Watch Groups

Who are the Asian American and Pacific Islander workers in commonly misclassified occupations?

EPI - 3 hours 19 min ago

Key takeaways:

Misclassification of workers as independent contractors is a pervasive and widespread problem. AAPI workers are overrepresented in three of the 11 commonly misclassified occupations: manicurists and pedicurists, home health aides, and personal care aides. Vietnamese, Bangladeshi, Filipino, Samoan, and other Pacific Islander workers are overrepresented within these occupations.
Groups with lower median hourly wages also have larger shares of their working populations in the 11 commonly misclassified occupations.
Federal protections against misclassification are limited and currently under attack by the Trump administration. The state and local landscape for curbing misclassification is varied, which leaves some workers less protected than others.

In March, EPI published updated research highlighting the cost to workers of being misclassified as an independent contractor for 11 commonly misclassified occupations. Asian American and Pacific Islander (AAPI) workers were overrepresented in three of those occupations—manicurists and pedicurists, home health aides, and personal care aides—relative to their share of the overall workforce.

Most federal, state, and local labor laws apply only to employees and not to independent contractors, so misclassification strips workers of key protections such as minimum wage laws or qualifying for employer-provided health insurance and retirement benefits. Additionally, both misclassified workers and social insurance funds lose out on income: the report conservatively estimates that for the three jobs in which AAPI workers are overrepresented, misclassification costs workers at least $7,000 annually and costs social insurance programs $600 to $800 per worker each year.

With the understanding that the umbrella term “AAPI” encompasses an immensely diverse population both in ethnic origin but also in economic outcomes, this piece goes beyond the narrow view that all AAPI workers are high-wage earners. Below, we provide more detail on which groups of AAPI workers are most likely to be employed in lower-wage commonly misclassified occupations.

Disaggregated data shed light on particular AAPI communities that may be vulnerable to misclassification

Across all occupations, AAPI workers comprise approximately 8% of the total workforce. For three of the 11 occupations highlighted in the report—manicurists and pedicurists, home health aides, and personal care aides—AAPI workers make up 67%, 13%, and 10% of employment, respectively, according to Current Population Survey (CPS) data.

Table 1 provides a detailed breakdown of the composition of the AAPI workforce for the three occupations in which AAPI workers are overrepresented. Here, we use the American Community Survey (ACS) as it offers detailed race definitions which the CPS does not offer due to sample size restrictions.

Asian Indian and Chinese populations combined make up over 40% of the working-age AAPI population, thus their relatively large shares of the AAPI workforce in these occupations are not surprising. However, several groups are disproportionately represented across these occupations compared with their share of the overall AAPI workforce.

For example, Bangladeshi workers make up 5.1% of AAPI workers employed as home health aides while only constituting 1.1% of the total AAPI workforce. Chinese workers represent almost half (47.7%) of AAPI home health aides while representing just over one-fifth of the overall AAPI workforce (20.9%). AAPI employment among manicurists and pedicurists is largely held by those of Vietnamese origin (71.4%).

Finally, a majority of AAPI personal care aides are either Filipino (32.8%) or Chinese (20.8%). Filipino workers, however, are overrepresented by twice their share of the overall workforce. While Samoans and other Pacific Islanders comprised a much smaller share of personal care aide employment, they are also overrepresented in this occupation by more than twice their share of the overall workforce.

Table 1

Figure A provides a more comprehensive picture of the share of each detailed group employed across all 11 commonly misclassified occupations, revealing that smaller communities—often overlooked because of their size relative to the aggregate AAPI workforce—may be among the most vulnerable to misclassification. Workers belonging to seven of those groups are more likely than the average U.S. worker to be employed in one of those occupations. Almost 20% of Vietnamese workers are employed in one of those occupations, with over half concentrated as manicurists and pedicurists.

Samoan, Hawaiian, and other Pacific Islanders have the next highest shares working in the 11 occupations, making up 15% or more of their total working-age population. These groups also earn lower median hourly wages than the national median and the aggregate AAPI median hourly wage. Their disproportionate representation in commonly misclassified occupations further exposes these workers to wage suppression due to misclassification.

Misclassification enforcement varies by state—meaning different AAPI populations can be disproportionately impacted

Federal protections from misclassification are limited and are currently under attack by the Trump administration, which has proposed a rule to weaken standards to determine worker classification under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Protection Act. The proposed rule narrows the definition of who is a covered employee under these statutes, encouraging employer schemes to reclassify their employees as independent contractors to evade those obligations.

Broadly, the Trump administration has been actively dismantling long-standing federal worker protections, leaving states to bear the responsibility of ensuring workers are given rights and protections and that they can exercise them. For most states, labor and employment protections only apply to workers classified as employees, meaning workers misclassified as independent contractors are denied their legal rights and protections.

EPI’s 2026 misclassification report outlines state and federal policy recommendations that ensure proper enforcement mechanisms to curb misclassification. One of the recommendations includes implementing the ABC test. Unlike the six-part “economic reality” test or the “common law” test, the ABC test presumes that a worker is an employee unless they can demonstrate they are an independent contractor based on three criteria. Placing the onus on the employer to determine the employment status of a worker provides protections against misclassification and extends proper protections to workers. Many states have adopted the ABC test for unemployment insurance programs and, to a lesser extent, for wage and hour orders and other employment applications.

As shown in Figure B, The AAPI population is highly concentrated across a handful of states. Almost half of the prime-age working Asian population is concentrated in California, New York, and Texas, and a majority of the Pacific Islander population resides in California, Hawaii, and Washington. Overall, 21 states have significant numbers of AAPI residents, and some are home to large shares of specific AAPI communities. For example, the Hmong community in Minnesota and the Burmese community in Indiana are concentrated in states that have smaller total AAPI populations.

The current landscape for state policy protections against misclassification is quite varied. For example, among the states with the largest AAPI populations, California is the only state to adopt the ABC test for both unemployment insurance and employment law, although certain occupations are exempt from the test—including app-based drivers. California also institutes penalties for misclassifying a worker, which can include restitution payments and, if the misclassification was willful, a penalty between $5,000 to $25,000 per violation.

Texas, on the other hand, has significantly less state enforcement. Apart from using the common law test for its unemployment insurance program and providing a definition of an independent contractor for workers’ compensation, Texas mainly relies on federal law for classifying workers as employees. In the last 15 years, Texas lawmakers have introduced several bills that would create penalties for misclassifying workers in the construction industry, but all have stalled or failed.

Figure B

Comprehensive protections are needed to protect workers from misclassification

AAPI workers are facing multi-pronged attacks from the Trump administration through the degradation of federal protections for workers, immigration, and equity. Occupational segregation and other labor market disparities lead women, people of color, and immigrants to be disproportionately represented in occupations that are commonly misclassified. These factors—in addition to historical and current geopolitical relations that shape the flow of labor to the U.S., immigration and citizenship status, and English language proficiency—can contribute to the concentration of AAPI workers in these occupations. Disaggregated data further identify which specific AAPI communities are overrepresented, revealing that smaller, less economically secure groups are often most exposed to the costs of misclassification. Strong policies at the federal, state, and local levels are needed to combat misclassification and to ensure workers can exercise their rights.

Are CPP Investment Execs Manipulating Their Benchmarks to Pay Themselves Huge Compensation?

Pension Pulse - May 26, 2026 - 8:04pm

Mathew Kaminski, a former employee of CPP Investments, wrote a lengthy blog comment on how CPP executives are manipulating their benchmarks to pay themselves before your retirement.

He calls it an insider's perspective on the illegitimate $100 million dollar wealth transfer from Canadian taxpayers to CPP execs and employees, and exactly how they covered it up:

As you may have seen, CPP Investments published its Annual Report for the Year Ending March 2026 yesterday.
It would be one thing if CPP was underperforming their benchmark. It would be another if they were manipulating their benchmark to pay themselves unduly. It would be another if they were depressing growth in the Canadian economy writ-large to cover it all up. I’ll prove they are doing all three.
In short, CPP Investments leadership manipulated their benchmarks over 2025 and 2026 to pay themselves and their teams at least an extra $100 million while they missed the baseline target of 4% real return needed to sustain the CPP in the long-term.
Along the way, I’ll reference prior annual reports and my own first-hand knowledge as a former employee to provide you, a government-mandated CPP contributor, with a clear story. A story of how a couple key decisions resulted in the CPP contributing an immense amount of value to Canadian pensioners prior to 2015, and then how its organizational ego got overblown… eventually leading to leadership in 2025 introducing an ill-defined slush fund called the Annual Strategic Objectives Performance Multiplier (henceforth, the “Slush Multiplier”, because I never want you to have to read Annual Strategic Objectives Performance Multiplier again!).
The Slush Multiplier has allowed CPP leaders to increase their compensation and that of their employees in a way that (i) they do not attempt to justify in their annual reporting, and (ii) has no basis in whether they’ve achieved the minimum return hurdle needed to sustain the fund. The introduction of the Slush Multiplier alone helped CPP employees earn over $100 million in undue compensation over the last two years while CPP missed its baseline real return target.
It’s also a story of how CPP leadership in 2025 manipulated the benchmark used by the Federal government (and thereby you) to assess their performance, clouding it in investment jargon so that they can unjustly pocket additional hundreds of millions of dollars of compensation while underperforming their prior standard by hundreds of billions.
I’ll also explain how the funding gap these items created was covered up, in large part, by raising contribution rates on CPP to the tune of tens of billions of dollars each year, directly depressing growth in the Canadian economy.
Finally, I’m going to tell you how it can be fixed, despite CPP Investment’s government monopoly on the pensions of 20-million-plus Canadians.
You may find the explanation for all of this boring, and you’d probably be right, which is why it’s so sinister. I’ve attempted to enliven it. The difference between you receiving what you’ve paid into CPP when you turn 65, or receiving a fraction of what you’re owed today, is reading this and speaking up.
WHAT HAPPENED IN THIS YEAR’S REPORT?
CPP Investments reported an annual return of 7.8% for the year ended March 31 2026. This underperformed CPP’s benchmark return of 13.2% by -5.4%. On assets of ~$700 billion, that reflects $38 billion of ‘forgone’ value last year alone, or roughly $1,000 for every Canadian. Not great, right? But they still grew the fund, you might say! I agree, hold on.
Let’s leave alone that the S&P500 and MSCI World both returned at least 15% over the same timeframe, with the Nasdaq and TSX60 exceeding 25%. But it’s only one year and CPP is a long-term investor, right? I must, again, agree, but tell you I can explain.
Before we start breaking down the fund’s returns over a longer five-year period - the timeframe CPP uses to evaluate itself for compensation purposes - let’s ground ourselves in what the fund paid to its average employee last year.
In 2026, CPP had $2.3-$2.5 billion in non-interest expenses, depending on how you define it, around $1.2 billion of which went to its 2,000+ employees. In totality, CPP salaries were ~0.2% of AUM, versus most large ETFs at <0.1% for total fees. This equates to roughly $500,000 per employee, on average. Now, in years with great performance, you could say CPP employees deserve a huge payday, right? After all, they’d be delivering billions in value to the 20-million-plus Canadians who contribute to the program with every paycheck… right? Again, I agree… assuming they performed.
But, did CPP Investments’ performance over the last five years deserve $1.2 billion in compensation in 2026? Short answer, no. Long answer, buckle up…
COMPENSATION BREAKDOWN
To proceed, we must define specifically how the average CPP investment professional makes their annual half-million. In short, they get a base salary and also a bonus target of between 20-70% of total comp. For a $500,000 take-home, let’s say $200,000 is the salary and $300,000 is the “Bonus Target”. On its own, as finance jobs go, that’s not abjectly absurd. You want to hire good people and pay them handsomely in a way that’s based on performance. There are very few people in the world who can genuinely earn above-average returns on a portfolio year-in and year-out, and when they do it in private industry they get rich. Warren Buffett rich. So to get them to come to your pension fund, you want to pay them very well when they perform. You want to make them not quite as rich as those in private industry, but rich and powerful enough to belong to the same clubs and associations.
Prior to 2025, the bonus target of CPP employees was based purely on performance - one half absolute (e.g., a 7% return) and one half relative (e.g., 7% actual return beat the benchmark of 6% by 1 percentage point). Now, this may not sound problematic theoretically, but if you open the 2024 annual report and go to page 74… you’ll see this became a massive problem for CPP leaders. This Pure Performance Multiplier algorithm spat out a multiplier of 0.62x for the year ending March 2024. Ouch! This is actually a massive problem, not for taxpayers - I mean, yes for taxpayers - but more immediately for CPP leadership and their ability to manage their employees.
Since the performance multiple was 0.62x, an employee making ~$500,000 would receive $186,000 as a bonus instead of his normal $300,000. Even after-tax at the highest marginal rate that difference is at least a year, maybe even two, at Upper Canada College! They might have to go to… shivers… public school! Won’t somebody PLEASE think of the children?!
On one hand, I can empathize with someone thinking they’re going to get $300,000 and getting $186,000 instead. If I employed that person I’d be concerned about being able to continue to manage them. Maybe they’d find a new job. I get that.
With my other, CPP-contributing hand, I’m pulling a Mr. Krabs.
Anyway, CPP leaders saw the incentive problem this created with their employees, and so they resolved to change the compensation structure in 2025. But how? Maybe they could reduce the lookback? Or change how comp was tied to performance? Let’s look at what they actually did.
THE SLUSH MULTIPLIER
CPP Investments helpfully breaks down their Fund Multiplier calculation for 2026, which spits out 1.10x (ahhh, SO much better than 0.62x!). This is pictured below and can be found on page 82 of the report:
But how did they get from a 0.62x to a 1.10x Fund Multiple in two years? Let me break it down:
40% of the multiplier is now based on Absolute Performance, versus 50% in 2024. On its own, not entirely absurd.
However, CPP employees “earned” a 1.05x multiplier in 2026 for achieving a 6.6% return over the last five years, including inflation, which is actually a pretty huge problem, arguably more so than anything else I’ll speak to in this entire article.
According to the 2026 Annual Report, the chief actuary of Canada says that the organization must earn an average annual return of 4.0% after inflation to be sustainable, long-term. Inflation in Canada over the last five years was 3.7%, meaning the real post-inflation return of the Base CPP has been 2.9% over the last five years, missing its long-term Chief Actuary target by MORE than a full percentage point. The leaders of the CPP confirm this on page 37 of the 2026 annual report, but inexplicably still give themselves a 1.05 multiplier here.
Moving on for now…
40% is Relative Performance versus 50% before, which still feels mostly appropriate. This earned employees a 0.81x multiplier on their bonuses for being… 0.13% above their Benchmark.
This actually felt kind of punitive to me, and offsets the generous Absolute Performance multiple a bit, so at the risk of over-explaining everything, let me just say, for now, “I’d be OK with this in isolation”. However, it does make me think… why such a low multiple for outperforming your Benchmark?
Combined, this 80% spits out a multiplier of 0.93x. Definitely better than 0.64x, but still not quite 1.10x…
The final 20% of the 2026 compensation algorithm is our Slush Multiplier, established 2025, which is 1.80x. Which… well… like… OK… I guess! Theoretically, it could make sense! It really depends on if there are valuable objectives that the CPP leaders are executing on super well. To give yourself a healthy 1.8x multiplier they must have done a really good job at all the other important objectives they had besides generating returns for pensioners? Maybe they solved world hunger, or unblocked the Strait of Hormuz? Let’s take a look at those all-important strategic objectives:

