We have been proudly investing the Canada Pension Plan Fund for 25 years, helping ensure that more than 22 million Canadians have financial security in retirement.
As we celebrate the 25th anniversary of CPP Investments, we reflect with pride on the journey that began with a clear mission: to manage the funds entrusted to us in the best interest of Canadian contributors and beneficiaries. Our commitment to this responsibility has been steadfast over the years, yielding strong investment returns and enhancing the financial security in retirement of 22 million Canadians. Twenty-five years on, we continue to generate solid returns by remaining focused on the long term and on building diversified portfolios with robust governance and risk management. This year, we once again delivered the results needed to sustain the CPP for generations to come.
The CPP Fund will continue to meet challenges as they arise. For example, as Canada’s population ages, more Canadians will begin to rely on the benefits they receive from the CPP. Today, over a fifth of Canadians are nearing retirement age (between 55 and 64 years old). This is the highest proportion in Canadian history. That challenge inspires us every day. As I tell my neighbours and friends, you can be confident the CPP will be there for you when you retire. Below is an update on some of our fiscal 2024 activities.
Our performance
The CPP Fund’s net income (after all costs) in the latest fiscal year was $46.4 billion and our 10-year returns remain strong at 9.2%. The Fund grew to $632.3 billion as of March 31, 2024, and is projected to hit $1 trillion in assets in the next eight years. This past year we were recognized as one of the world’s highest performing public pension funds by Global SWF, a data platform that tracks public pension plans, in recognition of our long-term performance. In addition, Canada’s Chief Actuary concluded that the CPP is financially sustainable for at least the next 75 years.
Our results were delivered amid an unusual year for global capital markets. We witnessed strong economic growth in the U.S., despite the pressures of inflation and higher interest rates. The result was a U.S. stock market that soared to new heights, fuelled largely by technology stocks. This exuberance in equities was reflected in the performance of our Reference Portfolio, which is a basket of global stocks – composed of about 50% U.S. equities – and bonds that we use to represent our market-risk appetite. The value of this portfolio increased by 19.9% over the fiscal year, compared to our portfolio’s 8.0% return.
We expect that some will see the difference between these two returns and suggest that the CPP Fund would have been better off mimicking this basket of publicly traded securities. We share the aspiration for the highest possible performance, but our results must be measured over the long term and not just a single year. When considering our performance across market swings, both up and down, we are confident in our approach.
Evolving our leadership
Our Board of Directors approved an evolution of our corporate strategy, which sets our course for the next several years. Our strategy provides the destination for where and how we compete to deliver superior investment performance. In addition, we are energized by new initiatives across the organization that are laying the groundwork for increased efficiencies, collaboration, and investment returns.
As part of our strategy evolution, we reorganized our leadership to better manage the size, complexity, and growth of the CPP Fund. We have separated the roles of Chief Investment Officer and Head of Total Fund Management to allow for more dynamic management of our portfolio, as well as balance sheet management and tactical positioning. Our Chief Investment Officer, Edwin Cass, now oversees all investment departments. That includes Total Fund Management, which is now headed by Manroop Jhooty, the newest member of our Senior Management Team.
Finally, we welcomed new appointments to our Board of Directors. Dean Connor, who has been a key member of our Board since August 2021, was named Chairperson. Mr. Connor succeeds Dr. Heather Munroe-Blum, our Chairperson since 2014. We thank Dr. Munroe-Blum for her leadership over the last decade. Nadir Mohamed, former President & CEO of Rogers Communications, joined the Board late last year.
Addressing public discourse surrounding the CPP
As the CPP Fund grows, CPP Investments has increasingly become a part of the public discourse on the best way to bolster the financial security of future generations. This includes whether public pension plans are investing enough in Canada and whether Alberta should withdraw from the CPP.
With the CPP Fund’s long history of strong financial performance, the case is clear for sticking with a well- established global investment strategy. But I also deeply respect the right of Albertans to ask questions, seek information, and make their own informed choices about their pensions. That is why we created a website (YourCPP.ca) with the facts about our national pension model. What I return to time and again, is that when it comes to pensions, there is strength in numbers. Pooling contributions from more than 22 million Canadians helps protect the CPP Fund from market volatility and changing demographics. We use our scale as a competitive edge to gain access to transactions around the world that help grow the CPP Fund. There are also advantages in the CPP’s portability, as it allows Canadians access to their CPP pension wherever they choose to retire.
The case is also clear for investing in Canada, which is why 12% of our portfolio is invested here. To put that into perspective, Canada makes up just 3% of global GDP. We invest four times more than Canada’s global economic weight because we recognize the excellent investment opportunities in our home market. At the same time, our mandate is to maximize returns without undue risk, taking into consideration the factors that affect the funding of the plan. That requires careful diversification — a key element of a resilient pension plan, and one of our core investment beliefs. Our contributors live and work in Canada, but to restrict their money to that single market would undermine the long-term sustainability of the Fund.
