The man in charge of the $200-billion fund that underpins the Canada Pension Plan invests with a very long horizon.
Mark Wiseman, president and CEO of the Canada Pension Plan Investment Board, uses the analogy of Wayne Gretzky, saying "we’re going to go to where the puck is going to be, not where the puck is today."
That means a highly diversified portfolio, with only one third of its assets in Canada, said Wiseman, who joined the investment board in 2005 and has been its head since July 2012. He previously worked with the Ontario Teachers’ Pension Plan.
The board manages the portion of CPP’s capital that is not immediately needed for benefits, and Wiseman has a firm grasp of the potential impact of the baby boom retirees. He points out that most of them are still contributing to CPP.
The chief actuary’s report in December showed the CPP is sustainable for the next 75 years.
The $200 billion fund is only "middling" in size by global standards, Wiseman said, but its scale means it can take on investments in assets such as real estate and infrastructure that smaller investors cannot.
The CPPIB has stepped up the pace of investment outside Canada, including investments in emerging markets such as Peru, China, Brazil and India.
That’s what Wiseman means by having his eye on where the puck will be. He agrees there is turmoil now in emerging markets as money moves toward the U.S. dollar, but points out CPPIB has the kind of investment horizon that can last out market cycles.
Similarly, he believes China will eventually be the world’s largest economy and its growth, though slowing, will be faster than any developed country.
"We still have a third of the portfolio invested in Canada, but if you think about it, Canada represents less than 3% of global capital markets today so even at 33% we’re effectively grossly overweight Canada," Wiseman added.
Wiseman assures Canadians that CPP benefits will be there for them at retirement, though he warns most will need to do some additional saving.
He said he doesn’t get involved in decisions such as whether CPP should be expanded as Ontario would like or how private pensions should be reformed.