I mean…I don’t know if that means anything to you but it doesn’t to me! I hope McKinsey was well-paid for that pablum. I want to emphasize that the overall Fund Multiple moved from ~0.9x to 1.1x because of just how well everyone at CPP executed on… checks notes… “refreshing our Talent Strategy”, “piloting new tools and frameworks across asset classes to compare relative value of current positions and investment opportunities”, “Expanding information available on the knowledge platform by one million external documents”, and “Continuing to progress the tools frameworks and factors considered in the management of Fund exposures and level of diversification”. Deep breath.
That move that the Slush Multiplier creates - from 0.93x to 1.10x - represents a transfer from the Canadian taxpayers to CPP Employees to the tune of $50-100 million last year alone, and even more in 2025 when the Slush Multiplier was a whopping 2.0x.
John Graham, President & CEO of CPP Investments, earned ~$7 million on a 1.33x performance bonus (better than the rest of his employees) while underperforming his benchmark. The Board of Directors actually does at least attempt to justify the G-man’s compensation on page 80 of the 2026 report [my emphasis added].
“Our assessment of Mr. Graham for the year reflects several significant achievements, including strong financial performance despite a challenging global environment [STOCK INDEXES WERE UP 15-25%, BUT I GUESS TRUMP WAS A REAL JERK?!]. By also advancing key strategic objectives, Mr. Graham ensured CPP Investments maintained its focus on long-term value during the year [HOW, EXACTLY?!]. The Board awarded him an incentive multiplier of 1.55 [BASED ON WHAT?!]. The weighted average of the Fund multiplier and the department/ individual multiplier resulted in an overall incentive multiplier for Mr. Graham of 1.33 . The Board awarded Mr. Graham total direct compensation of $6,827,644 for fiscal 2026, consisting of salary, an in-year award and deferred awards, as shown in Table 2. Mr. Graham also received standard pension and benefits. [MUST BE NICE!!]”
So, in 2026, the CEO and employees of CPP Investments were judged to have earned their full target bonus and an extra 10% of juice on their bonuses because they did such a good job achieving their vague strategic objectives while underperforming the 4% real rate of return required to keep the CPP in good standing over a generous investment period of five years. Furthermore, the CEO responsible for all this gets an EVEN HIGHER multiplier of 1.55x on his individual performance to get him a $7 million payday.
So, I mean… that’s bad on its own. But that’s it, right? CPP’s leaders solved their employee retention problem with the Slush Multiplier, and we’re just losing a couple hundred million bucks to their North York extensions? Trickle-down economics, right? It’s still good! It’s still good!
Laughs in Orwellian.
Just wait… it gets worse…
A HISTORY LESSON
I got a funny feeling reading the 2026 report, that - regardless of the new, wonky Slush Multiplier - the actual benchmark numbers didn’t quite make sense. Indeed, it seems that CPP Investments retroactively changed how it calculates its benchmark portfolio as of the 2025 Fiscal Year. Review CPP’s 10-year historical returns versus benchmark for 2026 versus 2024 below, and you’ll see that - on the whole - the 2026 Benchmark is substantially easier than the one from 2024.
2026
2024
Before I get into the why, I unfortunately need to take you through the entire history of the organization. It’ll be… relatively quick.
In 2000, CPP Investments was just CPP, and it was managed more like a life insurance portfolio before the Bill Gross era, invested in something like 95% Debt and 5% Equity and employing a few traders to occasionally re-balance the portfolio and stress test it against future cash outflows. Thank goodness this was changed! Our former Prime Minister Paul Martin, the late John MacNaughton and the early teams at CPP deserve all the credit in the world for moving toward a market risk target of 65% equity and 35% debt by 2007. Regardless of the impending 2008 Great Financial Crisis right around the corner, this investment mix decision undoubtedly generated hundreds of billions for Canadian pensioners. Thousands for each and every Canadian.
That said, the 2026 report goes on to say “a targeted risk level of 65% of equity and 35% debt… is in the typical range for conventional fully funded pension plans”. So while this was a great decision, I’d argue CPP Investments simply did the bare minimum here, going from a far-too-conservative position of 5/95 to a more-generally-held-standard of 65/35. It would have been tantamount to malpractice NOT to move to this number, especially with the organization’s unique position of still having decades until it was a net payor of cash.
In 2015, CPP Leadership went further. The Board of Directors approved an increase in market risk from 65% equity / 35% debt to 85% equity / 15% debt, to be phased in over a couple years. CPP Investments also adopted a Benchmark Portfolio against which they’d compare their performance, with 15% weighted toward Canadian government bonds and the other 85% directly tied the “S&P Global LargeMidCap Index”, which is defined as comprising “the stocks representing the top 85% of float-adjusted market cap in each developed and emerging country.”
Another good decision! And this time I’ll say that it wasn’t an obvious one. Many other pension funds across the world held closer to the 65/35 standard, with many still below that equity number today. However, there’s a good reason for that, which is most other pension funds didn’t have the enviable position of being a young fund and projected net receiver of cash for another few decades. CPP Investments takes in funds from its CPP payroll taxes which it uses to invest and will eventually use to pay retirement benefits. US Social Security, Ontario Teachers, OMERS, the Japanese Pension fund, and CalPERS, are all net payers of cash, relying on their investment returns to fund immediate payments. If you look at CPP Investment’s relative returns and compare them to other pension funds across the world, CPP has routinely outperformed, but it does so because of the structural advantage of being able to move to an 85/15 equity/debt split as a result of being a net receiver of cash rather than net payer. The leadership at the time, led by Mark Wiseman, current ambassador to the US and former Blackrock philanderer, was smart not to ignore this.
From this point forward, government bonds returned somewhere in the 1-2% range while S&P Global LargeMidCap Index returned in excess of 13%, compounded annually, dividends reinvested. The decision to go from 65/35 to 85/15 generated additional hundreds of billions for Canadian taxpayers and should also be applauded.
I still remember in 2014, diploma from Queen’s still available for download from the student portal, when Mark greeted me and 30 or 40 other smart young minds who were joining CPP Investments for the first time.
See, I fell into finance because I was smart, and I thought it was more interesting than being an accountant. I ended up joining the firm because my alternative was being an investment banking analyst - which sucked and continues to suck - and back in those days Private Equity funds hadn’t started reaching out with 24-hour exploding contracts in the six figures to burgeoning senior kindergarteners with 99th-percentile paper-cutting skills. Basically, there are two broad categories of Finance Jobs: sell-side, which is investment banking (again, sucks) or equity research; and buy-side, which basically involves working for “A Couple Rich Investor Dudes”, either at a private equity fund or a public company.
I liked that I was venturing out into the real world with the mission of earning money for hard-working Canadians who trusted this money to be there for them. Better them than ACRID.
And so, I sat in a meeting room on the 19th floor of Two Queen West. It was in the kind of meeting room that has siblings in virtually every other towering office building in the downtown Toronto core dated to roughly my birthyear. Large banquet halls in the sky with floor-to-popcorn-ceiling windows offering glimpses of Lake Ontario between the other skyscrapers, each probably containing similar rooms though their windows were tinted so I couldn’t be too sure. The room could be divided by these giant movable accordion partitions covered in the same soft fabric as the floor, presumably for acoustics. They had been extended so that the room was divided into the correct amount of space for the number of us in attendance.
Mark started by reminding us that accepting gifts over $100 was reason for a written warning or even an immediate termination without cause, and talked about the opportunity we had to make life better for Canadian taxpayers and the trust that they were placing in us. The second statement justified the first, and we would take it to heart for a while as we watched all our ACRID-backed friends get taken out to Leafs games. I was a Sens fan anyway, I told myself.
Mark told us that the penalty for breaching Canadians’ trust, collectively as an organization, was that we would be replaced with three guys in a windowless basement rebalancing the 85/15 index. At the time, to a type-A kid just out of school with something to prove, I took that as a threat. A threat that I didn’t have anything to offer, to the profession or to the Canadian taxpayer. That my four years at one of the finest business schools in Canada had been a waste. It was intended as such, and it was the right threat for him to make.
Then, Mark broke out a chart in which he showed that if CPP Investments continued at its 65%-equity/35%-debt split, we could maybe earn a 3.5-4.0% real rate of return. However, if we took on more risk as a maturing organization, by moving to 85/15, we could earn a 4.0-4.5% real rate of return and be able to reduce contributions in the future. Indeed, the 2019 annual report makes reference to this:
When assessing the sustainability of the CPP, the Chief Actuary assumes a long-term net annual return averaging 3.9% after inflation. If through active management, we could consistently deliver returns averaging 0.5% a year higher, then:
The minimum contribution rate could eventually be reduced from 9.79% of covered earnings to 9.43%.
That is equivalent to a combined savings to employees and employers of more than $1.7 billion annually at current earnings levels.
Alternatively, the additional returns could be used to increase benefits or held in reserve to strengthen the sustainability of the CPP.
But wait, you’ll ask, isn’t the current contribution rate 11.9%, a full 2+ percentage points higher than the 9.79% they reference? And don’t I also have to contribute 8% if I earn more than $75,000 when I didn’t have to before 2019? The answer to both of those questions, simply, is yes. Later that same year, CPP rates would be increased, the name changed to CPP1 or Base CPP, and CPP2 or Additional CPP was introduced on incomes above ~$75,000.
The stated reason was to bolster Canadian retirement incomes: 25% of average income was insufficient to provide for the average Canadian in retirement. I can’t say I whole-heartedly disagree with that statement, but who made that decision and why? Especially when earlier that same year CPP was talking about reducing CPP contributions for the benefit of the Canadian economy, which was never discussed again.
I’ve been told from sources that - if you speak to anyone senior in the organization in 2019 who actually knew what was going on - CPP Investments had accidentally over-extended itself around this time. It had made too many non-cash-flowing and illiquid investments and would either have to sell equities or raise more cash in order to pay its near-term cash outflows. Now, none of this was going to have to happen immediately, but the Chief Actuary would have had to talk about the impact in their next report, and selling equities would have “piled on” to the issues within said report. To explain that in slightly more detail, when you remove equities from the portfolio to pay for immediate liquidity needs, that creates a much larger gap in 20-30 years because you’ve lost an asset that would have returned 8-12% over the next 20-30 years. You and I don’t see this clearly in the reporting but the Chief Actuary would have.
There was an exodus of senior leaders during this time, which you can track, and if you ask the junior folks, the fund stopped doing deals for a while in many of its groups. Of course, it couldn’t stop entirely or it would be too obvious. The answer was to do fewer deals while tapping the Canadian tax payer for incremental CPP1 contributions AND incremental CPP2 contributions.
The cost of that answer, based on extrapolating the never-realized savings from the 2019 Report, would tell us that CPP has increased its drain on the Canadian taxpayer (split between employer and employee EVENLY) by $10 billion annually since that time. That’s $125 out of the pocket of the average Canadian, every year, and $125 out of the pocket of every employer for each full-time worker in its employ.
The CPP’s historical journey from 2000 to 2015 to move from a 5/95 portfolio to an 85/15 portfolio was very positive. We, as Canadians, can rightly be proud of the CPP and its leaders during this time, and of the decision-making that led the organization there. But that all happened over a decade ago. I’m not here to argue the history or whether CPP Investments has contributed positively to Canadians as a whole. It undoubtedly has.
I’m asking… WTF has been happening in the last few years?!
INTO THE WILDERNESS
From 2015 to 2025, CPP Investments used a benchmark of 85% S&P Global LargeMidCap Index to reflect the equity part of its returns and 15% in a Canadian Government Bond Index to reflect the debt part. To me, this makes a lot of sense. Easy and simple to understand, this benchmark also has the benefit of fairly accurately reflecting the types of assets the fund held, as you can see in the chart below. This is especially the case if you assume that Infrastructure, High-Yield Credit, and Real Estate are more reflective of equity returns over time than debt. I think there’s some nuances there I can’t get into here, but overall I’d agree with that assessment. If you argued for a more lenient 80/20 or 75/25 benchmark rather than an 85/15 based on this fact, you could convince me. I’d get on board. Overall, that would feel right to me!
So what did CPP Investments change their Benchmark to in 2025? Let’s take a look!
I mean… I don’t know what to do with that. I’m a CFA and an investment professional who should be able to interpret this, and I have NO FREAKING CLUE what to do with that.
What I can tell you - and this is the upshot - is that based on CPP Investment reporting, the “revamped” 2026 Benchmark Portfolio returned 8.1% over the last five years.
The Benchmark Portfolio CPP Investments would have had to use if they hadn’t changed it in 2025? That lovely… simple… beautiful… 85/15 index that I used to know like Gotye… returned 11.6% annually over the same five years. I don’t know what that 40% Relative Performance multiplier would be for underperforming that index but I bet it’s a lot lower than the 0.81x that got used for 2026.
Let’s reframe those numbers another way though. CPP Investments had ~$400 billion in assets in March 2019, so if they had simply invested 85% in their equity benchmark (”S&P Global LargeMidCap Index” yielding 13.3%) and 15% in Canadian Government Bonds yielding a conservative 1% over the last five years… CPP Investments would have an incremental $140 billion in returns over those five years versus what they actually earned, with no incremental CPP1 or CPP2 contributions required. That’s an extra $3,500 in each Canadian’s pocket.
To put that yet another way, if CPP Investments had actually invested 58% of its funds into the LargeMidCap Index at 13.3%, and the other 42% in Canadian Bonds at 1%, it would have done just as well as the 2,000+ employees at CPP Investments actually did. Read that again.
For the inclined among you, I asked ChatGPT and Gemini… and they both said if your active manager can’t beat a 75/25 index, you should get rid of them and invest passively! That matches my gut. CPP Investments is at 58/42.
CPP Investments gave themselves the Slush Multiplier to try to pay themselves more, but it wasn’t enough, so they had to adjust their relative benchmark too.
SO WHAT DO WE DO?
Well, first, you can get upset. No, but really. Share this and maybe it’ll get around. Send it to your representatives. The Globe and Toronto Star both had articles on this yesterday with broadly similar takeaways, but their articles are behind paywalls and don’t have the whole context. To change the charter of CPP Investments requires a 2/3rds vote of the Canadian senate representing 2/3rds of Canadian provinces. It’s very hard to do! The only way for it to change is general public outcry.
I know how CPP Investments works. There are hundreds of people there (maybe dozens) who are concerned about the future of the average Canadian’s retirement in the same way I am; they are people still not accepting that $100+ gift from a client because they want your trust. There are hundreds more just keeping their heads down and pretending - to others and themselves - not to hear the loud sucking sound their employer is making at the roots of the Canadian economy. These people are - mostly, like any group of people - good at their core. I’ve enjoyed a beer or two with many of them. However, the only way to effect change is for the 20-million-plus Canadians who contribute to the fund, as well as those inside it, to demand transparency and accountability. For our benefit, our children’s benefit, and for the employees, because living in the Orwellian nightmare of CPP Investments is not healthy for them either. But hey, that’s just, like, my opinion, man.
You can share this and we can collectively demand that the CPP leaders do some combination of: (i) become more transparent rather than less, and (ii) shift to a less-expensive form of asset management largely focused on passive index investing... over time. I’m not saying they have to do it tomorrow, as that also involves risk. There are also a variety of ways to accomplish it. We could cap CPP Investment’s expense ratios below current levels in a graduated manner to “force” a move toward passive indexing in a similar way to how one might dollar-cost-average into the market. We could also demand more clarity on compensation calculations, like the 1.8x Slush Multiplier and the 1.55x individual performance multiplier
While I find CPP’s performance lacking versus the market, that’s actually not my chief issue with the report. If they were honest about their performance and didn’t introduce the Slush Multiplier, I wouldn’t have been able to write this article. The reality is that CPP Investments’ leaders adjusted their benchmarks and introduced a Slush Multiplier to increase their own compensation and make it easier for themselves to manage employee turnover, while failing to meet the minimum real return of 4% required by the Chief Actuary over a significant period of five years. In doing so, they put themselves before your retirement.
If CPP’s leaders really cared about their professed purpose at the top of the 2026 Annual Report to “help provide a foundation for more than 22 million Canadians to help build their financial security in retirement” - tough tagline by the way, use a thesaurus - they’d be honest in their reporting and we could have a real conversation about them reducing their active management of investments, over time. They can’t beat the index, and Canadians shouldn’t give them more time to try.
Looking forward to any feedback and answering any questions. If you’d like to understand but don’t, shoot me a message… I probably just explained that part poorly.
EDIT:
I have to come clean, I wish I’d included this in my original piece... I would like to say that this all comes from a place of love, for the taxpayer and the employee at CPPIB. I don’t think they should all lose their jobs nor a majority of them nor should we move to a passive index tomorrow. What’s life without a little mystery, though?

