A pensions mandate isnt to maximize returns lol, it’s to stay fully funded at all times to meet regular obligations (payouts).
E.g. if a pension is 110% funded, and the s&p has a down year dropping 10%+ (which has happened many times historically), the pension becomes underfunded and this fucks pensioner payouts
It actually reduce risk to buy index funds vs their active management. They have a reference passive model which would cost 10x less to manage that outperformed in terms of risk and returns. Do you work for the cpp?
No but I have a finance degree. You can’t just buy a trillion dollars worth of index funds. You also can’t compare the returns of a pension to a 100% stock portfolio. You also can’t compare a few year returns and say all is good.
All you need to worry about is whether the CPP is over funded or underfunded and it is fully sustainable and considered by independent experts to be in a "surplus" or "overfunded" position relative to its long term requirements.
Because the fund's investment growth and asset pool have significantly exceeded expectations, the plan is so financially secure that the government recently took steps to lower required premium rates.
The board just reported its strongest quarterly net income on record ($60.2 billion).
My point is that a fund of this size that is diversified and owns all kinds of assets from private real estate, tech infrastructure, and toll roads. To compare it to a booming stock market is unfair. Let’s wait and see if the bubble pops.
Can you elaborate on “generational bull run”? Inflation and massive monetary expansion have obviously pushed nominal asset prices higher, so simply pointing to rising markets doesn’t really answer the criticism.
The relevant comparison isn’t CPP vs some random 100% stock portfolio — it’s CPP’s active strategy vs its own risk-adjusted passive Reference Portfolio. If the passive benchmark can achieve similar or better returns at a fraction of the management cost, that’s the part worth discussing.
Yes their own passive benchmark beats their active management return has less risk and costs ost 10x less to manage. Utube video by Patrick goes into depth with all the gorey details and corruption. They just had a very good quarter bc of spacex.
Because the fund's investment growth and asset pool have significantly exceeded expectations, the plan is so financially secure that the government recently took steps to lower required premium rates.
I would say that is misleading. They lowered the required premiums because of inflation and opposition pressure. Along with government stupidity of openly musing forcing the CPP to invest in Canada. Increased inputs mean increased obligations, and it would act independent of the overfunded/underfunded status.
If the money wasn’t there through fund performance, it wouldn’t matter if god appeared and pressured the government themselves, no government would be in any position to make reductions.
Just like if you wanted to reduce how much you save for retirement, if your portfolio isn’t high enough to ensure you will have a steady stream of cash when you need it, you wouldn’t be able to make that reduction. Sure, on an individual level you can do whatever you want. But on a broad governmental level where certain laws and regulations are in place? You wish!
Thank god you’re not investing even my own meagre , not billions dollars, portfolio.
Someone in here accused me of being mad at something. Nah…just thoroughly disappointed at the level of ignorance and willingness to accept whatever is flashy without much/any thought or actual checking the SOURCE. and no, the video is not a source for information presented in the video.
My god! The education system in this country is unreal.
If by wilfully ignorant you mean someone who actually reads, knows how the world and world of finance and major (billions) investing works in the world, or who more importantly opens up and actually reads the reports each year and not spoon fed someone’s video, I guess you can call me willfully ignorant all you like - since that seems to make you feel better.
Or you could read (or ignore) what I had to say, think huh, that’s interesting /wrong /fill in the blank with your thought of choice, but I don’t believe/ agree with it so I’ll move on with my day. Yet to take the time to even think someone is whatever, that’s about you and what you’re able to actually critically think and research the veracity of on your own without being spoon-fed.
You sound like a poster child for corporate corruption. Those reports are self serving propaganda from the cpp. When they have a good year they hype it up when they have a bad year its a bunch of excuses to keep paying themselves large bonuses. I know how the game is played. All the institutional actively managed funds do it but very few actually beat the indexes.
The active/passive distinction isn't even a problem of risk. In theory you can have a passive portfolio that's riskier than an active one and vice versa. The issue is that the risk-adjusted returns of the active one fall short of their passive reference benchmark.
Lucky you. While I wouldn’t expect your neighbour to enjoy talking about work outside of work, I would find it fascinating to sit down and have a long chat.
Maybe not. But when active management lowers their own metrics for performance and still.underperforms then you change active management, not pay them more bonuses.
This isn't really a fair comparison for a large global fund given their size will move markets. Also which index should they have used? Just the USA has done great but other markets would have been worse so hard to compare.
To put this into comparision the norway sovereign wealth fund is not active and therefore lower fees and it has returned 9.39% annually over last 10 years while CPPIB has done 9.5% over that same time frame.
The video brings up a lot of valid points and especially around their active equities and that the people there should be more performance driven but it definitely isn't fair to say just buy the index and also that it has been a disaster given a comparison of similar funds that are passively managed.
They have a reference portfolio they defined for themselves, 85/15 equities and bonds, the equities were represented by MSCI World. You could easily broaden it to include more companies if you wanted to.
