets, it had virtually no losses due to credit or counterparty exposures in this period.”

Mr. Denison added that the CPPIB is “well-positioned to acquire assets at advantageous prices that will generate long-term value for the fund. While market conditions have worsened since the end of the quarter, we remain confident in our ability to generate superior long-term risk-adjusted returns. … Given our mandate, the CPP Investment Board invests not for the quarter, but for the quarter century and beyond.”

On the West Coast, the C$85 billion (as of March 31) British Columbia Investment Management Corp., Victoria, is weathering the economic uncertainty. No more recent figures were available.

“These are challenging times, and while the short-term volatility will hurt the performance of public equity investments, BCIMC invests for the long-term,” said Gwen-Ann Chittenden, manager, corporate initiatives. “As such, BCIMC has diversified our clients’ assets across a wide range of asset classes — including cash, government bonds, real estate, and infrastructure, ensuring that our clients are well-positioned to weather the recent events in the financial markets.

“(The) BCIMC has no direct exposure to subprime mortgages, non-bank-sponsored asset-backed commercial paper, other opaque financial instruments, credit default swaps or hedge funds, and BCIMC does not use leverage in the public markets. While the risks appear to be greater than usual, markets like these also present attractive opportunities for investors to acquire undervalued assets.”

The BCIMC invests assets for public sector pension plans, publicly administered trust funds, public bodies and the Province of British Columbia. Pension plan clients account for 76.4% of the assets managed.

Angela Marion Lee is a free-lance writer based in Montreal.