CPP Investments F2023 Results

Summary

John Graham discusses the resilience of the CPP fund amidst global challenges like the war in Ukraine, inflation, and high interest rates. Despite market declines, the fund achieved a 10-year annualized net return of 10% and reached $570 billion in assets. The CPP fund's active management strategy and commitment to sustainability, including a net-zero target by 2050, are highlighted. Investments in diverse sectors like energy, retail, and hospitality are mentioned, showcasing the fund's adaptability and long-term growth focus.

Takeaways

• 🌍 The world has experienced significant changes, including ongoing war in Ukraine, geopolitical tensions, high inflation, and rising interest rates.
• 🇨🇦 Despite challenges, the Canadian Pension Plan (CPP) fund remains resilient and strong, thanks to a prudent investment strategy.
• 📈 The CPP fund has produced solid results, with a 10-year annualized net return of 10 percent, showcasing its ability to create value for future generations.
• 💹 The CPP fund's net assets grew by $31 billion this year, reaching $570 billion, with a 1.3 percent return after expenses, even amidst a decline in global markets.
• 🔄 The fund's active management strategy, with diverse investments across continents and asset classes, has allowed it to outperform most major indexes.
• 🌱 Sustainability is a priority, with the CPP fund committing to net-zero emissions by 2050 and achieving carbon neutrality in its global operations.
• 📊 The Chief Actuary of Canada's financial review confirms that current benefit levels are sustainable for at least the next 75 years at the existing contribution rates.
• 📈 Recent investments include Era Energy in California, D1 in Colombia, and a joint venture in the European hospitality sector, demonstrating a focus on growth and sustainability.
• 🤝 The CPP fund's success is attributed to its people, who embody the guiding principles of integrity, partnership, and high performance.
• 🔮 Looking ahead, market volatility is expected to continue, but the CPP fund is well-prepared to navigate through challenging economic cycles.

Q & A

What are the current challenges mentioned in the global context that have affected financial markets?

The challenges include the ongoing effects of the war in Ukraine, high geopolitical tensions, high inflation, and rising interest rates.

How has the CPP fund maintained its resilience and strength despite these challenges?

The CPP fund has maintained its resilience through a prudent investment strategy designed to create value for generations, with active management seeking the best investment opportunities globally.

What is the role of the Chief Actuary of Canada in relation to the CPP fund?

The Chief Actuary of Canada conducts a financial review of the CPP every three years to evaluate its financial sustainability.

What was the conclusion of the latest financial review of the CPP fund?

The latest review concluded that existing benefit levels are sustainable at current contribution rates for at least the next 75 years.

What was the 10-year annualized net return achieved by the CPP fund?

The CPP fund achieved a 10-year annualized net return of 10 percent.

How much did the CPP fund grow this year, and what was its net asset value?

This year, the CPP fund grew by 31 billion to reach 570 billion in net assets.

What was the return on investment after all expenses for the CPP fund this year?

The CPP fund earned a 1.3 percent return after all expenses.

How has the CPP fund's active management strategy contributed to its performance?

The active management strategy with diverse investments across continents and asset classes has enabled the CPP fund to outperform most major indexes.

What commitment has the CPP fund made regarding sustainability?

The CPP fund has committed its portfolio and operations to achieve Net Zero by 2050 and has made progress towards this goal, including achieving carbon neutrality in its global operations.

Can you provide examples of recent investments made by the CPP fund?

Recent investments include Era Energy in California, D1, a discount grocery chain in Colombia, and a joint venture in the European Hospitality sector with the acquisition of the W Rome hotel in Italy.

What are the guiding principles of the CPP fund's team?

The guiding principles of the team are integrity, partnership, and high performance.

What is the outlook for the CPP fund in terms of market volatility and returns?

The outlook suggests that market volatility will continue and returns may be lower than in past years, but the CPP fund is built to navigate through such conditions and perform well in challenging economic cycles.

Outlines

00:00

🌟 Introduction and Global Challenges

John Graham introduces himself and discusses the significant changes in the world over the past three years, including the ongoing war in Ukraine, geopolitical tensions, high inflation, and rising interest rates. He acknowledges the challenges faced by financial markets and the impact on Canadians. Despite these challenges, he emphasizes the resilience and strength of the CPP fund, attributing its success to a prudent investment strategy aimed at long-term value creation.