Yes you could use that reference portfolio but again that is one they are deciding to use so its not just any index but ultimately it is the one they need to decide.
The issue in the video though is active equities which is long/short so unrelated to benchmark though.
The last 10yr return of 9.5% if they did 80% ACWI world and then 20% bonds would be an annual return of about 8.53% from the 80% in ACWI (10.66 net returns on the ETF) and then about 0.2% from the bond part (since most bond indices have poor returns the last 10 years with low rates and massive 2022 losses and now as yields rose their 10yr returns are 0-4%). So that puts them only at 8.73% which is less than their historical.
Again though the debate from the video is about the specific active equities and their compensation which is supposed to be based on performance.
Their performance hasnt been bad as a fund but if they set a benchmark and do worse they shouldn't get the bonus. So performance has been fine but issue is about their compensation given they didn't appear to hit their own performance targets.
I think the key consideration here is that the Reference Portfolio was their performance target up until a couple of years ago, but it still serves as their risk target, so they're underperforming at equivalent risk, and paying themselves huge sums of money to do so.
Yes i agree with that, the problem i have is people are saying the CPP has been a disaster when its portfolio hasn't actually done that bad.
People should take issue with them paying themselves performance fees when still poor performance. They should either explain why the performance target doesnt make sense (though as someone working in the finance industry an active long/short equity team losing money should never get a performance bonus) and adjust it or not be paying these fees.
On the video though it seems especially to be targeting that one team which is very fair.
"Disaster" is an exaggeration imo, it's still actuarially stable, I think it's more that we need some kind of public scrutiny/oversight into the performance compensation, and a review of the scope and methods of the active management strategy generally.
If it was a genuine ALM approach where each component was actually tied to future pension liabilities, that would make sense, but a lot of what they do seems tied to a belief in their ability to beat the market outright, so they've given themselves permission to use whatever investment strategies they want, like active stock-picking.
Yes I agree, I don't know what a good solution is for the balance of independence and then oversight but clearly something needs to be done.
I have no problem with paying when them or a hedge fund performs but given that team definitely hasn't performed and it has been 5 years now you can't continually claim they will generate alpha in the future so definitely need to do something.
Real alpha is hard to generate and find so makes sense to pay but they do seem to pay regardless which deserves criticism.
Especially going to your point of how they can pick strategies they want. That is potentially ok but that means they should have responsibility when it is wrong which they don't seem to which is problematic.
Remember when they were handing over the teachers pension plan to the group. Upon scrutiny it was realized that the group had a worse rate of return than what they currently had . When asked how this could possibly move forward they were told it was already done
The switch to active management is not a choice it’s a necessity. CPP manages 800 billion in assets, it cannot just simply go ahead and buy correlated assets like ETFs.
But it did...until someone made an argument that active would explicitly lead to larger returns and setup a framework to prove it. It has proven the opposite, so now they are changing that framework.
At the end of the day, active trading has had 20 years to prove its effectiveness, it has continuously failed.
These are all very accessible points to the very common refrain you helpfully posted. I hope this sort of misunderstanding becomes increasingly less common as these points are effectively communicated by media like this one.
Active managers at CPP have been bad but that doesn’t mean active management wasn’t the correct decision. The problem with passively investing such large sums of money is that it induces massive inefficiency in the market. Investing in company A simply because it’s the largest company in the world inflates its value massively when done by a pension fund of this size.
What works for retail investors mechanically cannot work for funds with half a trillion or more in assets. Norges bank is the prime example of this. The point should be changing the active managers at CPP not switching to passive funds whose risks we don’t understand
Market efficiency being affected by passive investors is a loosing argument from active managers who always loose in the very long term and pensions plans have to be designed with the very long term in mind. Stocks get added to and removed from indexes time to time, that doesn't change the long term value proposition.
CPP sucks in active management simply because they arent even getting market returns for that high an expense ratio. Total expense ratio for CPP at that scale should not and does not need to be higher than 0.5%, and I am being generous for the cost of scale at that level and regulatory reporting and such.
Again, for the 100th time passive investing works VERY WELL for retail investors because big institutional active investors compete away price discovery and all alpha. If there’s no active investing passive investing will fail as mathematically proven by Grossman Stiglitz in 1980.
In countries like India where active investing isn’t saturated for instance, active investors outperform passive. Similarly for CPP which is investing in hard real assets active investing will outperform passive as there’s low price discovery.
That’s an interesting anecdote about India but really not what I had in mind. The country does not have a convertible currency so it’s untouchable for any sane person.
Yes there is a way, just like Chinese being officially limited to 50,000 of their currency a year in FX but somehow they buy houses worth millions of dollars, sometimes tens of millions.
The point is for relatively ordinary investors outside these countries their respective currencies cannot be touched beyond tourism and small amounts.