Alright, a lot of people have brought this to my attention, I saw it posted on LinkedIn. I even had an exchange with Mark Kaminski (publicly, not privately) via his comments section.

I read his long comment, at times he brings up good points on transparency, other times, I cringed, reminded me a bit of when I used to write my blog angry and just blurt things down.

I think it's fair to say, his comment needs to be tightened up considerably; there are passages that quite frankly aren't very professional.

But leaving that aside, I wanted to address his main concern, namely, that CPP Investments is gaming its benchmarks to dole out multimillion-dollar compensation packages to senior execs.

Those are serious charges, especially coming from a former employee.

And to be sure, I've seen my share of gaming benchmarks at PSP during my time there which is what got me started on my blogging escapades over 20 years ago.

For example, I was at a board meeting at PSP where two board members asked me straight out if the risks the real estate department was taking were reflected in their benchmark.

I looked at my CEO and he told me to answer the question so I did: "Well, no, their benchmark is CPI + 500 basis points and they're taking all sorts of risks in opportunistic real estate to garner 20%+ in returns annually."

That didn't go well with senior execs, along with all my other warnings about stupid credit risks PSP was taking at the time (selling CDS, buying ABCP), it ended costing me my job (my underlying health condition, however, was the real reason I was fired but alas, I couldn't hide the fact I had MS and knew for months I was a sitting duck).

So, when I hear people say "just ignore him, he is a disgruntled former employee," I say wait up, don't be too quick to judge former employees.

Now, I did reach out to CPP Investments and shared Mark's comment with them and they were kind enough to respond today.

Michel Leduc, Senior Managing Director and Chief Public Affairs Officer, sent me this:

The allegations the individual is circulating don't hold up to the facts. The writer treats a simple two-asset risk target as if it were the prudent benchmark for a global pension fund investing across asset classes, public and private. It isn't. The letter alleges CPP Investments manipulated benchmarks in 2025 and 2026 to pay executives more. The annual report record, the disclosed compensation outcome, and the long-run expected return of the Benchmark Portfolios all contradict that claim.

CPP Investments has disclosed for several years that the actual Fund was not managed as an 85/15 global-equity/Canadian-bond portfolio. The framework (Strategic Portfolios, Active and Balancing Portfolios, leverage, factor exposures, strategy-level passive comparators) was set out in the fiscal 2022 and 2023 Annual Reports. Strategic Portfolios were approved in fiscal 2021 and ran through fiscal 2024. Active selection was already being measured against risk-comparable passive indexes well before the Benchmark Portfolios were formalized. Fiscal 2024 went further still and disclosed that a more representative benchmark was being developed and explained why: the Fund had deliberately diversified beyond the two asset classes of the Reference Portfolios, which had become an increasingly poor relative-performance comparator. Fiscal 2025 then formalized the change. The evolution did not appear out of nowhere. Indeed, we find that the 85/15 risk target, if directly invested in a typical global index (rather than serving as diversified risk equivalency) would be reckless for a national pension fund given concentration levels, which have intensified more than 100% over the last decade. By that measure alone, the Reference Portfolios provide a distorted comparable for performance metrics.

A Market Risk Target answers one question: how much market risk should the Fund take? A Benchmark Portfolio answers a different one: did active and balancing strategies add value relative to passive, investible alternatives for the strategies actually used? The individual is misguided in seeking to collapse these into a single question. They aren't the same.

The claim that the new benchmarks were designed to lower the bar fails on the disclosure itself. The Benchmark Portfolios have slightly higher long-run expected absolute returns than the Market Risk Targets, because diversification compounds. Over the appropriate horizon, which amounts to decades, not quarters, the new benchmark is a higher more difficult hurdle, not a lower one. The argument against it depends on a recent stretch in which concentrated U.S. mega-cap technology and communications names dominate public-market returns. That's not a long-horizon pension argument. It's market timing plain and simple.

It's also a textbook case of recency bias, which is well-documented. Because a narrow sector has recently outperformed, the argument retroactively concludes a prudent fiduciary should have concentrated there, and treats diversification as failure. Kahneman, Tversky, and Shiller all documented exactly this pattern. Morningstar has warned investors enamoured of recent winners against it. Our framework is built to resist that temptation: it doesn't chase yesterday's winners and doesn't confuse concentration with prudence because concentration happens to be rewarded today. Concentrators may be winning at the moment. That isn't a strategy for a national pension fund.

The compensation allegation is contradicted by the math. In fiscal 2025, the five-year annualized return of the Benchmark Portfolios was 9.73% against the Fund's 8.98%. Net relative performance was negative 0.75%. The Value Added Multiplier came in at 0.17. A 0.17x multiplier is not a manufactured windfall. It's a sharply reduced score under the disclosed formula. Any claim that the new benchmarks were adopted to engineer a pay benefit has to ignore that the relative result was negative. Importantly, as clearly described in our annual reports, the compensation framework is about appropriate incentives holistically to align the work of investors with enduring value for the CPP, and not simply benchmarking. A reminder that the pension promise depends on strong absolute returns, which is precisely why the Fund is so far ahead of projections, enabling Canada's finance ministers to cut the contribution rate by 40bps thus putting billions of dollars back into the Canadian economy. We are not aware of any similar circumstances occurring anywhere else, globally. Worth noting the CPP Fund ranks second in terms of ten-year financial performance among the top 25 global public pension funds. Let's get back to what really matters and not lose the plot in the weeds.

The CFA/GIPS guidance expressly recognizes that a retroactive change may be appropriate where the new benchmark is a better comparison for the investment strategy. It warns against changes designed to flatter performance. That isn't what happened here. The change was disclosed, the rationale was explained, the construction was described, the Market Risk Targets remain in place as a risk gauge, and the disclosed five-year relative-performance outcome was negative.

The market-concentration dynamic isn't theoretical. Fiscal 2026 reported the Fund at 7.8% against a benchmark of 13.2%, with the benchmark boosted by heavier exposure to large technology companies that outpaced the broader market. Fiscal 2024 had already warned that this environment could make a diversified portfolio look worse against a public-equity-heavy comparator, even when diversification remained prudent. The warning preceded the outcome.

The accurate account is straightforward. CPP Investments evolved its performance-measurement framework over multiple years as the Fund became more diversified, as public markets became more concentrated, and as the former Reference Portfolios became increasingly disconnected from the actual Investment Portfolios. Fiscal 2025 formalized that evolution. It didn't create it. A story that presents this as retroactive benchmark manipulation to boost pay leaves readers with a materially false impression of the public record. For clarity, here is a summary of the facts:
1. Annual report disclosure trail is extensive.
The fiscal 2022 Annual Report described strategy, performance, governance, investment approach, risk management, cost management and pay-for-performance, with performance attribution over the fiscal year and over five years. 2. The framework predates fiscal 2025.
The fiscal 2023 Annual Report states that Strategic Portfolios were approved in fiscal 2021 to be effective from fiscal 2022 through fiscal 2024. Those Strategic Portfolios were diversified across public equity, private equity, public fixed income, credit, real assets, cash/absolute-return strategies and geographies. 3. The actual Fund was not “the Reference Portfolio.”
The fiscal 2023 Annual Report states that Investment Portfolios were exposed to Active and Balancing Portfolios; the Balancing Portfolio completed and rebalanced targeted exposures; and the Active and Balancing Portfolios together delivered targeted factor exposures at targeted risk while diversifying asset class, geography, currency and sector exposures. 4. Strategy-level passive comparators existed before the Benchmark Portfolios were formalized.
The fiscal 2023 Annual Report states that active investment selection was measured against risk-comparable passive public-market indexes to objectively assess each active strategy’s contribution. 5. Fiscal 2024 expressly warned about the concentration issue.
The report explained that diversified portfolios can trail concentrated global public-equity portfolios when global public equities materially outperform, especially when performance is driven by a small number of very large companies concentrated in one sector or geography. 6. Fiscal 2024 expressly foreshadowed the benchmark transition.
CPP Investments disclosed that it was developing a performance benchmark more representative of how it assessed the effectiveness of its investment strategies. 7. Fiscal 2025 separated risk targets from performance benchmarks.
The fiscal 2025 Annual Report states that Market Risk Targets, previously Reference Portfolios, express targeted market risk, while Benchmark Portfolios replaced them as the benchmark for relative performance. 8. The reason for the change was disclosed.
The fiscal 2025 Annual Report states that since fiscal 2016 the Fund had become more diversified, the role of the Market Risk Targets shifted primarily to representing targeted market risk, and the Market Risk Targets became increasingly disconnected from the targeted exposures of the Investment Portfolios. 9. The new benchmark is not an easier long-run hurdle.
CPP Investments disclosed that the Benchmark Portfolios have slightly higher long-run expected absolute returns than the simple two-asset Market Risk Targets and are more resilient to equity-market downturns. 10. The “retroactive” point is aligned with CFA/GIPS guidance.
The CFA/GIPS guidance says most benchmark changes should be prospective, but it also states that retroactive changes may be appropriate where a new benchmark is a better comparison for an investment strategy. 11. The compensation allegation fails on the disclosed math.
The fiscal 2025 compensation table shows a five-year annualized Fund net return of 8.98%, Benchmark Portfolios return of 9.73%, negative net relative performance of 0.75%, a Value Added Multiplier of 0.17 and a Fund Multiplier of 1.04. 12. Governance is not self-directed in the casual sense alleged.
CPP Investments is governed by an independent Board, operates at arm’s length from government, undergoes external audit, and is subject to a special examination every six years; the most recent special examination by Deloitte in 2022 gave a clean opinion with no significant deficiencies in the systems and practices examined.

Alright, I thank Michel for sending me this, think he explains in detail how the changes in benchmarks were detailed in previous annual reports leading up to fiscal 2025 when they were adopted.

My only point of contention is the most recent special examination done by Deloitte, those are standard audits, not in-depth performance audits that kick the tires hard on benchmarks (good luck finding a firm that does this properly and independently).

Now, I have a recommendation to CPP Investments. On your website, you should have a detailed section on benchmarks, specifically the evolution of benchmarks in relation to the evolution of the active management strategy and portfolios. Michel goes over the main points above but a detailed discussion is worth it.

Quite honestly, every large pension fund I cover on my blog should do this; however, because CPP Investments is the biggest and most important one, and prides itself on transparency, I highly recommend it does this and even have a section in its annual report going over the evolution of benchmarks throughout time and why changes were made.

Now, I went over the Fiscal 2025 report here and can validate all the numbers Michel gave above:

What about fiscal 2026? Again, from the most recent report (pages 81-82):

As you can see, taking into account absolute and relative performance, the fiscal 2026 Fund Multiplier is 1.1, slightly above 1.04 of fiscal 2025.

Importantly, there is nothing out of the ordinary here, the explanation is given in the Compensation section and it's very clear.

I know, some critics think it should just be relative performance but by doing that, you force the Fund to chase returns in a very concentrated market, which they will not do (for reasons Michel outlines above).

