Heralded as “Maple revolutionaries” by The Economist Magazine in 2012, Canada’s largest public pension funds have garnered an international reputation for their success – and their unique approach to investment management. A study conducted by Boston Consulting Group (BCG) provides a compelling look at the impact and size of the ten largest of these funds, dubbed “the Top Ten”, of which CPPIB leads the pack.
Today, the Top Ten collectively manage over $1.1 trillion in assets, or the equivalent of over 60 per cent of Canada’s GDP. However, size alone is not what makes them most intriguing, according to the BCG report. Rather it is their approach to investment that distinguishes them. Unlike others, the article notes, the Canadians funds run their portfolios internally and invest directly, in part to save money in external manager fees. Enabled by the significant size of their portfolios and capabilities, they also invest in alternative asset classes like infrastructure and real estate, which provide diversification and alignment with their long-term horizons.
Among the key findings of BCG’s report:
- The Top Ten’s assets under management have tripled since 2003 with investment returns driving 80% of the increase.
- The Top Ten represent some of the world’s largest pension funds. They comprise eight funds in the top 100 and three funds in the top 20.
- The Funds are among the top infrastructure and real estate investors globally. They comprise four of the top 20 global real estate investors. They also comprise six of the top 20 global investors in infrastructure assets.
- They have strong governance structures and are managed as professional businesses, enabling them to act in the best interests of their beneficiaries. The Funds are also strong proponents of good corporate governance practices, ultimately improving the efficiency and effectiveness of capital markets.
- They directly employ approximately 11,000 professionals in the Canadian financial and real estate sectors.
- They have invested approximately $600 billion in Canadian enterprises, including $149 billion in real estate, infrastructure and private equity.
- They have participated in some of the largest deals globally in recent years.
The study follows on an earlier 2013 study by BCG which can be found here.