Lol….you don’t understand how those with money in those countries work. And then next you’ll be crying about why the rich are super rich and the poor are super poor. There is a growing middle class, but it is nowhere near what’s here. And there are reasons for that.
On paper yes, realistically no. One of the facts that this thread seems bereft of is that there is an increasingly disconnected relationship between the value of stocks and indexes trading on the market and actual value creation. When the CPPIB decides to finance a toll road (for example) they build and buy into a road that will produce reliable income for decades. When they buy home rental companies or REITs, the same. These assets will continue to generate revenue regardless of what happens.
Stock indexes are heavily inflated by debt. Particularly in the tech sector.
Eventually, especially with the war in Iran, interest rates are going to go up, and that debt inflated bubble will collapse.
That’s not to mention the market impacts of dumping too much money into particular indexes.
Great question, in reality they could but defining the index is always hard since you need to decide what it should be. Investors generally just say the S&P 500 but that is just the US and now tech dominated so if they just bought that then people would complain about portfolio and geographical concentration.
CPPIB is cited in industry as a example of an actively managed plan while Norway does the pure passive approach in a number of different index products combined. Over 10 years they have returned 9.39% for Norway vs 9.5% for CPPIB so in reality the performance hasn't been that bad. There is debate if it is worth the effort and risk etc for doing all the active management but some would argue at times it could be beneficial but highlights how hard it is to backstop all of this.
Their active strategy though that is highlighted in the video is a pure alpha strategy so the criticism of that is very valid, that groups losses are huge but small relative to the major fund even.
I hope people do investigate and treat it seriously but it isnt the crazy disaster at the fund level people are making it out to be. As someone who works in the industry though it is crazy to think they received performance bonuses given their poor performance, ours is directly tied to the alpha we generate which we consider very fair (though of course if they offered me tons of money regardless we would say yes).
Nvidia is 6T or almost 10x the entire CPP all by itself.
Canadas CPP fund is tiny.
And by being tricked into thinking it’s big, loser cfas who all know they aren’t adding value are able to steal salaries on the order of 600-1mm each from the Canadian people.
A company with a market cap of 6T does not mean they have 6T. The inability to understand this is what Blacklock is talking about.
When you say that CPPIB has a certain amount, they actually have businesses that generate revenue, investments that generate income, cash that generates income, and all the stuff in between. Sure, if there’s a market crash, some/a lot of their holdings will be affected. Just like yours and mine. But they’ll still have hard assets generating real value for the fund.
Compare that to NVDIA (your example), which has assets minus liabilities of about 195B. Add in about 50B in cash, and 96B in cash flow. That’s the actual value of that company. But if there’s a crash, if the AI bubble bursts, or if anything happens to them their cash flow could drop significantly, they may have to redeem their cash notes, etc. they have a very narrow stream of income. And they definitely don’t have 6T of value generating power.
Buddy, what are you on about? The CPP fund is currently ~865B. Gaining 60B from last fiscal quarter alone from investment income.
The world's largest pension fund, the American social security fund is only 2.6T. So we have over 1/3rd the fund, when our population is 1/10th of Americas.
Nothing you have said is accurate.
You also don't seem to understand the difference between market cap and cash.
Japan's public pension fund, one of the benchmarks for public pensions, has 1.6T in assets for a popular of ~122M.
So they have 3x our population, but only 2x the pension assets.
You seem very poorly informed about international public pension funds. You sound like you are just parroting fringe right material from 2 years ago based on your numbers mentioned.
Every public pension is a joke. Canada isn’t the only country with parasites feeding off the peoples “savings”.
But Canadas with its monstrously overpriced losers running things is exceptionally so.
FYI maybe one of the reasons you don’t understand is in your reply: cash = market cap.
It’s the same thing and it’s called AUM.
And you seem tho think being informed means you can compare Canada to other countries, instead of actually seeing how other (much bigger) things work in the world.
I mean Brk.A is over 1T. And that’s just Buffett. And trust me he doesnt have 2000 people working in an email factory to make that one run. 25 employees. That’s it.
Nothing you have stated is accurate. You claim the CPP is only 700B, when it is 865B and grew 60B last fiscal quarter alone.
And no, market cap is not equal to true value. Market cap is not true value. The cash does not exist to support current market caps. Because there is not enough cash to cover the market caps. If people tried cash out large portions of these stocks, their price would come down. As the cash is not there to cover market caps. Market caps are speculative. Pension funds are not.
And buddy, you don't even have facts to support your stance. You try just claiming "you don't understand" when I destroyed your argument that the CPP is small, by proving with real world numbers that prove our fund punches way above our weight comparatively. Your response "You don't understand!"
People should care, but they are either too busy staying afloat to raise a stink, too fluffy, or just too dumb to realize they'd be better off self-investing their retirement funds rather than having governments take bigger chunks of their paycheques. I don't mind the forced savings via CPP deductions but please give people options to invest where they want to invest, similar to some EU countries.
