Canada Pension Plan Investment Board’s (CPPIB) main fund fell by $2.4 billion to $298.1 billion during the last three months of 2016, due to a combination of factors including turbulence on the bond markets.

Toronto-based CPPIB delivered a 0.64% gross investment return, or 0.56% after all costs during the quarter.

That was relatively weak compared with the CPP Fund’s performance a year earlier, when gross investment return was 4.6% and 4.5% net of costs from October through December 2015.

CPPIB president Mark Machin said the bond portion of the portfolio was hurt by expectations the U.S. economy is headed for a period of “high growth and high inflation” — conditions that are better for equities than for fixed-income investments.

Since Donald Trump won the U.S. presidential election in November, the major U.S. and Canadian stock indexes have soared and North American bond markets have experienced the biggest quarterly decline since the CPPIB was formed.

“I think it’s directly tied to an expectation of the new administration’s policies, versus what was expected before,” Machin said in a phone interview Friday.

As far as Trump’s plan to renegotiate or scrap the North American Free Trade Agreement, signed by the United States, Canada and Mexico, Machin said it’s too soon to tell the impact.

“Nothing has changed yet and things that will change will take some time, if they do change.”

As for planned changes in the Canada Pension Plan that will be phased in from 2019 through 2025 under a federal-provincial plan, Machin said CPPIB has been preparing for years and he’s confident it will be ready.

Machin said CPPIB has diversified its portfolio by country, asset class and investment strategy.

“That’s what protects us from any particular change to an agreement somewhere or a country somewhere.”

One reason for the decline in the fund’s value in CPPIB’s fiscal third quarter, ended Dec. 31, was a $4.1-billion cash outflow to pay for benefits covered by the Canada Pension Plan.

Those payments exceeded the $1.7 billion of investment income during CPPIB’s fiscal third quarter.

The Canada Pension Plan usually collects more in contributions from employees and employers than required to pay current benefits. The surplus is invested by CPPIB for future use, but the trend sometimes reverses late in the calendar year.

While the quarter’s rate of return was below the long-term level required to sustain the Canada Pension Plan over the coming decades, CPPIB says its nine-month rates of return to the end of December were comfortably above the required levels.

In September, the Chief Actuary of Canada projected that the pension system will remain sustainable at current contribution rates if inflation-adjusted rates of return average 3.9% over 75 years.

In the first nine months of CPPIB’s 2016-17 financial year, the gross rate of return was 7.1% and the net rate of return was 6.9%. The value of the fund was up 19.2 billion from $278.9 billion on March 31, when the previous financial year ended.