Also, look at the fiscal 2026 press release and look at all the deals they entered.

Part of the compensation at any pension fund has to be on meeting strategic objectives, it can't all be based on absolute performance or relative performance.

By the way, on absolute performance, the Fund is doing very well over the last 10 years, it has more than enough assets to cover long-dated liabilities, so I don't understand the criticism.

In fact, they're lowering the contribution rate because performance has been very strong, which is a first in developed countries.

What about the famous 85/15 benchmark? No doubt, relative performance would have been worse in fiscal 2026 had they kept it but it doesn't properly reflect the risks of their underlying portfolio and over the long run the new benchmark has higher expected returns and less downside risk.

I always hated that 85/15 benchmark and told Mark Wiseman long ago when I met him that there will be a time when it "causes you nothing but headaches" and it doesn't properly reflect the true risks of the underlying portfolio which is more diversified across assets, sectors and geographies.

Again, a comprehensive performance audit of benchmarks (which the Auditor General should undertake along with the Bank of Canada) would have proven my point easily back then.

Alright, let me wrap this up because I can go on and on but there is no gaming of benchmarks at CPP Investments and I think the criticism is misplaced and just plain wrong in many areas.

Lastly, unlike Mark, I think contributions to CPP are good for the Canadian economy over the long run so I don't see contributions as a tax on our citizens.

I thank Mark for sharing a lot on his blog post and stimulating a discussion but just like Millennial Moron and Andrew Coyne, I don't agree with the criticism.

I have no issues with John Graham pulling in $7 million a year, or Charles Emond $5 million or Jo Taylor and Blake Hutcheson's compensation. Remember, all these CEOs have been with their organization for a long time and that too factors into the equation.

Are there compensation issues at these large funds? Does everyone pulling in over a million dollars a year deserve it? I have my thoughts on that too (hell no!) but that will be for another time.

Below, watch John Graham and others discuss fiscal 2026 results.

OMERS CEO on Why Canada Is Most Investable in Decades

Pension Pulse - May 25, 2026 - 9:37pm

OMERS CEO Blake Hutcheson joined Drumbeats to discuss Indigenous equity and the Canadian capital case:

Today's Spotlight
OMERS to deploy £5.5bn more in Canada, lifting allocation above 20%.
Carney-Smith pact opens 1mbpd oil pipeline to Asian buyers.
Atlantic First Nations stake claim in £33bn Wind West build.
Selkirk First Nation lines up Alaska port as global mineral export route.
"A quarter isn't three months. A quarter is 25 years."

What does it mean when one of Canada's Maple 8 thinks in generational time?

In a Drumbeats first, Blake Hutcheson, President and Chief Executive Officer of OMERS, joined co-hosts Mark Magnacca and Rob Brant in front of a live audience at the First Nations Major Projects Coalition annual conference in Toronto. Over the next five years, OMERS will deploy at least £5.5bn (CA$10bn) of additional capital in Canada, lifting its Canadian allocation meaningfully above the current 20%.

The examples are already in motion. The Bruce Power isotopes joint venture with Saugeen Ojibway Nation was financed at levels comparable to Government of Canada and Government of Ontario notes, a prototype for Indigenous-partnered infrastructure debt.

Hutcheson also pointed to defence, where Carney's commitment to 5% of GDP by 2035 creates a £50bn (CA$90bn) annual spending delta, with Northern infrastructure squarely in scope. "Canada is more investable than it has been in recent decades," he said.

For more on the conversation with OMERS, and other episodes on what is drawing capital back to Canada, listen to Drumbeats.

I recently discussed why OMERS aims to add $10 billion in Canadian investments over the next five years.

I stated the following:

[...] OMERS is aiming to add $10 billion in new investment in Canada over the next five years, mostly in infrastructure and real estate.
Is this feasible? Yes, as long as all the governments -- local, provincial and federal -- create winning conditions for OMERS and all of Canada's Maple 8 and beyond to invest in big projects.
I recently discussed that Prime Minister Mark Carney has invited 100 of the world's biggest investors to a summit in Toronto this September, hosted by CPP Investments and PSP Investments.
But I was clear, the time for words and slogans is long gone; the time for action is now, and we need to get going on big projects or else global investors will not invest here.

Go to minute 19 of the discussion below where Blake Hutcheson makes it clear they stack projects in Canada with opportunities they see around the world and will only invest here if the relative opportunities are better from a risk-adjusted viewpoint.

He then explains how the federal government is planting seeds to invest more in Canada and is optimistic that things will get going and global investors will take notice.

He also explains why defense spending in Canada will necessarily increase and that "$90 billion annual delta" will present huge opportunities.

There was also a discussion on how Bruce Power partnered with indigenous groups to double the production of medical isotopes.

Anyway, great discussion, kudos to Mark Magnacca and Rob Brant for their great questions.

Below, Blake Hutcheson, President and Chief Executive Officer of OMERS, joins co-hosts Mark Magnacca and Rob Brant in front of a live audience at the First Nations Major Projects Coalition annual conference in Toronto.

Also, a historic agreement between Bruce Power and Indigenous groups will double the production of medical isotopes. Scott Miller reports (Feb, 2026).

Top Funds' Activity in Q1 2026

Pension Pulse - May 22, 2026 - 6:43pm

Fiona Craig of Investor Hub reports hedge funds scale back chip holdings after massive AI-driven surge:

Hedge funds have been trimming positions in U.S. semiconductor companies following the sector’s outsized gains, choosing to secure profits while still maintaining strong exposure to artificial intelligence investments, according to Goldman Sachs data referenced by Bloomberg on Thursday.

Information from Goldman’s prime brokerage unit reportedly indicated that semiconductor and semiconductor equipment stocks were the most heavily net-sold U.S. subsector over the past month. The activity was driven primarily by investors reducing long exposure rather than building significant short positions against chipmakers.

That shift has pushed the sector into a net-selling position for the year to date.

The profit-taking follows a steep rally across AI-linked chip stocks. Goldman Sachs’ AI semiconductor basket has outperformed the S&P 500 by more than 50% in 2026, while the broader index itself gained over 18% between late March and a recent three-day pullback.

South Korea’s Kospi index — often used as a gauge of worldwide demand for AI infrastructure — briefly rose above 8,000 points for the first time in mid-May after climbing more than 80% year to date before later retreating.

Goldman’s prime brokerage team reportedly said the recent moves reflected portfolio adjustments rather than declining confidence in the AI trade. Exposure to U.S. artificial intelligence shares within the bank’s technology, media and telecommunications basket remains near all-time highs.

Meanwhile, hedge funds have expanded short positions in broad equity indices and ETFs as a hedge against broader market risks, with those bearish positions now sitting at their highest levels in about ten years.
Goldman analysts added that gross leverage across hedge fund portfolios reached a new five-year high this month, while net leverage stayed relatively unchanged — a setup the bank said does not resemble the kind of speculative frenzy currently evident among retail traders.

Jared Blikre of Yahoo Finance also reports chip stocks are hitting fresh records, but Nvidia isn't the driver:

Chip stocks are back to hitting intraday record highs after a fast round trip. The iShares Semiconductor ETF (SOXX) pushed to its first intraday record high since May 11 on Friday, extending a three-day rally that followed a three-day slide that started late last week.

Qualcomm (QCOM) led the move, jumping more than 12% on Friday and rising nearly 20% over the last three sessions.
What’s behind the move: The rally is notable because it is not being driven by Nvidia (NVDA).

Nvidia has been selling off since its Wednesday earnings report, even after the company topped estimates and gave an upbeat outlook on strong chip demand. The stock fell again Friday and has lost more than $100 billion in market value over the last three sessions.
That makes the rebound look less like another Nvidia-led AI surge and more like buyers broadly rotating across the rest of the semiconductor complex.

By the numbers: The biggest value creation over the last three sessions has come from the next tier of chip leaders. Advanced Micro Devices (AMD) has added nearly $100 billion in market value, while Arm Holdings (ARM) and Micron Technology (MU) have each added close to $90 billion.

Taiwan Semiconductor Manufacturing (TSM) and ASML (ASML) have each added more than $70 billion, while Intel (INTC) has added more than $50 billion.
What else you need to know: The move also reached the higher-beta end of the chip trade. Navitas Semiconductor (NVTS) surged nearly 18% Friday, Vishay Intertechnology (VSH) jumped over 10%, and Skyworks Solutions (SWKS) rose nearly 10%.

Broadcom (AVGO) was a big exception, slipping Friday and remaining lower over the three-day rebound.

The test now is whether SOXX can hold the reclaimed record zone. If it can hold above it, the chip rally looks repaired after a brief hiccup.

It's Friday, the S&P 500 notched its longest weekly win streak since 2023, the Dow climbed to record high and all seems wonderful in Equity La La Land.

The parabolic moves in stocks continued this week, with quantum stocks (IONQ, RGTI, QBTS, etc), IBM (IBM), Dell (DELL) and many others all soaring. Even BlackBerry (BB) and Nokia (NOK) joined in on the fun today, with their own big moves up.

These days, it seems like anything AI/ quantum related just explodes up.

Just have a look at the top-performing US large cap stocks this week (full list here):

And here are the top performing US large caps year-to-date (full list here):

Anyway, that's not why you're reading this comment; you all want to know what the world's top money managers bought and sold last quarter, with the customary 45-day lag.

Since AI is the theme of our times, I added a new fund, Situational Awareness LP, a prominent, San Francisco-based hedge fund launched in 2024 by Leopold Aschenbrenner, a former OpenAI researcher (replaced Kynikos, which closed a few years ago at number 37 in the L/S hedge funds below).

I've never heard of Leopold or his fund, but his first name suggests he must be very intelligent (/sarc).

Jack Inabinet of Bankless reports Leopold Aschenbrenner's 'Situational Awareness' files 13F quarterly investment disclosure:

Situational Awareness LP, a $13.7B tech mega fund managed by Gen Z AI savant Leopold Aschenbrenner, has filed its 13F quarterly disclosure with the United States Securities and Exchange Commission, providing the investing public with a moment-in-time snapshot of its portfolio at the end of the first quarter of 2026.
What's the Scoop?
Chipmaker Shorts: At the end of the first quarter, Aschenbrenner's Situational Awareness held an astonishing $8.46B worth of notional put exposure against a wide array of chipmaker stocks, including $2B of notional put exposure against the VanEck Semiconductor ETF (NASDAQ: SMH) and $1.6B of notional put exposure against AI mega cap Nvidia (NASDAQ: NVDA). Compounding on these broader bets, the fund also opened put positions against Broadcom (NASDAQ: AVGO), Oracle (NYSE: ORCL), Advanced Micro Devices (NASDAQ: AMD), Micron Technology (NASDAQ: MU), ASML Holdings (NASDAQ: ASML), Intel (NASDAQ: INTC), Corning Glass Works (NYSE: GLW), and Taiwan Semiconductor (NYSE: TSM).

Bullish Bets: California-based biofuel company Bloom Energy (NYSE: BE) remained Aschenbrenner's largest bull bet, with Situational Awareness holding 6.5M shares worth $879M and call options to 409k shares with a notional value of $55M. The fund opened calls in memory darling Sandisk (NASAQ: SNDK) to complement its existing 1M+ common stock position, alongside calls on chipmakers Micron Technology (NASDAQ: MU) and Taiwan Semiconductor (NYSE: TSM), signaling it is making selective bets in the sector intended to monetize volatility. Further, Situational Awareness increased its positions in crypto mining/data center operators CleanSpark (NASDAQ: CLSK), Riot Platforms (NASDAQ: RIOT), Applied Digital (NASDAQ APLD), and IREN Limited (NASDAQ: IREN).

Late Filing: Although 13F filings were due on Friday (all institutional investment managers with over $100M of securities holdings must file the disclosure with the SEC within 45 days of quarter end), Situational Awarness failed to file until this morning. Late or missed 13F filings can trigger civil penalties at the discretion of the SEC, ranging from minor fines to as much as $750k.
What's the Take?
Although much of the attention has centered on Aschenbrenner’s massive semiconductor put positions, Situational Awareness remains heavily exposed to a basket of highly volatile tech names and continues making selective bets across compute, memory, and data center infrastructure.
Still, many of the chip stocks the fund bet against have staged sharp rallies since the end of Q1 — the snapshot date captured in the filing — leaving it unknown how severely the run-up impacted net fund performance, even as some of its highest-conviction longs emerged as standout winners over the past month. Additionally, the current makeup of the portfolio remains unknown, as some positions may have been reduced, exited, or reversed entirely after the filing period ended.

Anyway, you can view Leopold's top positions here (he's definitely losing money on his short positions).

Forget Leopold, Leo, what are Stanley Druckenmiller's top positions as at last quarter?

They're right here and you can view them below:

Druck is making great money on Taiwan Semiconductor (TSM) , Sandisk (SNDK), Intel (INTC) and even Teva Pharmaceuticals (TEVA).

What about David Tepper's top positions? You can view them here and see below:

Tepper is making a killing on Micron (MU), Alphabet (GOOG), Corning (GLW), Advanced Micro Devices (AMD), Qualcomm (QCOM) and others.

It looks to me like the top fund managers are loaded to the hilt on semis but the data is lagged, so take it with a grain of salt.

Chasing parabolic moves is fun if you catch them early and ride the wave, not so fun when the top hedge funds exit and leave the retail crowd holding the bag.

Ok, let me wrap this up, time to enjoy my weekend.

The links below take you straight to the top holdings of top money managers and then click to see where they increased and decreased their holdings.

Top multi-strategy, event-driven hedge funds and large hedge fund managers

As the name implies, these hedge funds invest across a wide variety of hedge fund strategies like L/S Equity, L/S credit, global macro, convertible arbitrage, risk arbitrage, volatility arbitrage, merger arbitrage, distressed debt and statistical pair trading. Below are links to the holdings of some top multi-strategy hedge funds I track closely:

1) Appaloosa LP (David Tepper)

2) Citadel Advisors (Ken Griffin)

3) Balyasny Asset Management

4) Point72 Asset Management (Steve Cohen)

5) Millennium Management (Izzy Englander)

6) Farallon Capital Management

7) Shonfeld Strategic Partners

8) Walleye Capital

9) Verition Fund Management

10) Peak6 Investments

11) Kingdon Capital Management

12) HBK Investments

13) Highbridge Capital Management

14) Highland Capital Management

15) Hudson Bay Capital Management

16) Pentwater Capital Management

17) Sculptor Capital Management (formerly known as Och-Ziff Capital Management)

18) ExodusPoint Capital Management

19) Carlson Capital Management

20) Magnetar Capital

21) Whitebox Advisors

22) QVT Financial

23) Paloma Partners

24) Weiss Multi-Strategy Advisors

25) York Capital Management

Top Global Macro Hedge Funds and Family Offices

These hedge funds gained notoriety because of George Soros, arguably the best and most famous hedge fund manager. Global macros typically invest across fixed income, currency, commodity and equity markets.