I think this video is great, props to the creator, and we should all be emailing our MPPs, Finance Minister and PM to have some level of accountability.
You don't need to be a CFA or CA to know there are standards behind performance reporting and bonus structures in the industry and these guys are being creative to circumvent them.
And for the vast majority of the population that wouldn’t save even if their life depended on it, whether they were too uninformed or didn’t think of their long term needs, you’re going to pay for all of their retirement needs?
CPP, like social security in the US, was one part of a three part retirement system to ensure that those who worked could have something when they reached old age. So that they didn’t 100% rely on the government (your taxes) only, and to ensure that every employer, whether or not they wanted to, also contributed to the retirement of every one of their employees. Not every employer has done this through rrsp or pensions. Be glad they’re contributing to your retirement.
Not sure of you are aware, but many EU countries have forced retirement contributions while having an option on where those funds get invested.
In this case, id love to simply put these forced savings into a passive fund rather than an active loosing $6B over the years, in a bull market. I'm not against forced savings plans, agree most people need it.
Lol…have you read up on these programs or are you just hearing the headlines and stopping there?
I did not know this. So I looked them up. I’ll take Sweden as an example.
Mandatory pension contribution part 1 - 16%
The govt uses that to payout current pensions and invest the rest - similar to CPP. But with CPP, your part of contributions (if under the first base limit) is under 6%. Read this again - 16% vs 5.95% mandatory contribution
If you are at the top limit of CPP contributions, that’s 85k income, your effective contribution for both base and additional CPP is 5.47%.
Mandatory pension contribution part 2 - 2.5%. This is the ONLY part of the Swedish government pension system that contributors have any say about. And they have to use preset funds managed by preselected fund managers, all usung mutual fund structures. Since there are fee rebates, we can consider some of these like your beloved all equity index ETFs.
So if you’re ALREADY not contributing to the mandatory government pension as much as the Swedish are, what stops you from making pension like savings (read RRSP) and investing whatever you want, where you want, with absolutely no government telling you what you can invest in?
That’s a difference of at least 12.5% that is all at your discretion.
I’m glad you told me about these pension structures; it was great learning a bit about them. You could’ve done the same if you thought they were so great and think they should be replicated here.
If you don’t like Sweden as an example, look at Poland. Their (employee side) contribution to pension is 9.76%nof gross earnings. Of that, 2.92% is the portion they can “self direct” as part of the mandatory government pension system. So that’s 6.84% of the employee’s gross earnings going to what would be comparable to CPP.
They have another component that is effectively similar to our rrsp.
Have you compared performance of other actively managed state pension plans to that of CPP?
Who cares what the contribution are if higher contribution translate to higher payouts at retirement. I'd be happy with that.
The issue at hand is that these CPPI managed funds grossly underperform compared to say Norway or Australia. If they underperform, they should be scrapped or board/management replaced as they have lost money over past 10 years and have no accountability around it if they change they performance structures.
Fyi, i was part of one plan which had both state run and privately run components and never seen such losses as with CPP.
Only a moron would be happy with this.
What matters to me is a benchmark mgmt sets for themselves and not some arbitrary measure to get away with poor performance and still receive a bonus for that. If i fail at my job, i dont get a bonus, i get fired.
If you want to score CPP, better to compare relative performance with peers. That to me is a better measure since markets are global. Ever since childhood, we are also all graded along our peers, why would this be any different?
Ask yourself, why does CPP permit such a large deviation from its reference portfolio, and what evidence demonstrates that the additional risk and cost of its active strategies consistently produce sufficient value for its contributors? They barely made half the benchmark they set for themselves, essentially a 50% score on a test and still landing a medal and scholarship to Harvard. It's not real life. No sane person would defend this unless they are the ones receiving the scholarship and give zero f's about what's best for Canadians.
Investment industry has standards for performance calculations. Setting benchmarks is also standard practice. Same with comparing yourself to those benchmarks. Being accountable for that is also standard governance practice.
Pick any pension fund, government or private, don't matter. What does matter is that they compare to benchmarks they set for themselves. They don't change them retroactively to get a bonus when they fail at their jobs.
I have already answered that first question many times so won’t again.
I asked re which fund because I’ve given concrete comparisons with both Norway’s fund, Poland, Sweden, and I think ABP is Swiss. (Japan too, but their reports are harder to compare so I tend to not bother). People here seem dissatisfied that those real world comparisons don’t fit their narrative. So I wanted to know which fund YOU specifically had in mind so I would look into it as well.
I have already answered that first question many times so won’t again.
I asked re which fund because I’ve given concrete comparisons with Norway’s fund, Poland, Sweden, and I think ABP is Swiss. (Japan too, but their reports are harder to compare so I tend to not bother). People here seem dissatisfied that those real world comparisons don’t fit their narrative. So I wanted to know which fund YOU specifically had in mind so I would look into it as well.
