|
|
|
|
 |
|
|
|
 |
|
|
|
|
 |
| |
|
|
| |
Our investment team earned $4.7 billion in 2007, achieving a solid 4.5% return amid difficult market conditions.
The summer’s credit crunch was the defining issue for our performance in 2007, as it was for many other investors. Our public equities and bonds did well during the first half of the year, but reversed course in late June and July.
Although we had not invested directly in the types of investments that gave rise to what is now known as the subprime mortgage crisis, we did have some indirect exposure through other investments. In addition, the value of some of our fixed income investments has been impacted materially by the global credit crisis. More broadly, the resulting market instability in the fourth quarter hurt the performance of all our fixed income and public equities portfolios, and is expected to continue in 2008.
Because we report foreign investment returns in Canadian dollars, the rise of the Canadian dollar against most other currencies also had a significant impact on the fund’s 2007 performance. Although many of the fund’s
non-Canadian assets fared well, the strengthening dollar meant that their gains were diminished in the conversion to our home currency.
While market forces are beyond our control, we can influence our performance relative to the markets. Private equity, real estate and infrastructure assets led the fund’s $2.3 billion outperformance of its benchmark in 2007. Read more about our investment performance, benchmarks and related matters.
Beating benchmarks helps pay pensions
|
 |
|
 |
| |
|
We generated $2.3 billion more than the markets in which we invest. We benchmark ourselves against the performance of standard indexes including the S&P/TSX Composite and S&P 500. This extra income was enough to pay 64,000 pensions in 2007. |
|
Almost one-quarter of the fund’s growth since 1990 has been generated by consistently outperforming market benchmarks. The fund would be worth $25 billion less today if our performance had not exceeded market growth. |
|
| Rate of return |
4.5 |
13.2 |
12.3 |
9.7 |
11.4 |
| Total fund benchmark |
2.3 |
9.4 |
8.7 |
7.1 |
8.5 |
| Value added above benchmark ($ billions) |
$2.3 |
$3.4 |
$12.3 |
$20.5 |
$25.0 |
|
|
| |
|
Strong market performance since 1990 has helped generate an average annual return of 11.4%. We do not expect markets to repeat this level of performance in the future. |
|
|
|