George Soros, Carl Icahn, Stanley Druckenmiller, Julian Robertson have converted their hedge funds into family offices to manage their own money.

1) Soros Fund Management

2) Icahn Associates

3) Duquesne Family Office (Stanley Druckenmiller)

4) Bridgewater Associates

5) Pointstate Capital Partners

6) Caxton Associates (Bruce Kovner)

7) Tudor Investment Corporation (Paul Tudor Jones)

8) Discovery Capital Management (Rob Citrone)

9) Moore Capital Management

10) Rokos Capital Management

11) Element Capital

12) Bill and Melinda Gates Foundation Trust (Michael Larson, the man behind Gates)

Top Quant and Market Neutral Hedge Funds

These funds use sophisticated mathematical algorithms to make their returns, typically using high-frequency models so they churn their portfolios often. A few of them have outstanding long-term track records and many believe quants are taking over the world. They typically only hire PhDs in mathematics, physics and computer science to develop their algorithms. Market neutral funds will engage in pair trading to remove market beta. Some are large asset managers that specialize in factor investing.

1) Alyeska Investment Group

2) Renaissance Technologies

3) DE Shaw & Co.

4) Two Sigma Investments

5) Cubist Systematic Strategies (a quant division of Point72)

6) Man Group

7) Analytic Investors

8) AQR Capital Management

9) Dimensional Fund Advisors

10) Quantitative Investment Management

11) Oxford Asset Management

12) PDT Partners

13) TPG Angelo Gordon

14) Quantitative Systematic Strategies

15) Quantitative Investment Management

16) Bayesian Capital Management

17) SABA Capital Management

18) Quadrature Capital

19) Simplex Trading

Top Deep Value, Activist, Growth at a Reasonable Price, Event Driven and Distressed Debt Funds

These are among the top long-only funds that everyone tracks. They include funds run by legendary investors like Warren Buffet, Seth Klarman, Ron Baron and Ken Fisher. Activist investors like to make investments in companies where management lacks the proper incentives to maximize shareholder value. They differ from traditional L/S hedge funds by having a more concentrated portfolio. Distressed debt funds typically invest in debt of a company but sometimes take equity positions.

1) Abrams Capital Management (the one-man wealth machine)

2) Berkshire Hathaway

3) TCI Fund Management

4) Baron Partners Fund (click here to view other Baron funds)

5) BHR Capital

6) Fisher Asset Management

7) Baupost Group

8) Fairfax Financial Holdings

9) Fairholme Capital

10) Gotham Asset Management

11) Fir Tree Partners

12) Elliott Investment Management (Paul Singer)

50) Oaktree Capital Management

51) Fayez Sarofim & Co

56) Owl Creek Asset Management

57) Portolan Capital Management

58) Proxima Capital Management

59) Tourbillon Capital Partners

60) Impala Asset Management

61) Valinor Management

62) Marshall Wace

63) Light Street Capital Management

64) Rock Springs Capital Management

65) Rubric Capital Management

66) Whale Rock Capital

67) Skye Global Management

68) York Capital Management

69) Zweig-Dimenna Associates

Top Sector and Specialized Funds

I like tracking activity funds that specialize in real estate, biotech, healthcare, retail and other sectors like mid, small and micro caps. Here are some funds worth tracking closely.

1) Avoro Capital Advisors (formerly Venbio Select Advisors)

2) Baker Brothers Advisors

3) Perceptive Advisors

4) RTW Investments

5) Healthcor Management

6) Orbimed Advisors

7) Deerfield Management

8) BB Biotech AG

9) Birchview Capital

10) Ghost Tree Capital

11) Soleus Capital Management

12) Oracle Investment Management

13) Palo Alto Investors

14) Consonance Capital Management

15) Camber Capital Management

16) Redmile Group

17) Casdin Capital

18) Bridger Capital Management

19) Boxer Capital

20) Omega Fund Management

21) Bridgeway Capital Management

22) Cohen & Steers

23) Cardinal Capital Management

24) Munder Capital Management

25) Diamondhill Capital Management

26) Cortina Asset Management

27) Geneva Capital Management

28) Criterion Capital Management

29) Daruma Capital Management

30) 12 West Capital Management

31) RA Capital Management

32) Sarissa Capital Management

33) Rock Springs Capital Management

34) Senzar Asset Management

35) Paradigm Biocapital Advisors

36) Sphera Funds

37) Tang Capital Management

38) Thomson Horstmann & Bryant

39) Ecor1 Capital

40) Opaleye Management

41) NEA Management Company

42) Sofinnova Investments

39) Ariel Investments

40) ARK Investment Management

Canadian Asset Managers

Here are a few Canadian funds I track closely:

1) Addenda Capital

2) Letko, Brosseau and Associates

3) Fiera Capital Corporation

4) West Face Capital

5) Hexavest

6) 1832 Asset Management

7) Jarislowsky, Fraser

8) Connor, Clark & Lunn Investment Management

9) TD Asset Management

10) CIBC Asset Management

11) Beutel, Goodman & Co

12) Greystone Managed Investments

13) Mackenzie Financial Corporation

14) Great West Life Assurance Co

15) Guardian Capital

16) Scotia Capital

17) AGF Investments

18) Montrusco Bolton

19) CI Investments

20) Venator Capital Management

21) Van Berkom and Associates

22) Formula Growth

23) Hillsdale Investment Management

Pension Funds, Endowment Funds, Sovereign Wealth Funds and the Fed's Swiss Surrogate

Last but not least, I the track activity of some pension funds, endowment, sovereign wealth funds and the Swiss National Bank (aka the Fed's Swiss surrogate). Below, a sample of the funds I track closely:

1) Alberta Investment Management Corporation (AIMco)

2) Ontario Teachers' Pension Plan

3) Canada Pension Plan Investment Board

4) Caisse de dépôt et placement du Québec

5) OMERS Administration Corp.

6) Healthcare of Ontario Pension Plan (HOOPP)

7) British Columbia Investment Management Corporation (BCI)

8) Public Sector Pension Investment Board (PSP Investments)

9) PGGM Investments

10) APG All Pensions Group

11) California Public Employees Retirement System (CalPERS)

12) California State Teachers Retirement System (CalSTRS)

13) New York State Common Fund

14) New York State Teachers Retirement System

15) State Board of Administration of Florida Retirement System

16) State of Wisconsin Investment Board

17) State of New Jersey Common Pension Fund

18) Public Employees Retirement System of Ohio

19) STRS Ohio

20) Teacher Retirement System of Texas

21) Virginia Retirement Systems

22) TIAA CREF investment Management

23) Harvard Management Co.

24) Norges Bank

25) Nordea Investment Management

26) Korea Investment Corp.

27) Singapore Temasek Holdings

28) Yale Endowment Fund

29) Swiss National Bank (aka, the Fed's Swiss surrogate)

Below, Berkshire Hathaway's first 13F under CEO Greg Abel suggest more willingness to commit to tech stocks than under Warren Buffett, with a purchase of roughly $12.5 billion in Alphabet stock. This is likely to add volatility but add exposure to potential gains from AI and other emerging technologies.

Next, Leopold's Situational Awareness 13F is out and you can see the summary below (around minute 6:29).

Lastly, legendary macro investor Stan Druckenmiller joins Hard Lessons for a conversation with Iliana Bouzali, Global Head of Derivatives Distribution and Structuring at Morgan Stanley.

Druckenmiller reflects on his early career and how he learned to act decisively and change course quickly when the facts on the ground shift. Hear how he would construct a portfolio if he had to start over today, why contrarianism is overrated, and which stock he regrets selling too early.

Fantastic interview with the best money manager in the world. Take the time to watch it.

…

A Discussion With CPP Investments' CEO on Their Fiscal Year 2026 Results

Pension Pulse - May 21, 2026 - 10:20pm

The Canadian Press reports CPP Investments earned 7.8% for fiscal 2026, net assets total $793.3 billion:

The Canada Pension Plan Investment Board has reported a return of 7.8 per cent for its 2026 fiscal year.
The results helped increase its net assets to $793.3 billion at March 31, up from $714.4 billion at the end of its 2025 fiscal year.
It says the increase for the year included $56.9 billion in net income and $22.0 billion in net transfers from the Canada Pension Plan.CPP Investments chief executive John Graham says the results reflected the strength of its diversified portfolio and the reach of its global investment platform.
The returns were helped by its holdings in public equities, while its real assets, particularly energy and infrastructure assets, also contributed to the gains.
The results for the year by CPP Investments fell short of its benchmark portfolio which returned 13.2 per cent for the same period, as it was boosted by relatively heavier exposure to the large technology companies that outpaced the broader market for the year.

Layan Odeh of Bloomberg also reports that stocks, data centers drive the Canada Pension Fund to 7.8% return:

Canada Pension Plan Investment Board notched a 7.8% return in its most recent fiscal year, as gains on stocks and data center investments helped offset the impact of a softening US dollar and a weak year in private equity.
The returns, which pushed net assets to C$793.3 billion ($576.2 billion), came in a period “marked by geopolitical uncertainty, market volatility and currency movements,” Chief Executive Officer John Graham said in a statement.
Public equities gained 17.5% and were a key driver of results, particularly in the US, led by information technology and communication services. But private equity rose just 2.9%, partly because of the poor performance of some holdings in the software business, which investors see as vulnerable to AI-related disruption.
Real assets delivered a 12.2% return, boosted by data center investments and industrial real estate in the Asia-Pacific region, the fund said.
CPPIB’s results were hurt by the decline of the greenback against the Canadian dollar and by losses on government bonds, as expectations for central bank rate cuts shifted. The weakening of the US dollar contributed to a foreign currency loss of C$12.4 billion.
During the fiscal year ended March 31, Canada’s largest pension plan shifted some real estate, infrastructure and energy investments that were previously reported as equities to the real assets group, “to better reflect the underlying characteristics of these assets,” according to the annual report. Private equity now makes up 22% of the total fund, down from 25% a year earlier.
The pension plan made billions in new data center-related investments or commitments, including a C$225 million loan for a hyperscale expansion of a data center in Cambridge, Ontario.
CPPIB also committed $1.5 billion to an account managed by Blackstone Inc. that invests globally across diversified credit, including fund commitments, spanning private corporate credit, asset-based and real estate credit, structured products and liquid credit.

Layan Odeh also reports that CPP investments' boss warns about AI-fueled valuations as stocks keep rising:

Canada Pension Plan Investment Board’s top executive said the firm is getting increasingly uncomfortable with rich valuations in a stock market that’s dominated by technology and artificial intelligence companies.
“We have a market that is rewarding concentration. We have a market that is being driven by a handful of companies,” said John Graham, chief executive officer of the C$793 billion ($576 billion) fund.
The six largest technology companies in the S&P 500 now represent more than a third of that benchmark, led by Nvidia Corp., which is worth $5.3 trillion. They’ve been on a tear lately, helping lift the US stock gauge 14% since the end of March — and it has nearly doubled since the beginning of 2023.
The sustained rally has left far fewer opportunities, Graham said in an interview after the pension fund revealed its results for the fiscal year that ended in March. “I wouldn’t say we’re a deep-value investor, but we certainly have a value bias,” he said. “We certainly like to invest in cash flows, and we struggle with some of the valuations in the market today.”

Canada’s largest pension manager posted a 7.8% return in the 2025-26 fiscal year, driven by double-digit gains in public equities. Like some other members of the so-called Maple Eight group of Canadian pension funds, CPPIB’s stock portfolio is outpacing private equity returns by a wide margin.
But parts of CPPIB’s equities team had a difficult year. The fund’s active equities strategies incurred a C$3.5 billion net loss, bringing the five-year loss to C$6 billion. Regulatory changes in China weighed on the overall performance over the five-year period, prompting the fund to to reduce its exposure in that country.
The firm’s active equities team, which invests in public and soon-to-be-public companies, shrank to 120 employees from 139 people two years ago.
“We think it’s an important part of the broader portfolio to have a fundamental equities capability,” Graham said. “The big question is, how big do you think it should be?”
The rise of passive investing has reshaped markets in recent years, with investors directing more capital toward lower-cost strategies.
Some Canadian pension funds are now revisiting how much stock-picking they do. British Columbia Investment Management Corp. is closing two active equities strategies that oversee about C$4.3 billion, saying they’re no longer useful in a shrinking global pool of publicly listed firms. Last year, Ontario Teachers’ Pension Plan said it was altering its approach by prioritizing passive investing over stock picking.
Canada’s largest pension plan shifted some real estate, infrastructure and energy investments that were previously reported as equities to the real assets group, “to better reflect the underlying characteristics of these assets,” according to the annual report. Private equity makes up 22% of the total fund, down from 25% a year earlier.
CPPIB will continue to emphasize diversification across hedge funds, private equity, infrastructure, stocks, credit and real estate, Graham said. The credit team was “quite opportunistic” during the year, he said, helping credit investments gain 3.8%. The fund’s overall returns were hurt by the weakening of the US dollar, which represented the majority of its currency exposure, according to the annual report.
On investing in Canada, Graham said CPPIB has staffed each investment department for a while with teams dedicated to the domestic market, to “have Canada as part of their remit and their mandate,” the CEO said.
CPPIB also disclosed that Graham was paid C$7 million in the fiscal year, up from C$6.4 million a year earlier.

Earlier today, CPP Investments announced net assets total $793.3 billion at 2026 fiscal year end:

Highlights:

Net income of $56.9 billion
Net annual return of 7.8% in fiscal 2026
10-year annualized net return of 8.8%

TORONTO, ON (May 21, 2026): Canada Pension Plan Investment Board (CPP Investments) ended its fiscal year on March 31, 2026, with net assets of $793.3 billion, compared to $714.4 billion at the end of fiscal 2025. The $78.9 billion increase in net assets consisted of $56.9 billion in net income and $22.0 billion in net transfers from the Canada Pension Plan (CPP).