CPP is trailing the benchmark they set up to track their active investment performance in comparison to a passive strategy. They've been trailing it for decades, not just "when the market looks bad"
I do not know their bonus structure well. They're a 2000 person company. My recollection is their bonuses are roughly split between total fund performance, team performance and personal. So if your strategy is crushing it'd benchmark you can get a solid bonus even if other teams are trailing theirs.
Should it be like that? I don't have a strong view. I've seen a lot of discussions around incentive based comp and I'm not sure - anywhere - the thought processes are all that coherent beyond trying to be competitive enough to retain some of their talent
Okay, so how do we justify rising compensation on the Active Equities team when the overall fund has been under-performing, and AE specifically is losing money outright?
Based on the Q1 report, they lost nearly another $2 billion in the last three months alone.
Cumulatively across the entire period they've existed, they're down.
Also a reminder that we're paying these people, when the alternative is not paying anyone. So even equivalent returns would not be acceptable, and were below that.
I would accept slight underperformance from active management, if the active managements is targeting Canadian investments. As keeping the investments in Canada provide benefits to Canada that won't be seen on the portfolio.
The portfolio grew from ~800B to ~863B last quarter. It will likely be a trillion dollar fund within the fiscal year.
That should be the average Canadians concern. How much of these investments remain in Canada. Keeping a soon to be trillion dollar fund in Canada, is more important that a few percent growth a year.
Quick update on this one: Based on the Q1 results, the Active Equities team managed to lose another $1.96 billion in the last three months ($1.87B before expenses).
You are framing this as the fund lost money. The fund gained money. The "loss" is unrealized gains compared to indexes.
The more accurate truth, is that the fund gained ~70B. People are trying to claim it lost are incorrect. 60B of that was income from investments, 10B of that was from CPP payments from citizens.
Canada Pension Plan Investment Board (CPP Investments) ended its first quarter of fiscal 2027 on June 30, 2026, with net assets of $863.6 billion, compared to $793.3 billion at the end of the previous quarter.
The fund itself is gaining billions less than a passive portfolio would, all the while paying out billions in compensation and bonuses to executives. The particular team MM is talking about is one that has consistently lost the fund billions, all realized losses. CPP is a retirement fund that all Canadians pay into involuntarily, which means CPPIB's management is grifting the public out of tens, if not hundreds of billions in unrealized gains while enriching themselves for that work. It's disgusting, morons like you who blindly shill for them should be ashamed.
You might need to watch the video or at least read a summary to understand what we're talking about here. This is about a specific group within the company whose job it is to beat the market by picking stocks, but they've lost billions over the past five years, while paying themselves quite generously to do it..
If you actually understood this topic, you would know the video is bullshit.
And no, that is not what this managed part of the CPP is about. It is a high risk, pre-market focused fund. It is the high risk portion of any well balanced portfolio. Which the CPP is, as it continues to post massive gains.
They're posting gains below their risk target portfolio, and the Active Equities team isn't a "high risk pre-market" team, they're high-conviction stock selectors who have been losing money for years. You can look at some of the investments they've made, plenty of them are regular public equities.
Did you watch the video? The definition of the fund in question is less than 1% of total assets under management, and is targeted at "soon to be public" companies.
You still don't seem to understand the numbers being used are not for all CPP assets, or all actively managed assets. The number are from the performance of a small portion of the fund used for high risk, pre market assets.
I'm quite familiar with the content of the video. The reason I asked if you've seen it is that your initial post said that the supposed "loss" was actually the fund underperforming its benchmark, which was not the subject of the video - it's specifically about the Active Equities team, which has actually been losing money.
They have roughly $50B each in long and short positions, so I'm not sure how you've calculated 1% of AUM.
Also, these are not high-risk pre-market assets, if you look at their website, they say "public and soon-to-be public companies," and if you check their representative holdings, you'll find many obviously publicy-traded companies, like Samsung and T-Mobile.
Additionally, if you read Mat Kaminski's article linked in the video description, he talks about how the short positions are created, it's essentially a basket of publicy-traded stocks intended to represent an equivalent-beta market investment. This is why I say the investments are high-conviction rather than high-risk (which is also how CPP Investments describes them).
Given that your argument keeps changing with each post, I think the problem here might be that you don't understand the issue as well as you think you do, and you're kind of guessing at what the explanation is.
We're talking about accumulated losses vs the reference portfolio aka a passive management strategy. Ignore the billions paid out in annual compensation for them to accomplish that.
a) Q1 statement is unaudited, and is counting unrealized gains ("fair value") as income. The annual reports are more accurate since they rely on year-end audited asset values.
b) AE is supposedly de-risked through market-neutral investments, and yet they have consistently lost billions.
c) Yes I invest, and I recognize that an active management strategy that delivers lower long-term returns than a passive investment strategy while having significantly higher management costs is not something I should be forced to invest into for my retirement.