Transaction highlights
This year, our investments have seen significant growth. We increased our investment in Pattern Energy Group, one of the world’s largest developers and operators of wind and solar energy in North America, by US$905 million. We invested $197 million in financing to support CapVest Partners’ acquisition of Recochem, a leading global manufacturer and distributor of auto aftermarket and household fluids headquartered in Canada.
Our first infrastructure commitment in Italy involves an agreement to invest up to $2.9 billion dollars in NetCo, Italy’s largest fixed telecoms network, which is expected to close in the summer of 2024. As an active, global infrastructure investor, we currently hold 29 investments, including toll roads, ports, utilities and digital assets across 13 countries in both developed and emerging markets.
Lastly, we made a profitable exit from our stake in the wind farms Hohe See and Albatros. This sale earned us proceeds of $374 million after costs, yielding returns that greatly exceeded our initial projections.
Marking a milestone
We are proud of our quarter-century of delivering strong and sustainable returns for Canadians. For a person, 25 is young adulthood, a time filled with determination and optimism for the future. This is exactly how I feel about CPP Investments right now – we’ve had a quarter century of superb growth and resilience, but we have much more to achieve in the decades ahead.
To reach our goals for the CPP Fund, we will need a highly sophisticated team and strategic focus. Even more important, we will need to remain flexible and nimble. The world changes quickly. The skills investment firms relied on only a decade ago are no longer enough to excel under current conditions. To maintain our momentum and grow stronger, we must evolve our organization into an investing machine built for a rapidly changing global economy. I am confident our active but patient approach to investing, combined with a focus on continual improvement, will deliver a resilient portfolio for the next 25 years, and beyond.
I’d like to thank all our contributors and beneficiaries for your trust in allowing us to build one of the pillars of your retirement income. You can be sure we will do our best to earn your trust each and every day.
The challenge of moving the entire global economy towards lower carbon sources of energy is immense. As investors we view it as a
Video
November 14, 2023
Dear Contributors and Beneficiaries, As we celebrate the 25th anniversary of CPP Investments, we reflect with pride on the journey that began with a clear mission: to manage the funds entrusted to us in the best interest of Canadian contributors and beneficiaries. Our commitment to this responsibility has been steadfast over the years, yielding strong investment returns and enhancing the financial security in retirement of 22 million Canadians. Twenty-five years on, we continue to generate solid returns by remaining focused on the long term and on building diversified portfolios with robust governance and risk management. This year, we once again delivered the results needed to sustain the CPP for generations to come. The CPP Fund will continue to meet challenges as they arise. For example, as Canada’s population ages, more Canadians will begin to rely on the benefits they receive from the CPP. Today, over a fifth of Canadians are nearing retirement age (between 55 and 64 years old). This is the highest proportion in Canadian history. That challenge inspires us every day. As I tell my neighbours and friends, you can be confident the CPP will be there for you when you retire. Below is an update on some of our fiscal 2024 activities. Our performance The CPP Fund’s net income (after all costs) in the latest fiscal year was $46.4 billion and our 10-year returns remain strong at 9.2%. The Fund grew to $632.3 billion as of March 31, 2024, and is projected to hit $1 trillion in assets in the next eight years. This past year we were recognized as one of the world’s highest performing public pension funds by Global SWF, a data platform that tracks public pension plans, in recognition of our long-term performance. In addition, Canada’s Chief Actuary concluded that the CPP is financially sustainable for at least the next 75 years. Our results were delivered amid an unusual year for global capital markets. We witnessed strong economic growth in the U.S., despite the pressures of inflation and higher interest rates. The result was a U.S. stock market that soared to new heights, fuelled largely by technology stocks. This exuberance in equities was reflected in the performance of our Reference Portfolio, which is a basket of global stocks – composed of about 50% U.S. equities – and bonds that we use to represent our market-risk appetite. The value of this portfolio increased by 19.9% over the fiscal year, compared to our portfolio’s 8.0% return. We expect that some will see the difference between these two returns and suggest that the CPP Fund would have been better off mimicking this basket of publicly traded securities. We share the aspiration for the highest possible performance, but our results must be measured over the long term and not just a single year. When considering our performance across market swings, both up and down, we are confident in our approach. Evolving our leadership Our Board of Directors approved an evolution of our corporate strategy, which sets our course for the next several years. Our strategy provides the destination for where and how we compete to deliver superior investment performance. In addition, we are energized by new initiatives across the organization that are laying the groundwork for increased efficiencies, collaboration, and investment returns. As part of our strategy evolution, we reorganized our leadership to better manage the size, complexity, and growth of the CPP Fund. We have separated the roles of Chief Investment Officer and Head of Total Fund Management to allow for more dynamic management of our portfolio, as well as balance sheet management and tactical positioning. Our Chief Investment Officer, Edwin Cass, now oversees all investment departments. That includes Total Fund Management, which is now headed by Manroop Jhooty, the newest member of our Senior Management Team. Finally, we welcomed new appointments to our Board of Directors. Dean Connor, who has been a key member of our Board since August 2021, was named Chairperson. Mr. Connor