The Fund, composed of the base CPP and additional CPP accounts1, generated a 10-year annualized net return of 8.8%. For the fiscal year, the Fund’s net return was 7.8%. As the CPP is designed to serve multiple generations of beneficiaries, evaluating the performance of CPP Investments over extended periods is more suitable than in single years.

“Fiscal 2026 was a strong year for CPP Investments. In a period marked by geopolitical uncertainty, market volatility and currency movements, we delivered a 7.8% net return and the Fund grew to more than $790 billion,” said John Graham, President & CEO. “These results reflect the strength of our diversified portfolio and the reach of our global investment platform. By staying disciplined and investing for the long term, we continued to build value for generations of CPP contributors and beneficiaries.”

A diverse range of asset classes contributed to the strength of the fiscal year’s performance at CPP Investments. Public equities were a key driver of results, particularly in the U.S., led by information technology and communication services in the first half of the year. Real assets, particularly energy and infrastructure assets, also contributed meaningfully, alongside steady gains in credit. These gains were partially offset by foreign exchange movements, driven by the depreciation of the U.S. dollar against major currencies including the Canadian dollar, and by losses in government bonds as market expectations for major central bank interest policies shifted. Conflict in the Middle East at the end of the fiscal year contributed to a broad selloff in global equity markets, against a backdrop of ongoing geopolitical uncertainty and global inflation.

On a 2025 calendar-year basis, the Fund delivered a 7.7% net return, primarily driven by public equities, with gains across all asset classes.

“What matters most for a pension fund serving generations of Canadians is long-term performance, and over the past decade our investment programs have contributed positively to the Fund’s returns,” said Graham. “Through disciplined decision-making and global diversification, we have earned $549 billion in cumulative net income since we started investing more than 25 years ago, helping us protect and grow the Fund while building resilience through changing market conditions.”

Performance of the Base and Additional CPP Accounts

The base CPP account ended the fiscal year on March 31, 2026, with net assets of $712.9 billion, compared to $655.8 billion at the end of fiscal 2025. The $57.1 billion increase in net assets consisted of $53.2 billion in net income and $3.9 billion in net transfers from the base CPP. The base CPP account’s net return for the fiscal year was 8.0% and the 10-year annualized net return was 8.8%.

The additional CPP account ended the fiscal year on March 31, 2026, with net assets of $80.4 billion, compared to $58.6 billion at the end of fiscal 2025. The $21.8 billion increase in net assets consisted of $3.7 billion in net income and $18.1 billion in net transfers from the additional CPP. The additional CPP account’s net return for the fiscal year was 5.4% and the annualized net return since inception was 6.0%.

The additional CPP was designed with a different legislative funding profile and contribution rate compared to the base CPP. Given the differences in its design, the additional CPP has had a different market risk target and investment profile since its inception in 2019. As a result of these differences, we expect the performance of the additional CPP to generally differ from that of the base CPP.

Furthermore, due to the differences in its net contribution profile, the additional CPP account’s assets are also expected to grow at a much faster rate than those in the base CPP account.

Long-Term Financial Sustainability

Every three years, the Office of the Chief Actuary of Canada (OCA), an independent federal body that provides checks and balances on the future costs of the CPP, evaluates the financial sustainability of the CPP over a long period. In the most recent triennial review published in December 2025, the Chief Actuary reaffirmed that, as at December 31, 2024, both the base and additional CPP continue to be sustainable over the long term at the legislated contribution rates.

The Chief Actuary’s projections are based on the assumption that, over the 75-year projection period following December 31, 2024, the base CPP account will earn an average annual rate of return of 4.05% above the rate of Canadian consumer price inflation. The corresponding assumption is that the additional CPP account will earn an average annual real rate of return2 of 3.53%.

CPP Investments continues to build a portfolio designed to achieve a maximum rate of return without undue risk of loss, while considering the factors that may affect the funding of the CPP and its ability to meet its financial obligations on any given day. The CPP is designed to serve contributors and beneficiaries today and across future generations. Accordingly, long-term results are a more appropriate measure of CPP Investments’ performance and impact on plan sustainability.

“Canadians can continue to rely on the CPP as a strong foundation for their retirement income,” said Graham. “The Chief Actuary’s latest report shows our approach is on track, with investment income coming in approximately $80 billion higher than expected over the three-year period since December 31, 2021. This performance has strengthened the CPP’s funding outlook and helped create the conditions for governments to agree to a reduction in the contribution rate, while maintaining benefit levels and supporting a strong, sustainable plan for current contributors and future retirees alike. As a pension fund investor whose role is to prudently grow the Fund so Canadians can rely on the CPP for generations, it is especially meaningful that we have been able to contribute to this outcome.”

The OCA report provides forward-looking return assumptions and projected financial states for the base and additional CPP. The table below presents CPP Investments’ historical net real returns, which reflect realized performance over past periods.

Relative Performance

CPP Investments was created to invest and help grow the Fund, with the legislative mandate to maximize returns without undue risk of loss. The organization’s overall investment strategy is therefore focused on delivering a level of absolute performance that will help ensure the CPP meets all current and future obligations to contributors and beneficiaries.

CPP Investments also tracks investment performance relative to benchmarks to report on the value active management adds after all costs over different time horizons. It does so against the benchmark portfolios, which provide target allocations for our active and balancing investment strategies. We construct the benchmark portfolios by aggregating the sector- and geography-relevant public market index benchmarks to assess relative performance of each individual investment strategy. CPP Investments’ performance relative to the benchmark portfolios is measured in percentage terms.

On a relative basis, the Fund’s 10-year return outperformed the aggregated benchmark portfolios, generating 0.7% per annum of value added, net of costs. The benchmark portfolios’ fiscal 2026 return of 13.2% exceeded the Fund’s net return of 7.8% by 5.4%.

Significant concentration in public equities, with relatively heavier exposure to large-cap technology and communication services companies largely tied to artificial intelligence, were the principal drivers of benchmark portfolio performance in fiscal 2026. These companies delivered outsized returns compared to the wider universe of investable assets. By design, however, the Fund’s more diversified asset mix across public and private markets, sectors and geographies that helps reduce the impact of sharp equity market declines, limited participation in strong equity market rallies, such as those reflected in the benchmark portfolios’ public market indexes this past fiscal year. CPP Investments’ diversified portfolio is intentionally constructed to be less concentrated than public market indexes, with the purpose of enhancing the Fund’s resilience as it continues to grow over time.

For information on which of our decisions we believe are adding the most value, please refer to page 42 of the CPP Investments Fiscal 2026 Annual Report.

Asset Class and Geography Composition

CPP Investments’ portfolio, inclusive of both the base CPP and additional CPP investment portfolios, is diversified across asset classes and geographic markets.

Performance by Asset Class and Geographic Markets

Five-year Fund returns by asset class and geographic markets are reported in the tables below. A more detailed breakdown of performance by investment department is included on page 53 of the Fiscal 2026 Annual Report.

Managing CPP Investments Costs

Discipline in cost management is a main tenet of how we operate an internationally competitive enterprise that exists to create enduring value for multiple generations of CPP contributors and beneficiaries.

To generate $56.9 billion of net income, CPP Investments directly and indirectly incurred $1,757 million of operating expenses, $1,976 million in investment management fees and $2,758 million in performance fees paid to external managers, as well as $753 million of transaction-related costs.

Operating expenses were broadly flat in fiscal 2026, increasing by $1 million due to inflationary increases in personnel costs offset by lower general and administrative expenses. The net result is an operating expense ratio of 23.1 basis points (bps), below both last year’s 26.1 bps and our five-year average of 26.5 bps. We have also improved our operational efficiency, measured by net investments managed per employee, from $269 million in fiscal 2022 to $364 million in fiscal 2026, reflecting a 8% growth rate per year.

Management fees incurred increased by $216 million, driven by growth in externally managed assets. Performance fees increased by $535 million reflecting the positive performance delivered by our external managers.

Transaction-related costs, which increased by $23 million, vary from year to year according to the activity level, size and complexity of our investing activities. In fiscal 2026, we announced more than 50 transactions of $250 million or more, including approximately 20 transactions valued at more than $1 billion. Other categories affecting our total cost profile include taxes and expenses associated with various forms of leverage.

Refer to page 29 of the Fiscal 2026 Annual Report for more information on how we manage our costs and to page 50 for a complete overview of CPP Investments combined expenses, including year-over-year comparisons.

Operational Highlights for the Year

Corporate developments

Once again ranked one of the world’s top-performing public pension funds by Global SWF when measuring annualized returns between fiscal years 2016 and 2025 (Global SWF Data Platform, May 2026).

The Federal government announced, with the support of provincial and territorial governments, a proposed reduction in base CPP contribution rates (from 9.9% to 9.5%). This follows the most recent actuarial review released in December 2025, which confirmed the CPP remains financially sustainable and in a stronger financial position than in the previous assessment, supported in part by the growth of the CPP Fund and investment income over time. This underscores the long-term strength of the CPP and its ability to meet its obligations to current and future generations.

Entered into a Memorandum of Understanding under the Canadian-Australian Pension Funds Investment Initiative (CAP Invest Initiative), which defines a voluntary commitment among leading pension investors to facilitate dialogue on investment environments and policy barriers to generate solutions that unlock greater opportunities for value creation.

Ranked first among Canadian pension funds and second among 75 pension funds across 15 countries in the 2025 Global Pension Transparency Benchmark developed by Top1000funds.com and CEM Benchmarking, its fifth and final edition. The Global Pension Transparency Benchmark focuses on the transparency and quality of public disclosures relating to the completeness, clarity, information value and comparability of disclosures.

CPP Investments Insights Institute (the Institute) published Investing in Uncertain Times: Achieving Disciplined Flexibility in the Total Portfolio Approach, the first in a two-part series on how the Total Portfolio Approach works in practice. As persistent geopolitical and economic uncertainty reshapes markets, the report explores how CPP Investments adapts exposures and reallocates capital through market cycles within a calibrated risk framework—supporting a resilient portfolio and the Fund’s financial sustainability over its 75-year horizon. In fiscal 2026, the Institute also published Investing in a Changing World: How Public Funds are Addressing Physical Climate Risk; The Longevity Dividend: The CPP, Canada and an Aging World; and Mapping Canadian Capital, an ongoing series profiling our $119.2 billion in Canadian investments.

Board appointments

Welcomed the following appointments to our Board of Directors:
Gillian Denham, effective September 25, 2025. Ms. Denham has extensive experience on public company boards and is the former Head of the Retail Bank at CIBC.
Stephanie Coyles, effective October 10, 2025. Ms. Coyles is an experienced director and is the former Chief Strategic Officer at LoyaltyOne, Inc.
Elio Luongo, effective April 29, 2026. Mr. Luongo has more than three decades of experience in financial services and advisory and served as Chief Executive Officer and Senior Partner of KPMG in Canada.

Barry Perry and Sylvia Chrominska were reappointed as Directors of the Board for three-year terms, effective September 25, 2025, and December 3, 2025, respectively.

Leadership announcements

David Colla was appointed Senior Managing Director & Global Head of Credit Investments, effective April 1, 2026, and joined the senior management team. Mr. Colla joined CPP Investments in 2010 and most recently led the Capital Solutions group. He succeeds Andrew Edgell who will continue with the organization as a Senior Advisor.

Public accountability

Hosted our first two in-person public meetings for 2026 in Calgary and Edmonton, Alberta, providing an accessible forum to ask questions of our senior leaders. Additional meetings, including a national virtual meeting, will be held in the fall of 2026 to reflect our continued accountability to the CPP’s more than 22 million CPP contributors and beneficiaries.

Transaction Highlights for the Year

Active Equities

Invested C$73 million for a 0.8% stake in Definity Financial Corp, a property and casualty insurance services provider in Canada.

Invested C$411 million for a 0.6% stake in Medline Inc., a medical-surgical products and supply chain solutions provider in the U.S.

Invested C$322 million for a 0.1% stake in Hitachi, Ltd., which provides digital systems and services, green energy and mobility, and connective industry solutions in Japan and internationally.

Invested C$320 million for a 1.5% stake in Informa PLC, an international events, digital services and academic research group based in the U.K.

Invested an additional C$1.1 billion in Ares Management, a global alternative investment manager operating in the credit, private equity and real estate markets, resulting in a total ownership stake of 2.0%.

Invested an additional C$594 million in DSV A/S, a Danish transport and logistics company offering global transport services by road, air, sea and train, resulting in a total ownership stake of 1.9%.

Capital Markets & Factor Investing

Completed 34 co-investments alongside external fund managers through fiscal 2026, committing approximately C$3,640 million to macro-themed strategies in addition to equity trades in a variety of sectors, including communication services, consumer discretionary, and financials.

Credit Investments

Committed US$250 million to Lumina Strategic Solutions Fund III and US$200 million to a discretionary Separately Managed Account. Lumina invests at scale in the Latin American special situations market.

Committed US$1.5 billion to a separately managed account managed by Blackstone, which is designed to invest globally across diversified credit investments, including fund commitments, spanning private corporate credit, asset-based and real estate credit, structured products and liquid credit.

Invested US$200 million in a preferred equity facility to support ProAmpac’s acquisition of TC Transcontinental Packaging. Headquartered in the U.S., ProAmpac is a leading global provider of flexible packaging serving a diverse range of end markets.

Participated in a US$500 million senior term loan supporting Sixth Street’s acquisition of Global Lending Services, an auto financing solutions provider in the U.S.

Invested US$75 million in the first loss tranche of a significant risk transfer issued by a scaled non-bank lender in the U.S.

Invested US$200 million into a first lien term loan for Global Cellulose Fibers, a leading global producer of bleached softwood fluff pulp, based in the U.S.

Committed US$205 million as part of a term loan credit facility to Emergent Cold Latin America, the largest cold storage operator in Latin America, operating 112 facilities across 11 countries.

Invested £190 million in the primary commercial mortgage-backed securities debt issuance of Caister Finance, secured by a portfolio of U.K. holiday parks owned by Haven.

Invested US$100 million into the preferred equity issuance of CI Financial, a global wealth management and asset management advisory firm headquartered in Canada.

Invested C$225 million in a loan to construct a hyperscale expansion to a data centre in Cambridge, Ontario, Canada, funding 50% of the total construction cost, alongside Deutsche Bank.