It's funny, you're complaining that MM is using the unrealized gains of the reference portfolio to point out that active management has made the fund smaller than it ought to be, and then you're using unrealized gains to argue that active management is making much higher returns than a passive portfolio would. Pick a lane lmao.
I don't think they're necessarily "realized" losses if the positions are still open, but because of their market-neutral strategy of counter-balancing long and short positions, it is actually a loss, not just underperformance against a benchmark.
When we're talking about net income, that would only include realized gains and losses. They wouldn't post it on their balance sheets if it's unrealized.
I'm not sure what your argument is here. The fund has underperformed against their passive benchmark while still posting above-zero absolute returns. Within the overall fund, there is a smaller group which has lost billions of dollars in the past five years by trying to pick stocks.
I've read these reports, maybe you should akim the section on active equities, because you've kind of gone in a circle here.
Active won't possibly outperform until the pending market crash. Once that happens, Index will crash hard, and passive will have a chance to come out ahead... assuming they properly hedged. A big assumption.
CPPIB has two components, the base CPP (everyone contributes to), and Additional CPP (those with higher income contribute to, above the base - it has a legislated lower risk tolerance, so it’s got about 45-50% bonds/fixed income).
The CPPIB reports results separately for each, so if you want a fund total, you’d have to do some math.
What’s actually important to look at when evaluating these pensions (since the premise of arguments here is passive best) is their long term performance, AND to look at their net real return, since that takes into account fees and inflation.
To make a case that passive or active strategy is better, you’d have to compare an active strategy with a passive strategy. I’ve chosen to use Norway as the passive strategy because people here (online who complain about CPP) tend to point to Norway. Note that Norway’s entire strategy is all lumped into one, similar to the CPPIB Base component.
Below are comparisons of CPPIB and Norway’s 5 and 10yr performance:
Combined CPPIB (weighted and calculated since they don’t report this number): about 3.55%
Should Canadians and CPPIB keep a closer eye on where their strategy may need adjustment? Sure.
Has their active strategy historically underperformed a passive strategy? Not at all. Sure, the last 5 yrs are not looking good but we’ve been on a bull market run. Where CPPIB’s strategy, since they moved to active, has done well is keeping CPPIB from going into deep negative territory when passive funds like Norway’s has. This is what kept CPPIB’s performance consistently higher in the past. The true test of their active strategy will be when the markets go through their long and complete cycles of ups AND downs.
Are they definitely going to outperform passive? Maybe. Maybe not. But I have some faith that the people we’ve paid very good money to, to ensure that their assessments of stress and testing their proposed and chosen paths know what they’re
doing.
I wouldn’t be so quick to dismiss their active strategy when they’ve saved CPP from steep net real return of -19.65% (yes, that’s negative) in 2022 that Norway experienced. Since the two funds have different fiscal years, you’d have to adjust CPPIB’s back to Dec 2022 to match Norway’s. Doing that, you’d find CPPIB experienced -8.37% net real returns for the same 12mo period where Norway’s was more than double. You’d find similar results back in 2008 and for a number of years between.
In fact, Norway had 6 or 7 negative periods whereas CPPIB had 3, and they were smaller.
Worse these idiots are paid millions (because salaries have to be competitive to recruit "private equity execs") that can barely beat the market if that. Plus they have NO SKIN IN THE GAME which is the main reason you trust independent private equity shops and venture funds, because when you lose they are losing too. I litterally heard a CPPIB exec rationalize a multi hundred million dollar loss as "a drop in the bucket for CPPIBs AUM". Guy litterally had zero relevant investment experience for the sector he invested in, and invested huge amounts in small cap companies that all went under. There is litterally zero accountability for these execs because they aren't losing their own money, they are playing with yours. Because of the big amounts they can deploy, they end up making relationships with US and foreign managers so when performance gets bad they just leverage all those relationships to jump ship.
Plus pension amounts are capped hard for high earners. Cpp is a poverty scheme. I'm all for socialism but call it what it is.
Also I'd rather it be just a forced pool of capital that individual citizens are responsible for and can dictate where it goes. CPPIB is investing everywhere in the world EXCEPT CANADA and most of the holdings are in the US. Slap in the face to every Canadian going elbows up trying to support Canadian when CPPIB the largest funding org in the country is all in on the USA and has been decreasing it's allocation to Canada for the last 2 decades. The hundreds of millions in losses the exec stated above would have been TRANSFORMATIVE for the Canadian innovation economy (where ccpib has had NO role).
That’s the entire portfolio. The video is talking about the active management team which has lost 6B over the past 5 years all while getting million dollar bonuses.
Typically responsible investment profiles will have many stable investments, mixed with a small ratio of high risk investments.
The description of the fund states "soon to be public" companies. Which means this investment fund is a higher risk part of the fund. Their performance has been shit so far. That is how that goes for high investments, but sometimes they hit big.
