Canada pension plan warns of more Brexit uncertainty

Thu Aug 11, 2016 10:57am EDT
 
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By Matt Scuffham

TORONTO (Reuters) - The Canada Pension Plan Investment Board warned on Thursday of more uncertainty following Britain's decision to leave the European Union after the vote curbed gains in its investments during the last quarter.

The CPPIB, which manages Canada's national pension fund, reported gross investment returns of 1.5 percent for the first quarter ended on June 30, a slowdown from the 3.7 percent gain it achieved in the fiscal year to March 31.

Chief Executive Officer Mark Machin, who is British, said global investors had experienced ongoing volatility during the quarter, generating mixed results across major equity markets.

In an interview, he said there had been "very extreme volatility" immediately after the June 23 "Brexit" vote, followed by a rebound that was only partially reflected in first-quarter results.

Machin said the decision would lead to "protracted" uncertainty as Britain negotiates its exit from the EU.

"We're obviously watching the rest of Europe as well," he said. "I think it's unlikely we're going to see a sudden end to very difficult macroeconomic management of economies by central banks and governments."

Machin, a former medical doctor and Goldman Sachs veteran who joined CPPIB four years ago to oversee its international investment activities, became CEO in June. He replaced Mark Wiseman, who stepped down ahead of taking a senior position with BlackRock Inc (BLK.N: Quote), the world's largest asset manager.

The CPPIB, which invests on behalf of 19 million Canadians, has diversified internationally and into alternative asset classes such as infrastructure and real estate to offset the impact of record low yields on government bonds and volatile equity markets. Machin said that strategy would continue.   Continued...