Canada Pension Plan Investment Board (CPP Investments) reported net assets of $866.2 billion at the end of its second quarter of fiscal 2027, up $2.6 billion from the previous quarter, despite recording a negative investment return as losses in fixed income outweighed gains in other asset classes.
The Toronto-based investment manager said its net return was negative 0.5 per cent for the three months ended Sept. 30, 2026. However, its assets increased from $863.6 billion at the end of the first quarter, primarily because of $7.3 billion in net transfers from the Canada Pension Plan (CPP), which offset a $4.7-billion investment loss.
For the first six months of fiscal 2027, CPP Investments recorded a net return of 7 per cent, with the Fund's assets increasing by $72.9 billion. That increase consisted of $55.6 billion in net investment income and $17.3 billion in net transfers from the CPP.
The Fund, which includes the base CPP and additional CPP accounts, reported a 10-year annualized net return of 8.8 per cent. Since CPP Investments began investing the Fund in 1999, it has generated $604.6 billion in cumulative net income.
Fixed-income losses weigh on quarterly performance
John Graham, president and CEO of CPP Investments, said higher government bond yields affected the Fund's fixed-income portfolio during the quarter, although diversification helped offset some of the losses.
"Higher bond yields weighed on fixed-income returns this quarter, while diversification across the portfolio helped offset some of that pressure," said Graham.
Gains in public equities, private equity and real assets contributed positively to quarterly performance. CPP Investments attributed those gains to resilient corporate earnings, continued momentum in artificial intelligence-related sectors, strength in energy markets and sustained demand for infrastructure assets.
However, those gains were more than offset by losses in fixed income as higher government bond yields across developed markets pushed bond prices lower. The investment manager also cited persistent inflation concerns and expectations that interest rates would remain higher for longer.
CPP Investments said its portfolio is deliberately diversified across global markets and investment strategies to reduce reliance on any single source of returns and help manage performance through different market conditions.
Base and additional CPP performance
The base CPP account ended the second quarter with net assets of $771.7 billion, down $1.7 billion from $773.4 billion at the end of the previous quarter. The decrease consisted of $3.6 billion in net investment losses, partially offset by $1.9 billion in net transfers from the base CPP.
The account generated a quarterly net return of negative 0.5 per cent, while its 10-year annualized net return stood at 8.9 per cent. Its five-year annualized net return was 6.7 per cent.
The additional CPP account, meanwhile, ended the quarter with net assets of $94.5 billion, compared with $90.2 billion at the end of the previous quarter. Its $4.3-billion increase reflected $5.4 billion in net transfers from the additional CPP, offset by $1.1 billion in net investment losses.
The additional CPP account recorded a quarterly net return of negative 1.2 per cent and an annualized net return of 6.2 per cent since its inception. Its five-year annualized net return was 4.3 per cent.
CPP Investments said the additional CPP has a different legislative funding structure and contribution rate than the base plan, resulting in a different investment risk target and portfolio profile. Its assets are also expected to grow at a faster rate because of differences in their net contribution profiles.
The Office of the Chief Actuary of Canada reaffirmed in its most recent triennial review, published in May 2026, that both the base and additional CPP remain sustainable over the long term at their legislated contribution rates.
The review's projections assume average annual real returns of 4.05 per cent for the base CPP and 3.53 per cent for the additional CPP over the 75-year projection period following Dec. 31, 2024.
Canadian investment activity and portfolio transactions
CPP Investments highlighted several Canadian investments and strategic initiatives during the quarter, including the launch of a C$50-billion investment framework with Brookfield Asset Management to pursue large-scale opportunities across Canada.
The Maple Fund will operate on a 50-50 basis, with each organization providing up to C$25 billion in equity capital over an initial five-year period.
The pension fund manager also committed US$200 million to Toronto-headquartered Radical Ventures' new Radical Breakouts Fund, a late-stage venture capital fund targeting Canadian and international artificial intelligence companies. CPP Investments described it as the largest-ever venture capital fund in Canada.
Other transactions included the sale of its 50 per cent interest in Upper Canada Mall in Newmarket, Ontario, to Primaris REIT for approximately $200 million in net proceeds. The original investment was made in 2013.
CPP Investments also completed the sale of its remaining 10.1 per cent stake in the Unibail-Rodamco-Westfield Germany retail platform, generating net proceeds of €75 million.
In another transaction, the organization committed C$1 billion to acquire a majority stake in Tarchon, a 1.4-gigawatt subsea electricity interconnector project connecting Germany and the United Kingdom, alongside Elia Group's international development platform, WindGrid.
The fund also acquired a 49.5 per cent stake in LXP Industrial Trust, a major U.S. warehouse and logistics property portfolio, in a transaction valued at approximately US$5.2 billion in partnership with Brookfield Asset Management.
Following the quarter, CPP Investments announced additional commitments and investments, including an agreement to invest US$255 million for an indirect stake in Mitsubishi Corporation's interest in the LNG Canada liquefaction business alongside Blackstone.
It also invested approximately $15 million in additional equity capital in Wealthsimple through a primary and secondary offering at a post-money valuation of $13.8 billion, bringing its total investment in the Canadian money management platform to approximately $75 million.
Investment strategy and organizational changes
CPP Investments also announced the creation of a new investment department, Active Public Markets, combining the capabilities of its Active Equities and Capital Markets and Factor Investing teams.
The new department will oversee active investment strategies across global public markets, using internal investment teams and external partners. Heather Tobin will lead the department as senior managing director and global head of Active Public Markets.
Frank Ieraci, senior managing director and global head of Active Equities, is stepping back from the organization after nearly 20 years. He will remain as a senior adviser until the end of 2026 to support the establishment of the new department.
The organization also announced that Jon Webster, senior managing director and chief operating officer, is leaving CPP Investments after nearly five years with the organization.
CPP Investments manages the Canada Pension Plan Fund on behalf of more than 22 million contributors and beneficiaries. The organization operates independently of the CPP and at arm's length from governments.