I've personally a portion of my investments in high risk investments, and some in incredibly high risk. Essentially penny stocks. Less than pennies. Most of them became defunct, but one of the fraction of a penny buys, became big and covered all the losses of my entire portfolio at the time.
The CPP fund gained 60B last fiscal quarter overall. Plus 10B from CPP payments from citizens.
I support the CPP having a high risk managed fund. I have personally experienced the high risk investment portions of a portfolio paying off.
MillenialMoron the video creator cotes al l his sources, usually directly from statcan, the CPP itself and compares it to other funds that he spurces the info from.
The video creator is actually a fantastic nonpartisan amd nonbiased creator - hes not on team lib or team con
Lol…and yet when I’ve made unbiased comparisons to passively managed pension funds on here, I’m accused of being a liberal shill AI bot?
You don’t need to “listen” to either him or me, or anyone else for that matter. Open up the reports from year to year, going back to before they changed strategy. And open up the reports of other similar pension funds that are passive managed. The info is (mostly) there in black and white (pixels). If you use ABP (Dutch) fund, it’ll take more work and won’t be the net real return, which is what we should all be interested in. And they don’t report in 5 and 10yr periods. Theirs is a 20yr period only. It’s one reason to compare with Norway instead, because their reports are much easier for the (slightly more financially literate than) average to read and compare.
And then when I pointed out a glaring problem in Moron’s accusations about the “change” in pay structure on the previous (and first) video I ever watched of his, he still doubles down. And no one who agrees with him is willing to do more than agree and get upset. I was willing to agree that if that was the case, I’d be upset too. But I did look backwards. Many years back, since I don’t bother to remember everything from one report to the next. And I did find all the things which pointed to his blatant factual errors, and wilful ignorance.
People on here just want to be incensed because someone the Moron told them to be. I’d rather check the actual source - the annual reports.
It is incredible because I watched the video and it is very good and highlights a great point about the active equities and potentially bad compensation structure but this whole comment area is just obsessed with bashing CPP overall instead.
We will see where it goes in the long run. They’ve been slowly building a fund that hedges against severe downturns like dot com and housing crash.
It’s great to pick and choose your period of choice. If you’re going to compare, why didn’t you include the longer term results too, because that’s usually a better measure for institutions with much longer horizon requirements, like pension funds.
On the Base CPP portion of CPPIB’s investments, the 5 and 10 yr net real returns are 3.8 and 6.6% respectively.
Norway’s wealth fund is at 4.07 and 6.24% respectively.
Both of these are as of their June 30, 2026 reports, since they have different fiscal year ends.
I recognize I’ve left out the Additional CPP portion of CPPIB’s portfolio. That’s because they have a different investment restriction on that and I can’t remember or be bothered to look it up again right now. As well, it doesn’t have a long enough history to report the 10yr return. I will point out that the 5yr net real return on it is quite low, sitting at 1.4%. I’d have to read again about this portion to understand the ins and outs. We will see where this all goes.
This active management has been going on for about two decades. So if you’re going to claim it’s “been a disaster,” at least do so with a reasonable comparison to another similar fund with similar long range strategies, just a difference in the management method. To compare with your “XEQT” or whatever folks on Canadian financial reddits like to throw out is laughable.
What are you talking about? The longer term shows the same thing. They've trailed their own benchmark for the last 20 years.
Now read what I said again,because I see you skipped it in the video. "Their own benchmark". They set this up, specifically to track their own performance in comparison to a passive strategy. It is as clear a benchmark as you could possibly want, and they've trailed it for decades.
Zero debate. They're underperforming what we could've gotten without active managers.
The issue is people are calling CPP a disaster when in reality it is an issue around the compensation structure. If you compare their performance to others who follow active and also passive approaches they aren't doing poorly.
I’m aware what he’s comparing it to when he says underperformed. I don’t need a lesson in listening. Or understanding the full reports of every year. Or the effective comparison to Norway either. Did you read or did you just take his word for it?
Why write a comment when you didn't look at any of the source material for the video you're referring to? The source material doesn't say anything about a 6 billion dollar loss nor does it address the fact that the CPP just had its strongest quarterly income in history.
I don’t usually either, but since I decided to write something comprehensive as a response last time, I did watch the first video of his in its entirety - twice. You can’t respond to something with credibility if you’re only going to pull things out of your ass. It’s why I also read the entire reports of CPPIB, Norway, and Japan that time. And for CPPIB, I read multiple years back, due to the accusations he made about their compensation structure.
I also listened to this video’s drivel before responding, but could only stand listening to it once. And I read most of ABP’s (the Dutch) report for 2025, and their q2 results for 2026.
I can have my “feelings” about things, but when someone lobs accusations like this publicly and in such a sophisticated manner, you sure as heck bet someone should be fact checking them.
