more chumps here
Canada Pension Plan loses $453M on stock market
Public given assurances
Charlie Gillis
National Post
The Canada Pension Plan -- a latecomer to the world of stock market investment -- appears to have hit a painful bump in the learning curve of buying and selling equities.
The fund, which boasts $41.6-billion of assets invested mostly in bonds, yesterday reported a $453-million loss on its stock investments in its fiscal third quarter, a black eye wrought in part by market declines across North America.
It was the nadir of an up-and-down year for the old-age pension fund's investment board, which lost $64-million over the last nine months of 2000, a period that included the bruising third quarter.
During that time, the Toronto Stock Exchange fell nearly 14%, led by a plunge in the share price of Nortel Networks Corp., which sheared value from almost every stock portfolio in the country.
In all, the board has invested $6.4-billion in stocks since joining the market two years ago, including $1-billion in the last three months of 2000.
But even in the face of overall decline, yesterday's numbers were poor publicity for a plan that was eager to join most other pension funds in the country as heavyweights on the stock markets.
The CPP's investment board was formed in 1999 after the federal government opened the door for it to participate in capital markets for the first time. The board invests the portion of CPP funds not needed to pay current pensions.
The move came under immediate criticism as an unnecessary risk of public assets, and it still worries opposition politicians who believe the instability of markets make them inappropriate homes for Canadians' pension money.
Following a market sell-off last fall, Alexa McDonough, the NDP leader, accused the federal Liberals of leaving the fund "subject to the whim of the market."
The CPP board quickly issued a statement insisting it had reduced its Nortel holdings by 50% before the tumble. But its latest results suggest its other stocks were faring no better than the telecommunications giant.
The board sought yesterday to put the best face on its efforts, reminding the public it is "in the early stages" of diversifying its assets.
"Despite the occurrence of quarterly or even annual losses from time to time we are confident that over the long term this diversification of the portfolio ... will serve to enhance returns and mitigate risk," the board said.
The CPP's losses come as other major funds report weathering the recent market downturns with slim gains.
The Caisse de dépôt et placement du Québec, with $120-billion in assets, recently predicted it will report a gain on its investments for 2000 of less than 10%, but a gain nonetheless.
The Ontario Municipal Employees Retirement System, which has approximately $36-billion in assets, has also projected strong growth for 2000 in its portfolio. |
