The deadly COVID-19 pandemic wiped billions of dollars out of the Canada Pension Plan’s investment portfolio, leading to its worst annual performance since the 2008 financial crisis.
The Canada Pension Plan Investment Board announced Tuesday that it had an annual investment return of 3.1 per cent for the fiscal year ending March 31.
CPPIB president Mark Machin while said many of the losses have since been made up as markets rebounded in April and May, it had been a rough March.
“When it’s something this widespread, there are very few places to hide, either portfolio-wise or geographically,” said Machin. The CPPIB’s Canadian stock portfolio dropped 12.2 per cent for the fiscal year.
The investment board had assets of $409.6 billion at the end of the fiscal year, a gain of $17.6 billion. Of that gain, $12.1 billion came from net returns on investments while $5.5 billion came from individual workers’ CPP contributions.
There are shades of other market crashes in what COVID-19 has done to financial markets, but Machin said this one is something he’s never experienced before.
“I’ve seen some serious sell-offs over the years. I wasn’t in the investment world for Black Monday in 1987, but I saw the dot-com crash, how SARS affected the markets in Asia. But I’d have to have been born a hundred years ago to have seen something like this,” said Machin.
While the CPPIB doesn’t break out month-by-month results, Machin said that in the 2019 calendar year, it had a 12.6 per cent return on its investments. That the annual return dropped to 3.1 per cent in just one quarter shows just how quickly and how far things fell, Machin added.
Still, Machin reassured Canadians worried about their pensions that most of the losses suffered in February and March have already been recovered.
“Some of them have been completely erased. Others, they’re still working their way through,” said Machin, who also pointed to five- and ten-year annual returns of 7.7 and 9.9 per cent, respectively.