In an open letter, John Graham, president and chief executive officer at the Canada Pension Plan Investment Board, defended the the investment organization’s current exposure to domestic markets.

Canadian pension funds have recently faced criticism from business leaders about what they deemed an apparent lack of support and a preference for global investment opportunities. Graham said the CPPIB has allocated 12 per cent of its portfolio to the Canadian market. However, the fund requires careful diversification tactics to ensure long-term funding through maximized returns without undue risk.

“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.”

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After reporting a net income result of $46.4 billion for its latest fiscal year, which helped bring the fund to $632.3 billion in size as at March 31, 2024, Graham said an overperformance period by U.S. equities meant its reference portfolio (19.9 per cent) overperformed its current portfolio return (8.0 per cent).

“We expect that some will see the difference between these two returns and suggest that the Canada Pension Plan 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.”

The CPPIB’s investment returns have been highlighted at a time when the Alberta government has called for the province to exit the CPP and form its own pension fund. Graham said the national plan will be stronger for longer by having more Canadians enrolled in it. However, he respects the right of Albertans to ask questions, seek information and make their own informed choices about their pensions.

“Pooling contributions from more than 22 million Canadians helps protect the CPP fund from market volatility and changing demographics.”

Graham also said the CPPIB has elected to separate the roles of chief investment officer and head of total fund management with CIO Edwin Cass now overseeing all investment departments.

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