The C$279 billion ($207 billion) Canada Pension Plan Investment Board (CPPIB) is a professional investment management organisation that invests the assets of the Canada Pension Plan. It has an enterprise risk management framework that ensures risks taken are commensurate with the long-term benefits achievable. It invests for 25-year time frames. CPPIB has an active management strategy. The foundation of the investment strategy for the fund – the CPP reference portfolio – compromises only public market asset classes and is the dominant component of risk in the total portfolio (86 per cent versus 14 per cent active risk in 2013).
The total portfolio approach is a principal element of its overall investment strategy. It is designed to ensure that planned risk exposures at the total portfolio level are maintained as individual investments enter, leave or change in value. The approach diversifies the portfolio at the level of risk and return streams, rather than that of specific asset classes, and so looks through asset class labels to assess risk and make decisions accordingly.
This requires continuous assessment to ensure unintended risk exposures are minimised. Working closely with each investment department, the total portfolio management team provides guidance, structures goals and targets, clarifies economic value, and helps identify opportunities that fit well within the entire portfolio composition. The strategy is structured to be resilient in the face of wide-ranging market and economic conditions. It covers all major asset classes, addresses risk factors, and encompasses about 30 distinct investment programs.