Invested A$300 million (C$264 million) in an Australian commercial real estate debt strategy managed by Nuveen, a global investment manager. The strategy will focus on institutional senior and junior loans secured by prime real estate across major cities in Australia.

Invested US$300 million in the partial royalty monetization of Leqvio, a cardiovascular drug for the treatment of hyperlipidemia.

Private Equity

Invested US$50 million in 9fin, alongside Highland Europe. Headquartered in the U.K., 9fin is an AI-enabled credit intelligence and workflow platform serving global debt capital markets.

Committed JPY 11.75 billion (approximately C$100 million) to Bain Capital Japan Middle Market Fund II, which will target mid-sized companies in diversified sectors across Japan.

Committed US$63 million to Dragoneer Select Opportunities Fund, which will focus on growth-oriented companies in the technology sector globally.

Committed a combined US$145 million to Sands Capital’s Global Innovations Fund III, which invests in category-defining technology companies with an emphasis on long-term secular themes.

Invested US$175 million in Aadhar Housing Finance, the largest affordable housing finance company in India, alongside Blackstone Asia.

Invested US$27 million in Federal Bank, a private bank in India, alongside Blackstone Asia.

Committed US$300 million to Francisco Partners VIII, which will focus on technology investments in North America and Europe.

Committed US$50 million to NinjaOne through a single-asset continuation vehicle with Summit Partners. Based in the U.S., NinjaOne is a leading provider of cloud-based software solutions to outsourced IT managed service providers.

Committed US$200 million to Thrive Capital X across its Early, Growth and Opportunity funds and invested US$18 million in OpenAI alongside Thrive Capital. Thrive Capital is a New York-based, multi-stage venture capital firm.

Committed US$135 million to Consumer Cellular through a single-asset continuation vehicle with GTCR. Consumer Cellular is a U.S.-based cell phone provider that focuses on the 55+ demographic.

Committed US$155 million across a16z’s Late-Stage Venture Fund V, AI Applications Fund X and AI Infrastructure Fund X. Based in the U.S., a16z is a multi-stage venture capital and growth firm that invests in disruptive companies and technologies.

Committed US$100 million to Accel Leaders 5, which will invest in later-stage rounds of technology companies across the U.S., Europe and India.

Invested US$100 million in Advent LAPEF VIII, a private equity fund that will pursue control-oriented buyouts and select minority positions across business and financial services, healthcare, industrials, consumer and technology sectors in Latin America, with a primary focus on Brazil and Mexico.

Committed US$400 million to Bain Capital Asia Fund VI, which will focus on control buyout investments across Japan, India, China, Australia and Korea.

Committed to invest an additional C$750 million through our established Canadian mid-market private equity program managed by Northleaf Capital Partners, supporting the growth and scaling of domestic private companies.

Invested approximately US$600 million for a co-control interest in Boats Group, a global provider of online marketplaces for boats and yachts, alongside General Atlantic and existing investor Permira.

Invested approximately C$60 million in Wealthsimple through a primary and secondary offering at a post-money valuation of C$10 billion. Wealthsimple is one of Canada’s fastest growing money management platforms.

Acquired a US$135 million limited partner interest in TA Associates Fund XII via a secondary transaction. TA Associates is a global growth private equity firm investing in technology, health care, financial services, consumer and business services.

Invested approximately C$1 billion in OneDigital, a U.S.-based insurance brokerage, financial services and workforce consulting firm. We invested together with funds managed by Stone Point Capital for a majority position in the company. The transaction will support the company’s continued growth through a combination of organic expansion and strategic acquisitions.

Committed US$100 million to Glenwood Korea Private Equity Fund III, managed by Glenwood Private Equity, which will target mid-market control carve-out opportunities in South Korea.

Invested approximately €275 million in IFS, acquiring shares from EQT alongside other investors. Headquartered in Sweden, IFS is a leading global provider of cloud enterprise software and industrial AI applications.

Committed A$150 million (C$135 million) to Pacific Equity Partners PE Fund VII, which focuses on upper mid-market buyout opportunities in Australia and New Zealand.

Sold our remaining approximate 36% stake in Informatica, an AI-powered enterprise cloud data management company, as part of Salesforce’s acquisition, generating net proceeds of US$2.7 billion. Our original investment was made in 2015.

Real Assets

Committed US$400 million to Greystar Global Strategic Partners II (GGSP II) managed by Greystar, a global leader in property management, investment management, and development. GGSP II will provide equity to Greystar’s global investment offerings across a diversified portfolio of living sector real estate strategies.

Committed approximately US$175 million to a real estate portfolio of senior living communities across the U.S.

Agreed to invest approximately US$1.6 billion for a 60% controlling interest in atNorth, a leading Nordic high-density colocation and built-to-suit data centre provider, in partnership with Equinix who will own an approximate 40% stake.

Agreed to acquire a 50% ownership interest in Inkia Energy, a private power generation company in Peru, at a total enterprise value of US$3.4 billion, alongside I Squared Capital.

Committed to initially invest up to JPY 25.4 billion (C$222 million) to a Japan hospitality strategy managed by Singapore-based real estate investment manager SC Capital Partners Group.

Formed a joint venture with Dream Industrial REIT and Dream Asset Management Corporation to acquire last-mile industrial properties in major markets across Canada. We have allocated C$1.0 billion of equity capital (90%) to the joint venture. The partners have agreed to acquire a portfolio of 12 Canadian industrial assets totaling 3.6 million square feet across Ontario, Quebec and Alberta, for a purchase price of C$805 million.

Committed a combined US$310 million to U.S.-based Vantage Data Centers (Vantage), which provides data centre campuses to cloud providers and enterprises, as well as an additional US$200 million commitment across Vantage and Yondr, a global developer, owner and operator of hyperscale data centres.

Invested US$1.0 billion for a strategic minority position in AlphaGen, one of the largest independent power portfolios in the U.S., alongside ArcLight Capital Partners.

Entered into a definitive agreement to acquire an approximate 13% indirect equity interest in Sempra Infrastructure Partners, a leading North American energy infrastructure company, for approximately US$3.0 billion, alongside affiliates of KKR.

Invested €234 million to support Nido Living, a European student housing operator, in its acquisition of Livensa Living, a student housing platform operating across Iberia. The acquisition positions the enlarged Nido group as one of the leading student housing operators in Europe, with approximately 13,000 beds. We acquired Nido Living in 2024.

Committed JPY 192.5 billion (C$1.8 billion) in Japan DC Partners I LP, a data centre development partnership managed by Ares Management following its acquisition of GCP. The partnership will support the development of three large-scale campuses in Greater Tokyo to meet growing demand for scalable computing and AI solutions.

Completed the sale of our 49.87% stake in Transportadora de Gas del Peru S.A., which operates Peru’s main natural gas and natural gas liquids pipelines under a long-term concession, to EIG. Net proceeds from the sale were approximately US$820 million. Our original investment was made in 2013.

Entered into a definitive agreement to sell our 49% stake in Island Star Mall Developers Private Limited, a real estate investment program in India, to joint venture partner The Phoenix Mills Limited and affiliates. Net proceeds will be approximately INR 54.5 billion (C$871 million) before closing adjustments. The joint venture was established in 2017.

Sold our 50% interest in a portfolio of seven high-quality office properties in Western Canada to Oxford Properties for C$730 million. Our original investments were made in 2005 and 2016.

Transaction Highlights Following the Year-End

Committed US$104 million indirectly in the acquisition of Zentiva, a leading European generics and over-the-counter pharmaceuticals company, alongside GTCR.

Invested US$100 million for a minority stake in Sealed Air, a U.S.-based leading global provider of food and protective packaging solutions, alongside CD&R.

Invested US$100 million in Accuity Healthcare, a leading provider of pre-bill, revenue integrity services to hospital and healthcare systems in the U.S., through a single-asset continuation vehicle managed by Frazier Healthcare Partners.

Invested US$150 million in the preferred equity of Cerity Partners, a national registered investment advisor in the U.S.

Committed US$1 billion in financing to Blackstone Private Credit Fund, which is a U.S.-based investment fund focused on providing senior secured loans to large, performing companies.

Entered into a two-year forward-flow commitment with Global Lending Services, a U.S. auto financing solutions provider, to acquire up to US$1 billion of auto loans.

Committed US$50 million to Accel Core, which will invest in Accel’s core technology sectors, expected to include artificial intelligence, security, developer tools, fintech, defense and software. Accel is a leading global venture capital firm.

Sold Greenway Plaza, a mixed-use office property in Texas. No net proceeds were generated from the asset sale. Our original investment was made in 2017.

Sold a diversified portfolio of 33 limited partnership fund interests in North American and European buyout funds to Blackstone Strategic Partners and Ardian, for net proceeds of approximately C$4.0 billion. The portfolio of interests represents various investments made in funds over the course of approximately 20 years.

To read our fiscal 2026 annual report, please click here.

About CPP Investments

Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Canada Pension Plan Fund in the best interests of the more than 22 million contributors and beneficiaries. In order to build diversified portfolios of assets, we make investments around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Mumbai, New York City, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At March 31, 2026, the Fund totalled $793.3 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Instagram or on X @CPPInvestments.

You can download and read CPP Investments' FY2026 Annual Report here.

I had a chance to speak with CPP Investments' CEO John Graham earlier today, but before I get to this discussion, some of my observations on the results.

Before I get to our discussion, take the time to read the president's message below:

In a year of volatility and disruption, the CPP Fund (the Fund) did exactly what it was designed to do: remain resilient, grow steadily and help protect the retirement security of millions of Canadians.

The Canada Pension Plan (CPP) is one of Canada’s most important public programs and a cornerstone of retirement income for Canadians. Millions rely on it in retirement to provide a dependable monthly benefit that lasts for life and adjusts with inflation.

CPP Investments plays a distinct role in that system: we invest the Fund to help ensure the CPP is there for generations of Canadians. To keep the Plan financially sustainable, we must invest prudently through whatever the world throws our way.
The CPP remains strong and financially sustainable for generations
I’m pleased to report that the CPP Fund delivered strong performance in fiscal 2026 and the long-term financial sustainability of the Fund is secure.

In its latest report released in December 2025, the Office of the Chief Actuary of Canada reconfirmed that the CPP is financially sustainable for at least the next 75 years. The report also found that the funding outlook of the CPP – its expected ability to pay benefits over the long term – has strengthened since the previous assessment. Investment income also exceeded projections; between 2022 and 2024, it was about $80 billion higher than anticipated in the prior report. That independent, forward-looking assessment of the CPP’s ability to meet its obligations through changing demographics and economic conditions speaks to the Plan’s underlying health.

In fact, it is in part because of this underlying health that the federal government, with the support of provincial governments, announced in April 2026 a reduction in the contribution rate of the base CPP from 9.9% to 9.5%. This reduction will be implemented while maintaining benefit levels, supporting a strong, sustainable plan for current contributors and future retirees alike. As a pension fund investor whose role is to prudently grow the Fund so Canadians can rely on the CPP for generations, it is especially meaningful that we have been able to contribute to this outcome.
Strong long-term returns
The world is adjusting to a more fragmented global order, where trade and investment rules can shift quickly and uncertainty remains elevated. Market gains have been, at times, concentrated in a handful of large U.S. technology stocks, conflicts in Europe and the Middle East disrupted energy markets and renewed inflation concerns and shifting trade rules added to volatility. At the same time, artificial intelligence continued to move at pace from experimentation to production, reshaping capital spending and market leadership. These forces will influence investment opportunities and risks for years to come.

In fiscal 2026, the Fund delivered a net return of 7.8%, earned $56.9 billion in net income and ended the year at $793.3 billion, up $78.9 billion from last year. Public equities were a key driver of results, particularly in information technology in the first half of the year. Infrastructure, energy assets, and credit also contributed meaningfully. These gains were partly offset by foreign exchange losses as the Canadian dollar strengthened against the U.S. dollar, and by losses in government bonds, as central banks moved more cautiously on interest rate cuts.

For a pension fund designed to support generations of Canadians, long-term results matter most.

Over the past decade, the Fund delivered an annualized net return of 8.8%. Over that period, all our investment departments contributed positively to returns across very different market environments. This includes areas such as private equity, which is facing a more challenging period today, but has been a strong driver of absolute performance for the Fund over the longer term.

Over time, cumulative investment income has become a significant part of the Fund. At $549 billion, about 70% of the Fund today is a direct result of investment activity. That is compounding at work: patient capital invested across global opportunities with discipline around risk, liquidity and cost.

To understand performance, we look at it through more than one lens. The actuarial report provides an independent view of long-term financial sustainability. Absolute returns grow the Fund and help pay pensions. We also compare long-term results with global peers; Global SWF again ranked the CPP as the second best-performing pension fund globally on a 10-year basis. And we use sector and geography relevant benchmarks to assess relative investment performance. Together, these perspectives give a fuller picture of how the Fund is supporting the CPP for generations of Canadians.
Performance versus benchmarks
For the past three years, the benchmarks used to measure relative performance have advanced faster and higher than our more diversified portfolio built for long-term financial sustainability.

A component of the gap reflects a period in which large-cap, U.S. equities outperformed smaller companies and other geographies by a wide margin, while a relatively small number of technology and AI-related heavyweights drove a disproportionate share of benchmark returns. In addition, some parts of the Fund’s private-market portfolio – including private equity and real estate – faced cyclical headwinds, which weighed on more recent relative performance.

We did not design the Fund to mirror increasingly concentrated markets. Rather, we build resilience into the portfolio even as it is also designed to produce healthy returns over the long haul. Our investment portfolio is diversified by region, sector, and asset type, and actively managed to adjust to changing conditions. When market gains are largely driven by a single sector, our approach can lag for a period, but it is designed to reduce downside risk and keep the Fund resilient through many market cycles. That matters for a pension fund because the CPP must support contributors and beneficiaries through both strong markets and downturns.

Over 10 years, value added versus the benchmarks remains positive at 0.7%.

We remain focused on improving both the absolute and relative returns of the portfolio. Over the past year we reviewed the forces driving performance, challenged our assumptions and tested alternatives – including higher equity concentration, less diversification and different geographic mixes – to see whether they could improve outcomes without taking undue long-term risk. Some alternatives would likely have improved short-term results, but to the detriment of long-term risk-adjusted performance.

