CPP Fund CEO: No Plans to Reduce U.S. Exposure Despite Market ‘Wild Ride’
The chief executive of
CPP Investments
states he has no intentions to decrease the portfolio’s investment share in the United States even with the instability caused by U.S. President Donald Trump’s protectionist strategies and trade threats.
John Graham stated in an interview following the release of the fund’s 9.3 percent return for the fiscal year ending in March that “the U.S. remained … the top-performing region” during the fiscal year at hand.
The
CPP
The fund’s U.S. exposure increased to 47 percent in fiscal 2025, up from 42 percent the previous year.
“He noted that much of this is simply due to appreciation,” adding that the U.S. dollar strengthened against the Canadian currency throughout most of the year.
The net assets of the CPP fund currently amount to $714.4 billion, an increase from $632.3 billion in the fiscal year 2024.
“One of our common hurdles is that when you let go of the metaphorical steering wheel… your U.S. investment share tends to increase. We must proactively work to maintain it within that roughly 45% level,” Graham explained.
We review our distribution across all countries, and currently, we feel quite content with our position. For now, managing the investment portfolio is largely business as usual.
The pension organization intends to keep the portion of assets invested in the U.S. around the mid-40% range. Despite this being viewed as insufficiently invested by certain analysts—considering that the U.S. makes up approximately 70% of global capital markets—the plan remains unchanged, according to Graham.
The “business as usual” approach stems from the design of the CPP fund, including its size and diversification across geographic regions and asset classes, he said.
“With an organization such as CPP investments, where we have $714 billion (invested), we can’t be over-reactionary,” he said. “We build a long-term diversified portfolio. We can’t be exposed unduly to any one decision that someone makes around the world.”
Investing in equity markets has been a “wild ride” since January, he said, setting CPP Investments up for a more challenging fiscal year.
“I don’t think anybody really knows where we’re going from here,” he said, adding that uncertainty is stemming not only from ongoing trade threats but also what he described as more “idiosyncratic” behaviour from countries including the United States with a heavier focus on national interests.
Although significant alterations to asset distribution aren’t anticipated, Graham noted that political shifts worldwide could have secondary impacts on these markets.
Given the uncertainty and volatility we’ve experienced in recent months, we anticipate that global growth will suffer as a result,” he stated. “This situation isn’t likely to bode well for worldwide economic expansion in the coming years.
There won’t be anywhere safe from the effects. Each nation will sense this impact.
Outside the U.S., Europe accounts for 19 percent and the Asia Pacific region makes up 17 percent of the CPP fund, respectively. Ten percent of the holdings are located in Canada, with an investment of five percent in Latin America.
Graham mentioned that CPP currently holds a total investment of $114 billion within Canada, with the net allocation staying consistent over the last year despite an expanding asset base.
The former federal Liberal administration strongly encouraged major pension funds to ramp up their investments within Canada and enhance transparency regarding fund allocation strategies. However, pension leaders noted a shortage of sizable, expandable domestic infrastructure projects suitable for investment.
That could be shifting with the newly elected administration.
Prime Minister Mark Carney
And spurred by recent trade-focused initiatives, other decision-makers are reconsidering Canada’s industrial strategy with the aim of bolstering the nation’s strength and self-reliance, according to Graham.
In his campaign plan, Carney stated that he intends to utilize public money to “stimulate” additional private funding for areas such as housing, defense manufacturing, international trade and transport systems, digital technology and intellectual property, essential minerals, and energy.
“We’re very optimistic and hopeful about identifying some intriguing investment prospects… ones that align perfectly with our size, timeframe, and long-term approach,” Graham stated, mentioning that his team is dedicated to seeking out infrastructure investments globally.
“We have a strong interest in energy sources, pipeline development, traditional forms of energy like oil and natural gas, as well as renewable energies,” he stated.
Initial talks have been promising, and in response, Graham stated that his group has conveyed this sentiment: “CPP Investments is ready to do business.”
“One aspect that is heartening is people are discussing specific types of infrastructure that need to be constructed,” he noted, adding that further particulars will be crucial.
“We have to collaborate with individuals, and we can put money into these initiatives, but we do not run these projects,” he stated.
Graham didn’t dismiss potential interest in the Trans Mountain pipeline, which the government plans to sell off eventually.
I’m not aware of the specifics regarding Trans Mountain, but as mentioned earlier, we would consider any asset…. The team will be pleased to review it.
An additional field of focus is digital infrastructure.
We see potential for extensive digital infrastructure initiatives nationwide, and believe Canada is well-positioned for such endeavors,” he stated. “However, these must be executed properly.” He added, “Domestically, we’ve made certain investment commitments in digital infrastructure. While focusing on credit investments, we’re also considering equity opportunities… Our outlook remains optimistic regarding the impact of artificial intelligence.
Over a decade, the CPP fund has seen a return of 8.3 percent, amassing total net earnings of $492.1 billion since its launch in 1999.
The growth in net assets for the fiscal year ending March 31, 2025, was comprised of $59.8 billion in net income along with $22.3 billion in net transfers from the Canada Pension Plan (CPP).
• Email:
bshecter@postmedia.com
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