📈 CPP Fund's Resilience and Financial Review

The script highlights the CPP fund's solid performance and the chief actuary of Canada's financial review, which concluded that the current benefit levels are sustainable for at least the next 75 years with existing contribution rates. This review reassures Canadians of the CPP's long-term support.

🚀 CPP Investments' Strategy and Performance

The focus of CPP Investments is on supporting multiple generations with pensions. The script proudly announces a 10-year annualized net return of 10 percent and a growth of 31 billion to reach 570 billion in net assets. Despite market declines, the active management strategy has allowed the fund to outperform major indexes. The script also addresses the importance of sustainability, with a commitment to Net Zero by 2050 and achieving carbon neutrality in global operations.

🌍 Diverse Investments and Sustainability Efforts

The script details recent investments made by CPP Investments, including Era Energy in California, D1 in Colombia, and a joint venture in the European hospitality sector. These investments reflect a strategy of balancing strong returns with sustainability and meeting energy demands while transitioning to renewable energy. The script emphasizes the use of the fund's size and scale to drive change and generate strong returns.

🤝 People and Principles

The importance of the people behind CPP Investments is highlighted, with a focus on their guiding principles of integrity, partnership, and high performance. The script expresses pride in the team's dedication to growing the fund for the benefit of all Canadians.

🔮 Future Outlook and Market Volatility

Looking ahead, the script anticipates continued market volatility and potentially lower returns than in previous years. However, it reassures Canadians that CPP Investments is built to navigate such conditions and perform well through challenging economic cycles. The CPP fund is expected to remain strong and resilient for decades to come.

Keywords

💡CPP Fund

The CPP Fund refers to the Canada Pension Plan Investment Board, which manages the funds of the Canada Pension Plan. It is designed to provide financial security to Canadian retirees. In the video, it is highlighted as resilient and strong, with a focus on long-term growth and value creation for future generations.

💡Geopolitical tensions

Geopolitical tensions refer to the strained relationships and conflicts between countries due to political, economic, or territorial disputes. The video mentions these tensions as one of the challenges affecting the global landscape, alongside the war in Ukraine and high inflation.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. In the context of the video, high inflation is presented as a significant economic challenge that impacts financial markets and the well-being of Canadians.

💡Interest rates

Interest rates are the cost of borrowing money and the return on investment. Rising interest rates, as mentioned in the video, can affect the cost of borrowing and investment returns, which in turn influences the financial markets and the economy.

💡Prudent investment strategy

A prudent investment strategy involves making well-reasoned decisions to invest in a diversified portfolio to minimize risk and maximize returns over the long term. The video emphasizes the CPP Fund's commitment to such a strategy to ensure the sustainability of the fund for future generations.

💡Active management

Active management in investing means making ongoing buying and selling decisions based on analysis and market conditions to outperform a benchmark index. The video highlights the CPP Fund's active management approach, which involves seeking the best investment opportunities globally to ensure growth.

💡Sustainability

Sustainability in the investment context refers to considering environmental, social, and governance (ESG) factors to ensure long-term value creation. The video mentions that the CPP Fund has committed to net-zero emissions by 2050 and is integrating sustainability into its investment decisions.

💡Net Zero

Net Zero refers to achieving a balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere, resulting in no net increase in emissions. The video states that the CPP Fund is working towards achieving carbon neutrality in its global operations by 2050.

💡Market volatility

Market volatility is the rate and extent of price changes in the market, which can be influenced by various economic factors. The video acknowledges the expectation of continued market volatility and the CPP Fund's preparedness to navigate through such conditions.

💡Diversified investments

Diversified investments involve spreading investments across various asset classes, industries, and geographic regions to reduce risk. The video mentions that the CPP Fund's active management strategy includes diverse investments, which has helped it outperform major indexes despite market declines.

💡Carbon neutrality

Carbon neutrality means achieving a state where the net carbon footprint is zero by balancing emissions with carbon offsets or reductions. The video highlights that the CPP Fund has achieved carbon neutrality in its global operations, demonstrating its commitment to sustainability.

Highlights

The world has experienced significant changes over the past three years, including the ongoing war in Ukraine, geopolitical tensions, high inflation, and rising interest rates.

