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Pension Funds

Canada Pension Plan delivers 3.6% return in 3rd quarter

The investment portfolio for the Canada Pension Plan Investment Board, Toronto, delivered a net return of 3.6% after all CPPIB costs, for the nine-month period ended Dec. 31, the fund said in a news release Thursday.

The quarter ended Dec. 31 represented the third quarter of the pension fund's fiscal year.

Since Sept. 30, the pension fund's assets increased C$200 million ($146.6 million) to C$368.5 billion in net assets as of Dec. 31. Over the nine-month period ended Dec. 31, the pension fund increased by C$12.4 billion in assets.

The quarterly increase consisted of C$4 billion in net income after all CPPIB costs, less C$3.8 billion in net outflows used to pay CPP benefits. The nine-month increase consisted of C$12.8 billion in net income after all CPPIB costs, less C$400 million in net CPP cash outflows, the news release said.

As of Dec. 31, CPPIB had an asset allocation of 31.9% public equity, 31.4% fixed income, 25.4% real assets, 24.1% private equity, -5.2% cash and absolute-return strategies and -7.7% external debt issuance.

The negative balance in cash and absolute-return strategies represents the net amount of financing through derivatives and repurchase agreements and the current net position from absolute-return strategies, the news release said.

CPPIB returned an annualized 9.1% for the five years ended Dec. 31 and an annualized 8.2% for 10 years.

The pension fund also said in Thursday's news release that it allocated about C$945 million to GLP Japan Development Partners III, a Japan-focused logistics real estate venture, during the quarter ended Dec. 31.

In the first quarter of 2019, the pension fund also issued its first euro-denominated green bond in January.

"The sale of €1 billion ($1.1 billion) in 10-year fixed-rate notes will enable us to invest further in eligible assets such as renewables, water and real estate projects and to diversify the Fund's investor base," the news release said. "This issuance follows our inaugural Green Bond in June 2018, which was the first such market offering from any pension fund."

Of note, the CPPIB also signed a definitive merger agreement this month to acquire Ultimate Software, a Weston, Fla.-based developer of cloud-based human-resources software, for a total value of $11 billion with a group of investors.

The investor group in the deal was led by Hellman & Friedman in partnership with significant investors Blackstone, GIC and CPPIB, among others, a Feb. 4 news release from Ultimate Software said.