All figures in Canadian dollars unless otherwise noted. Highlights1: Net assets increase by $62.3 billion Net annual return of 8.0% 10-year net return of 9.2% Cumulative net income of $432.4 billion since inception in 1999 TORONTO, May 22, 2024 /CNW/ - Canada Pension Plan Investment Board (CPP Investments) ended its fiscal year on March 31, 2024, with net assets of $632.3 billion, compared to $570.0 billion at the end of fiscal 2023. The $62.3 billion increase in net assets consisted of $46.4 billion in net income and $15.9 billion in net transfers from the Canada Pension Plan (CPP). The Fund, which includes the combination of the base CPP and additional CPP accounts, achieved a net return of 8.0% for the fiscal year. Since the CPP is designed to serve multiple generations of beneficiaries, evaluating the performance of CPP Investments over extended periods is more suitable than in single years. The Fund returned a 10-year annualized net return of 9.2%. Since its inception in 1999, CPP Investments has contributed $432.4 billion in cumulative net income to the Fund. "The CPP Fund's growth this year continued the trend of reaching heights several years ahead of initial actuarial projections," said John Graham, President & CEO. "Solid performance by all of the investment departments and key corporate functions helps demonstrate how our strategy is on track." Annual results were positively impacted by strong public equity market performance, gains in our private equity portfolio, as well as investments in credit, infrastructure and energy. This was offset by overall weaker performance of emerging markets compared to developed markets and lower performance of real estate assets. "Since the creation of CPP Investments 25 years ago, we have made a number of strategic decisions that have generated significant value above initial projections, with investment returns comprising more than two-thirds of total Fund assets to date," added Graham. "As we head into our next quarter century, we are mindful of continuing geopolitical and economic uncertainties that may affect the investment environment, however, we have strong conviction that our people and our strategy will allow us to continue to deliver on our mandate for generations to come." Performance of the Base and Additional CPP AccountsThe base CPP account ended the fiscal year on March 31, 2024, with net assets of $593.8 billion, compared to $546.2 billion at the end of fiscal 2023. The $47.6 billion increase in net assets consisted of $44.4 billion in net income and $3.2 billion in net transfers from the CPP. The base CPP account achieved an 8.1% net return for the fiscal year and a five-year annualized net return of 7.8%. The additional CPP account ended the fiscal year on March 31, 2024, with net assets of $38.5 billion, compared to $23.8 billion at the end of fiscal 2023. The $14.7 billion increase in net assets consisted of $2.0 billion in net income and $12.7 billion in net transfers from the CPP. The additional CPP account achieved a 5.7% net return for the fiscal year and a five-year annualized net return of 4.9%. The additional CPP was designed with a different legislative funding target and contribution rate compared to the base CPP. Given the differences in their design, the additional CPP has had a different market risk target and investment profile since its inception in 2019. As a result of these differences, we expect the performance of the additional CPP to generally differ from that of the base CPP. Furthermore, due to the differences in their net contribution profiles, the assets in the additional CPP account are also expected to grow at a much faster rate than those in the base CPP account. CPP Investments Net Nominal Returns1 (For the year ended March 31, 2024) Base CPP Fiscal 2024 8.1 % Five-Year 7.8 % 10-Year 9.2 % Additional CPP Fiscal 2024 5.7 % Five-Year 4.9 % Since Inception 5.6 % 1After CPP Investments expenses. Long-Term Financial SustainabilityEvery three years, the Office of the Chief Actuary of Canada, an independent federal body that provides checks and balances on the future costs of the CPP, evaluates the financial sustainability of the CPP over a long period. In the most recent triennial review published in December 2022, the Chief Actuary reaffirmed that, as at December 31, 2021, both the base and additional CPP continue to be sustainable over the long term at the legislated contribution rates. The Chief Actuary's projections are based on the assumption that, over the 75 years following 2021, the base CPP account will earn an average annual rate of return of 3.69% above the rate of Canadian consumer price inflation. The corresponding assumption is that the additional CPP account will earn an average annual real rate of return of 3.27%. CPP Investments Net Real Returns1,2 (For the year ended March 31, 2024) Base CPP Fiscal 2024 5.1 % Five-Year 4.3 % 10-Year 6.5 % Additional CPP Fiscal 2024 2.8 % Five-Year 1.4 % Since Inception 2.0 % 1 After CPP Investments expenses. 2 The real return is the return after the impact of inflation, defined as the Canadian Consumer Price Index, is taken into account. Relative PerformanceThe CPP is designed to serve today's contributors and beneficiaries while looking ahead to future decades and across multiple generations. CPP Investments was created to invest and help grow the CPP Fund, maximizing returns without undue risk of loss. CPP Investments expresses our risk targets through simple, two-asset class Reference Portfolios comprising a mix of Canadian governments' bonds and global public equities (including Canada). The Reference Portfolios reflect the targeted level of market risk that we believe will maximize returns for each of the base CPP and additional CPP accounts, while also serving as a point of measurement when assessing the Fund's performance over the long term. CPP Investments' performance relative to the Reference Portfolios can be measured in percentage or dollar terms, after deducting all expenses. On a relative basis, the aggregated Reference Portfolios' return of 19.9% exceeded the Fund's net return of 8.0% by 11.9%. As a result, in fiscal 2024, net value-added for the Fund was negative 11.9% or negative $64.1 billion. Over the five-year and 10-year periods, net value-added was negative 2.0% and negative 0.3%, respectively. CPP Investments has deliberately and prudently constructed a portfolio that is significantly more diversified than the Reference Portfolios, by asset type, region and sector, and includes considerable weightings in private equity and real assets. This is designed to ensure portfolio resilience against the volatility that can impact net value-added – as experienced this year – and generate more consistent returns compared with a portfolio that is mainly exposed to public equity markets. In fiscal 2024, strong performance of the U.S. public equity market, led by technology stocks, was reflected in the performance of the Reference Portfolios. For information on which of our decisions we believe are adding the most value, please refer to page 37 of the CPP Investments Fiscal 2024 Annual Report. Asset Class and Geography Composition CPP Investments, inclusive of both the base CPP and additional CPP Investment Portfolios, is diversified across asset classes and geographies.