Despite challenges, the CPP fund remains resilient and strong, producing solid results through a prudent investment strategy.

CPP Investments actively seeks the best investment opportunities globally to ensure long-term growth.

The chief actuary of Canada has confirmed that the CPP's financial sustainability is maintained for at least the next 75 years at current contribution rates.

CPP Investments has achieved a 10-year annualized net return of 10 percent.

The CPP fund grew by $31 billion in net assets, reaching $570 billion, with a 1.3 percent return after expenses.

CPP Investments' active management strategy has outperformed most major indexes despite market declines.

Sustainability is a priority, with a commitment to Net Zero by 2050 and achieving carbon neutrality in global operations.

CPP Investments is actively investing in renewable energy and supporting energy transition efforts.

The fund has made its first direct private equity investment in Colombia with D1, a growing discount grocery chain.

A new joint venture in the European hospitality sector has been established, starting with the acquisition of the W Rome hotel.

CPP Investments' team embodies integrity, partnership, and high performance in their work.

Market volatility is expected to continue, but CPP Investments is prepared to navigate through challenging economic cycles.

CPP Investments is confident that the CPP fund will remain strong and resilient for decades to come.

Transcripts

hello I'm John Graham

the world has changed quite a bit over

the past three years we continue to see

the effects of the war in Ukraine

geopolitical tensions High inflation and

Rising interest rates

it's been especially challenging in the

financial markets and we know many

Canadians are feeling it too one thing

that hasn't changed is the resilience

and strength of the CPP fund we're

producing solid results thanks to our

prudent investment strategy designed to

create value for Generations as active

managers we seek the best investment

opportunities wherever they are to

ensure continued growth over the long

term

in a world where investment philosophies

can Veer from one quarter to the next

our highly experienced investors are

trained to look ahead and to be patient

every three years the chief actuary of

Canada conducts a financial review of

the CPP to evaluate its Financial

sustainability this year the latest

review concluded existing benefit levels

are sustainable at current contribution

rates for at least the next 75 years

Canadians can rest assured we will be

there to support the CPP through thick

and thin

let's take a look at how the CPP fund

performed this year at CPP Investments

we're focused on helping to pay pensions

for multiple Generations that's why

we're proud to share we've achieved a

10-year annualized net return of 10

percent

this year the CPP fund grew by 31

billion to reach 570 billion in net

assets earning a 1.3 percent return

after all expenses

and we've made these gains despite a

significant decline in global equity and

fixed income markets our active

management strategy with diverse

Investments across continents and asset

classes has enabled us to outperform

most major indexes

this past year we heard directly from

Canadians at public meetings held Coast

to Coast many of you told us how

sustainability is top of mind and we

agree considering sustainability is

important to maximizing long-term

investment value last year we committed

our portfolio and operations to Net Zero

by 2050 and we're making solid progress

towards the school in this fiscal year

we achieved carbon neutrality in our

Global operations

as active investors we're using our size

and scale to drive real change and

ultimately generate strong returns

here's a quick look at some of our

recent Investments

era energy is California's second

largest oil and gas producer accounting

for nearly a quarter of the state's

production

we're looking to pursue strong

investment returns by helping era

balance its energy transition efforts

with the need to continue meeting

California's energy demands by investing

in renewable energy to power existing

operations

we also made our first direct private

Equity investment in Colombia with D1 a

rapidly growing discount grocery chain

D1 is a market leader in Latin America's

expanding retail space offering private

label products at affordable prices

and we were pleased to establish a new

joint venture in the European

Hospitality sector by acquiring

operating hotels in popular destinations

to capitalize on growing tourism trends

our first acquisition in this Venture

was the W Rome hotel in Italy none of

this is possible without our people it's

truly inspiring to see firsthand the

important work they are doing

representing our guiding principles of

Integrity partnership and high

performance we are all proud to be

dedicated to Growing the fund for the

benefit of all Canadians looking ahead

we expect Market volatility to continue

returns may be lower than in past years

but we will navigate through in the face

of wide-ranging market and economic

conditions we were built for times like

this it's through challenging economic

cycles that active managers like CPP

Investments perform well Canadians can

have confidence the CPP fund will remain

strong and resilient and will be there

for decades to come

thank you