Investments in the Canada Pension Plan earned a return of 11.6% in the past year once all costs associated with running the program were paid. That return was strong enough to boost the fund's total assets by almost $40 billion.
The Canada Pension Plan Investment Board invests the money not needed to pay out current benefits for nearly 20 million Canadian workers and their beneficiaries. In its annual report released Thursday morning, the fund reported that it returned a profit of 11.6% for the fiscal year ending March 31, net of costs.
The Canada Pension Plan now has $356.1 billion worth of investments around the globe. That figure has risen by $39.4 billion from $316.7 billion a year earlier. Within that, $2.7 billion came from employees with contributions deducted from their pay cheques. But the rest, $36.7 billion, came from profits derived from the value of the investments they've purchased over the years.
The Canada Pension Plan investments were helped by a very strong year for stock markets in 2017. The Dow Jones Industrial Average gained 25% last year, while the broader S&P 500 was up by 19% and the technology-focused NASDAQ was up 28%.
The Canada Pension Plan invests in a variety of asset classes around the world so that all of its eggs are not in one basket. The public pension plan benchmarks itself against something it calls the “Reference Portfolio,” which is a mix of 85% foreign stocks and 15% Canadian government bonds. The Canada Pension Plan's return of 11.6% for the past year beat what the Reference Portfolio did, which rose 9.8%.
Over the last five years, the Canada Pension Plan has managed to return an average of 10.4% per year, inflation adjusted. Over the past decade, it has returned an average of 6.2% per year.
