TORONTO, Nov 12 (Reuters) - Canada Pension Plan Investment Board is positioned to make an acquisition as the global financial market rout has left prices of possible target assets at more attractive levels, its chief executive said on Wednesday.
Speaking on a conference call to discuss the board’s second-quarter results, Chief Executive David Denison said the market downturn has not put the fund under pressure to sell any assets. The CPP board, however, reported a big drop in assets under management on Wednesday, hurt by the market tumbles of the past two months.
“Rather at a time when many quality assets are oversold and many investors are on the sidelines or forced to sell, we are well-positioned to capitalize on emerging opportunities across a range of asset classes,” Denison said.
He said the board could pull the trigger on a number of opportunities in real estate, public equity and debt markets.
The CPP board invests funds not needed by the Canada Pension Plan, a federal government insurance program that provides retirement and disability benefits, to pay current benefits. It is Canada’s second-largest pension manager.
Denison said the board is ideally structured to withstand a prolonged market slowdown since it will be about 11 to 12 years before it needs a small portion of its investment income to help pay pensions.
Denison said Canadians should not be worried by the board’s recent performance since it is invested for the long term, has a diverse portfolio and is structured to withstand stock market cycles to secure pensions for generations.
He said the board does not plan to adjust its current asset mix following the massive slide in global equity markets in October when investors fretted about a global recession and the fallout it could have.
The Toronto Stock Exchange’s main index fell 16.9 percent in October and steep declines were recorded on other global stock markets.
Denison said the board’s investment strategy is based on the long-term outlook and that it does not need to react to sudden shifts in market sentiment.
The board said its assets under management had fallen to C$117.4 billion ($94.7 billion) by the Sept. 30 end of the second quarter of its fiscal 2009. That reflects investment returns of negative 7.5 percent for the first six months of the fiscal year and negative 8.5 percent for the second quarter. ($1=$1.24 Canadian) (Reporting by Frank Pingue; Editing by Peter Galloway)