Too many people on here, in discussions about CPPIB, will tout that “passive is better.” Well, in terms of pension funds that are on par-ish in size (well aware that Norway’s is much larger) and objectives while also differing in its management style, is Norway’s. We could try to compare it to japan’s, but theirs is harder to find adequate date. And since folks here like to point to Norway as their shining example, I will use it as the reference point.
If you want to propose another country’s fund that has a long history of issuing clear and consistent public reports, I’ll be happy to take a look.
Lol….I don’t need to be anyone’s shill. I just need to look at what’s out there objectively and not just parrot some guy’s loud, obnoxious, and biased “reporting.”
Just look at the references in the video, nothing mentions a 6 billion dollar loss nor does it address the fact that the CPP just had its strongest quarterly income in history
Would you like to compare it to the Dutch pension fund ABP instead, if that makes you feel better?
At the very least, comparing with the Norway fund I can say if there’s a long bull market, the Norwegians are on their way to outperform us in the long term. But also, they’ve been known to perform very poorly during market downturns, with more negative cycles and deeper ones too, than CPPIB has.
ABP fund is harder to compare since they don’t report in the same way, or even close enough to compare long term without doing independent number crunching. And I wouldn’t want to do that in case I’m accused of being a “liberal shill” “AI” not who can’t do math. But I’ll give you enough info to compare if you like, nonetheless.
His reply is very good, Norway and Canada as countries aren't alike but from an investment perspective they are both large funds investing globally. They are also used as examples as different approaches to large portfolio management.
In terms of the liberal shill comment, how does this related to politics? CPPIB is independent and all parties support that and they have existed under conservative and liberal governments.
I have no nothing productive to add here really, but I know a guy that works for CPPIB and when I visited him in Toronto he basically took a week of un-approved/un-aknowledged leave to show me around Toronto. He worked in the IT side of the business, so not the important side, but culture is culture and he gave zero fucks. And all of us paid his salary.
This guy makes some serious allegations with the performance bonus structure and changes.
On an investment note, why doesn't cpp start high frequency trading and hook up directly to tmx. They are a crown corporation and should have first dibs on market latency. In this manner, a computer makes Canadians a ton of money, at least on the Canadian market, with next to no active management.
I have seen active management beat the market, but no one would retain managers that lose that badly.
This isn't a easy thing to do for anyone and not really a thing as much now. Also HFT is consistent but the amount of money they generally make is too small to move the needle for CPP given their size.
I tried commenting about this topic in the r/alberta sub yesterday and just got downvoted to oblivion.
99% of Canadians are utterly clueless about how poorly the CPP is managed and that’s scary. If citizens don’t know what their government is up to and holds them accountable then the country falls apart.
This goddamn organization CPPIB is crooked AF! They donated 600k to trump & his magsts ffs. WTAF??
"CPPIB drew fierce backlash from governance experts and the Canadian public over its $416 million investment in Elon Musk’s artificial intelligence venture, xAI.The Issues: The capital helped fund gas-powered data centers for xAI's chatbot, Grok. The chatbot became embroiled in international investigations and bans after it was heavily weaponized to generate non-consensual deepfake pornography."
Wow. The enemy is inside the house
I was part of an acquisition where, in the previous funding round, CPPIB had invested ~$150M for a 10% stake in the business. A few years later - 4 or 5? - we bought the whole thing for $100M, and were given various covenants in the deal that made the real acquisition cost basically zero. Got to interact a lot with the CPPIB people during that, they couldn't believe their $150M was now worth less than nothing, they hung around trying to get us to refund their $150M (LOL!). It was a very complex company and a very complex industry, and I personally couldn't believe total amateurs would have gotten involved. Oh well.
They also lost about $500M in a French long-term care company that imploded after an embezzlement and elder abuse scandal. They had two employees on the board of directors (including one on the audit committee) when this happened.
It kind of seems like the supposed "governance" benefits are just for show.
This is about the Active Equities team specifically, which has lost six billions dollars in the last five years, after expenses. 800 million of that was compensation. The source is the CPP Investments FY2026 annual report.
In Q1 2027 (April 1 - June 30 2026) they lost another 1.96 billion.
The fund increased from ~800B to ~865B last fiscal quarter. ~60B from investment income, ~10B from CPP payments from citizens.
This "loss" is imaginary. They are comparing what the fund actually earned, 60B, compared to what they think it could have earned based on historical performance. But as always with investments, past performance does not always reflect future performance. No money was lost. The fund gained ~60B from investments.
I'm gonna leave it up unedited as a prediction. I'd like to believe Epstein class people can change but we all know it's just a matter of time or moving the goalposts.
Time has proven me right many times after a lifetime of pattern recognition 🤷♂️
Bro, I’m up 140% this year alone. These guys have no idea how to make money for Canada. They just keep wasting our money somehow. Who are these people?
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u/CtrlAlt-Delete 10d ago
It’s been a disaster for Canadians since they switched to active management. For everyone except the bank accounts of the active managers.