succeeds Dr. Heather Munroe-Blum, our Chairperson since 2014. We thank Dr. Munroe-Blum for her leadership over the last decade. Nadir Mohamed, former President & CEO of Rogers Communications, joined the Board late last year. Addressing public discourse surrounding the CPP As the CPP Fund grows, CPP Investments has increasingly become a part of the public discourse on the best way to bolster the financial security of future generations. This includes whether public pension plans are investing enough in Canada and whether Alberta should withdraw from the CPP. With the CPP Fund’s long history of strong financial performance, the case is clear for sticking with a well- established global investment strategy. But I also deeply respect the right of Albertans to ask questions, seek information, and make their own informed choices about their pensions. That is why we created a website (YourCPP.ca) with the facts about our national pension model. What I return to time and again, is that when it comes to pensions, there is strength in numbers. Pooling contributions from more than 22 million Canadians helps protect the CPP Fund from market volatility and changing demographics. We use our scale as a competitive edge to gain access to transactions around the world that help grow the CPP Fund. There are also advantages in the CPP’s portability, as it allows Canadians access to their CPP pension wherever they choose to retire. The case is also clear for investing in Canada, which is why 12% of our portfolio is invested here. To put that into perspective, Canada makes up just 3% of global GDP. We invest four times more than Canada’s global economic weight because we recognize the excellent investment opportunities in our home market. At the same time, our mandate is to maximize returns without undue risk, taking into consideration the factors that affect the funding of the plan. That requires careful diversification — a key element of a resilient pension plan, and one of our core investment beliefs. Our contributors live and work in Canada, but to restrict their money to that single market would undermine the long-term sustainability of the Fund. Transaction highlights This year, our investments have seen significant growth. We increased our investment in Pattern Energy Group, one of the world’s largest developers and operators of wind and solar energy in North America, by US$905 million. We invested $197 million in financing to support CapVest Partners’ acquisition of Recochem, a leading global manufacturer and distributor of auto aftermarket and household fluids headquartered in Canada. Our first infrastructure commitment in Italy involves an agreement to invest up to $2.9 billion dollars in NetCo, Italy’s largest fixed telecoms network, which is expected to close in the summer of 2024. As an active, global infrastructure investor, we currently hold 29 investments, including toll roads, ports, utilities and digital assets across 13 countries in both developed and emerging markets. Lastly, we made a profitable exit from our stake in the wind farms Hohe See and Albatros. This sale earned us proceeds of $374 million after costs, yielding returns that greatly exceeded our initial projections. Marking a milestone We are proud of our quarter-century of delivering strong and sustainable returns for Canadians. For a person, 25 is young adulthood, a time filled with determination and optimism for the future. This is exactly how I feel about CPP Investments right now – we’ve had a quarter century of superb growth and resilience, but we have much more to achieve in the decades ahead. To reach our goals for the CPP Fund, we will need a highly sophisticated team and strategic focus. Even more important, we will need to remain flexible and nimble. The world changes quickly. The skills investment firms relied on only a decade ago are no longer enough to excel under current conditions. To maintain our momentum and grow stronger, we must evolve our organization into an investing machine built for a rapidly changing global economy. I am confident our active but patient approach to investing, combined with a focus on continual improvement, will deliver a resilient portfolio for the next 25 years, and beyond. I’d like to thank all our contributors and beneficiaries for your trust in allowing us to build one of the pillars of your retirement income. You can be sure we will do our best to earn your trust each and every day. Sincerely, John Graham President & CEO About the Author John Graham President & Chief Executive Officer Thanks for subscribing to CPP Investments Sign up for our latest news, insights, reports and other information about CPP Investments Email address * Please enter valid email id Job title Select Job Title Associate Analyst Consultant advisor Manager/supervisor Government official/regulator General manager/director Board director Chairman/board member VP/SVP/EVP President Partner/Owner/Entrepreneur Parent/guardian C-level other Chief Human Resources Officer Chief Marketing Officer Chief Financial Officer Chief Sustainability Officer Chief Digital Officer Chief Technology Officer Chief Operating Officer Educator/professor Student Editor/reporter Other Organization How did you hear about CPP Investments? Select Source CPP Investments alumni CPP Investments employee or board member CPP Investments portfolio company Online search (e.g. Google) Social media Other What news would you like to receive? * News and updates from CPP Investments Latest news from the Insights Institute Consent * By checking here, you are subscribing to receive our newsletters and other similar types of insights and reports by email, and permit CPP Investments to use cookies and similar technologies to analyze your interactions with our emails. Unsubscribe at any time by clicking the link in the newsletter’s footer. Visit our Privacy Policy for more information. Questions or concerns? Contact us. An error has occurred. Please try again later. Next A National Pension Promise A strong pension fund is a solid defense against declining birth rates and rising life expectancies. Article April 11, 2024 A Fund for Canada Times like this call for a steady hand and a patient approach. Canadians can count on us. Article December 11, 2023 3rd Annual Alberta Energy and Growth Summit The challenge of moving the entire global economy towards lower carbon sources of energy is immense. As investors we view it as a Video November 14, 2023