We have also taken a number of actions in response to recent performance, including sharpening how we assess and manage AI-related exposures, refining how we characterize private equity exposures and reviewing geography and sector positioning. All to help improve investment performance while maintaining the diversification and resilience required for a long-term pension fund. We believe that these new market conditions have revealed new opportunities to apply our enduring advantages: the ability to invest at scale, to partner with the best investors and operators, and to allocate capital flexibly across asset classes and geographies.

We remained disciplined on risk and liquidity. We have maintained an elevated level of liquidity in recent years, and that has served the Fund well during periods of market volatility.

Although markets have recently rewarded concentration, our conviction in diversification remains unchanged. We see diversification as both essential and an act of humility: no investor can reliably predict which narrow slice of the market will lead in any given cycle. While benchmarks matter because they hold us accountable and push us to keep improving, our goal is to build a portfolio that delivers the highest long-term absolute returns, with resilience, across changing market conditions.
Our investing activity, in Canada and beyond
Canadians rightly ask how the Fund invests at home. We apply the same return-and-risk discipline in Canada as we do globally, and we invest when opportunities meet our requirements.

At fiscal year end, we had $119.2 billion invested in Canada – an all-time high in dollar terms. We are encouraged by the attractive investment opportunities we are seeing in our home market.

This year we made a number of significant investments in Canada: we expanded our Canadian mid-market private equity program with Northleaf Capital Partners through an additional $750 million commitment; formed a joint venture with Dream Industrial REIT and Dream Asset Management to acquire last-mile industrial properties in major Canadian markets, allocating $1.0 billion; and invested $60 million to Wealthsimple, one of Canada’s fastest-growing money management platforms.

These investments reflect the same approach we use globally: backing strong businesses and assets, partnering with experienced operators and managers, and investing where we believe we can earn attractive returns without taking undue risk.

Around the world, our teams also continued to make investments that we believe will strengthen the Fund over the long term. This year, those included investments in atNorth, a leading Nordic built-to-suit data centre provider; Inkia Energy, a power generation company in Peru; and Hitachi,a Japanese technology conglomerate.
How we run CPP Investments: cost discipline, efficiency and governance
Managing a pension fund at this scale requires strong governance, clear accountability and careful risk management. CPP Investments operates with an independent, arm’s-length governance model. We manage market, credit, liquidity and operational and technology-enabled risks, including those arising from AI adoption, through robust frameworks and oversight built for a long-horizon investor.

We continued to focus on operating discipline. We now manage approximately $220 billion more in net assets with fewer employees than at the end of fiscal 2023, while investing in technology, data, and ways of working that allow the organization to scale efficiently.

Cost discipline matters because every dollar spent is a dollar not invested on behalf of CPP contributors and beneficiaries. As the Fund has grown, we have built a scalable model focused on doing more with the same base rather than simply growing our cost footprint. That discipline supports net performance.
Positioning the Fund for a changing world
The investment environment is changing in ways that matter for long-term returns. Conflicts, fragmentation, shifting trade and capital flows, the build-out of AI infrastructure, digital sovereignty and the whole-economy energy transition are reshaping investment conditions. We respond by building a portfolio that can perform across many scenarios and by investing where long-term fundamentals remain durable.
Conflicts, fragmentation and supply chains
Tariffs, trade disputes and geopolitical tension shape costs, supply chains and investment conditions across many sectors. Conflicts in Europe and the Middle East have also affected energy markets, shipping routes and inflation expectations. These pressures can create market dislocations and widen differences across countries and sectors. We invest through that reality by diversifying by country, sector and currency, and our global platform and long-standing relationships help us evaluate opportunities with local insight and partner with operators who understand their markets.
AI, infrastructure and digital sovereignty: investing behind the backbone
Data growth is increasing demand for data centres and the power and grid capacity behind them. Governments and companies are also paying more attention to digital sovereignty – the ability to store, process and move data within trusted systems and jurisdictions. We are increasing our focus on the infrastructure that supports the digital economy, including power generation and storage, transmission and grid upgrades, data hubs and related infrastructure, where long-term contracts and strong counterparties can provide stable returns.
Climate: protecting value through a whole-economy transition
Climate change affects risk and opportunity across the portfolio through physical impacts, regulation, technology shifts and changes in energy systems. Progress is not linear. We embed climate considerations into investment decisions across the Fund as we invest for a whole-economy transition. That means we stay invested across sectors and work with companies to reduce risk and protect value over decades rather than relying on blanket divestment.

Within each of these themes, the thread is the same: long-term investing requires patience, diversification and prudent risk management. It also requires learning and adapting as conditions change, without letting the latest narrative become the strategy.
Looking ahead
The CPP remains financially sustainable for generations, and the Fund continues to grow through disciplined long-term investing. In a world that will keep testing investors, CPP Investments will stay focused on what matters for a pension plan: resilience, sound risk management and strong long-term returns.

None of this happens without the dedication of our people. I want to thank all my colleagues across CPP Investments, including our Senior Management Team (SMT), for their hard work this year in pursuing our mandate with focus and care.

This year, we welcomed David Colla to the SMT, succeeding Andrew Edgell as Global Head of Credit Investments, following Andrew’s decision to become a Senior Advisor with CPP Investments. I want to thank Andrew for his leadership and contribution.

Uncertainty will persist. But the CPP was designed for exactly this kind of environment: to provide a dependable benefit, paid for life and indexed to inflation, through many market cycles. Contributors and beneficiaries can continue to rely on the CPP as a stable foundation of retirement income, and CPP Investments will keep investing the Fund with discipline so that foundation remains strong.

Now, before I get to my discussion with John Graham, I think it's critically important to go over some items in the Fiscal 2026 Financial Results Overview, which is available to download here.

I will not go over all the slides in this presentation, so take the time to read it here.

One of the most important slides is this one on funding:

The base CPP funding ratio improved (and the bulk of the assets remain there), allowing for a proposed cut in the contribution rate from 9.9% to 9.5%. This was attained because of stronger-than-expected investment income.

Next, performance relative to benchmark over a 1, 5, and 10-year period:

As you will see below, I got into this quite a bit with John Graham because critics will be focusing on 1-year underperformance of the Fund (-5.4%) relative to benchmark and we discussed this at length.

Importantly, when you look at pension fund returns, you have to look at long-term returns to evaluate its performance and on this basis the Fund is still doing well.

The key culprits for the underperformance are well-known, concentration risk in US equity indexes remains very elevated, and that impacted relative performance, especially in private equity:

Despite the relative underperformance over the last 1 and 3 years, the Fund is not chasing returns and remains highly diversified to maintain its resilience over the long run:

And they are very careful about how they manage exposures:

This is critically important to remember because critics will focus on short-term performance and ignore the inherent risks of investing in passive equity indexes when concentration risk is high.

Again, I went over this with John, but I want to make it clear in my post that CPP will not/ cannot beat its benchmark every single fiscal year, especially when concentration risk is high and stocks are ripping higher. This is by design; the focus is on maintaining a globally diversified portfolio to maintain resilience over the long run.

The Fund also needs to manage its liquidity properly to make sure it can access funds when market dislocations occur and take advantage of them.

I am giving you important context to keep in mind before you read my discussion with John Graham below.

A few minor points of criticism that I shared with John and Frank Switzer during our discussion:

CPP Investments needs to have a table next year where it discloses its 1, 5 and 10 year returns by asset class relative to the benchmarks as well as total Fund level. This has to be in the press release and if possible, also do one by calendar year (I know, I'm asking for a lot).
Next, CPP Investments invests in top hedge funds all over the world and also invests in emerging hedge fund managers. We need more transparency on the performance of this external manager portfolio (performance, etc.)

Alright, long preamble but there is a lot to cover before I get to my conversation with John.

Discussion With CPP Investments CEO Going Over Fiscal 2026 Results

Earlier today, CEO John Graham called me to go over fiscal year results.

I want to begin by thanking him and Frank Switzer for setting up the call and sending me material early this morning.

John began by giving me an overview of total portfolio results:

The 10-year return of 8.8% which continues to be very strong, and I'd say comps well to global institutional investors. One-year return at 7.8%. Put that into context, we started the year this time last year we spoke, we were probably right into the kind of volatility of Liberation Day. We ended the year with the invasion of Iran, which obviously put the markets down for the last few weeks of the fiscal year, and through that, we had a market that rewarded concentration.
We had a market that rewarded concentration, and I think continues to reward concentration, and continues to have valuations that in certain parts of the market, to be blunt about it, that we struggle with.
So, we sit here today, and we sat there through the year. We have a pretty profound belief in diversification, even though diversification isn't paying off right now. And at a time when the range of potential outcomes is as big as it is today, we actually think it's time to lean into diversification and not lean out of it.
I would say the results were from having a well-diversified portfolio across asset classes and geographies, and in some ways, trying to be less concentrated in the broader markets.

I completely agree with him and noted in his message that he mentioned they looked at alternatives for taking more concentration risk in their public equity exposure: "Some alternatives would likely have improved short-term results, but to the detriment of long-term risk-adjusted performance."

I asked him to explain:

That's a little bit of what I was referring to. We spent a lot of time looking at some of the themes that were driving the market, and let's say the AI theme, and while we do have exposure to it, I think it's fair to say we're probably underweight compared to the broader markets. So, thinking about are there ways we would actually put in kind of a more concentrated exposure in, and if we did, how much would we want at the end of the day, you know, again we do have some exposure, but we're probably not at market weights.
At the end of the day, we have a view that if we take a step back and say who we are and what we're actually solving for, and that's to contribute to the financial security and retirement of 22 million Canadians. There are times when you have to let the market run away from you. There are times when, if you look at the dispersion of outcomes, you know our mandate is to maximize return with that undue risk of loss, and you have to pay attention to that second point of the undue risk of loss.
Now, we're not immune to a big market sell-off in any way, so I wouldn't want to give you that impression. But there are times when you think you know valuations are astronomical and you've got to make a decision that, as I wouldn't say we're a deep value investor, but we certainly believe in cash flows, and certainly believe in the long run you need to see cash flows that we'd rather be more diversified than concentrated.

That makes perfect sense to me. In fact, I told John this is how I read it. On a funding level, CPP is in great shape. The latest report from the Chief Actuary of Canada confirms this.

But I told him, over the short-term, CPP Investments and other Canadian pension funds have been criticized for not keeping up with their benchmarks, and we know that there are benchmark issues, especially in this type of market where the share of the semiconductor sector reached a high of maybe 18 or 19% of the S&P and MSCI ACWI recently.

I also noted hedge funds are driving these hot money flows, so he's right, chasing these stocks to keep up with the benchmark without consideration of risk is just plain stupid and dangerous.

So, I asked him point blank: "I think what you're telling me is you don't want to chase performance here, right?"

He replied:

Yes, that's right. So the way we think about performance is that we're close to CAD $800 billion AUM now, and you have to think about what that actually means from how you think about various alternatives. But there is a desire in this industry to reduce performance to a single number, and it's a little bit more complicated than that.
What I do is look at absolute returns, because you need to grow the fund. Relative performance is an important accountability framework, and it also provides a lot of insight into how your various programs are performing, but you can never lose sight of the purpose of the organization, and what the organization was actually created to do, and we're trying to jointly solve those three things, but it doesn't mean we put equal weight on each one at all time.
And you mentioned the funding ratio. The funding ratio is at 40%. It's what allowed the feds and the provinces to cut the contribution rate by 40 basis points, which is real money back into the pockets of Canadians, which is ultimately why we're here.
So we jointly solve for absolute, relative and kind of the sustainability of the plan, but they aren't equally weighted. And in times like this, I'll say it to you, if somebody really outperformed their benchmark over the past year, I think you'd have to look hard at how they did it and what risk they took to do it.

Again, I completely agree. I told him I have very close friends of mine who keep throwing in my face that the Norwegian sovereign wealth fund has outperformed all of the Canadian pension funds in recent years as the AI theme took off, at a fraction of the cost of Canada's Maple 8.

I told my friends that I know, I covered their 2025 results here, Norway's GPFG gained 15.1% in calendar year 2025, far outpacing all of Canada's pension funds but even that mighty fund, which has huge tech exposure and a different objective function, underperformed its benchmark last year.

All this to say, whenever I look at the performance of any fund, I look at the asset mix and the embedded risks in the portfolio, and try to understand it at that level.

I also stated the importance of looking at long-term performance for the Fund as a whole and by asset class where John remarked:

One of the things we did in this annual report is we put in 10-year returns, so maybe you planted the seed last year, but one thing in this annual report you will see is 10-year returns. I agree it's one thing that we've been trying to get more and more long-term, because that's what matters.
If it didn't come out clearly in the report, I can take that away, but you will see when you get into the report that we did actually add commentary on 10-year returns, and I think that's a great segue to private equity (PE). Look, diversification means that some things are firing and some things aren't. If everything is firing, you're probably not diversified.
The PE portfolio has been a long-term kind of contributor to performance. You get 10-year returns probably close to 12% for PE, but the short-term returns are challenged. And they're challenged in that you had a period of low distributions in the PE industry, and then the software challenges that in an asset class that had kind of gone overweight software.
PE, the way I think about it, is you have a, you have the stock in the flow, right? You have the portfolio that's in the ground, and then you have the new opportunities, and the stock has to be worked through. And broadly, in the industry, there are some challenges with the stock, but the flow is pretty interesting, and you've got to make sure you're not cutting off the flow because of decisions that you made five years ago around valuation.
What our PE team is doing -- and I'd be happy to have you spend time with Caitlin at some point -- they're actively managing the stock. You would have seen the press release about a $5 billion disposition to Blackstone and Ardian.
This is all about managing the stock, and I've been pushing on the whole organization, even real assets, real estate, for the past five years, and it's probably my credit background. You've got to actively manage these portfolios, you got to embrace a relative value perspective. When the investment thesis is played out, even if it's a good asset, sell it and find a better place to put the money. So one thing is, over the past year, there was a lot of turnover in the portfolio, which is going to serve as well going forward, but it's, it's a lot of work.
So, PE is definitely working through the working through the stock right now. I don't know, anything else I want to talk about PE. I can move on to the other asset classes.

Indeed,CPP Investments has the biggest private equity portfolio in the world. It is selling C$4 billion in fund stakes to Blackstone and Ardian on the secondary market, creating liquidity in that portfolio to invest in better opportunities going forward. Y

Yes, they're taking a little bit of a haircut as they sell at a small but it doesn't matter over the longer term, as they are investing the money where they see better opportunities.

I told John the thing with PE that scares me is whether there a profound structural change going on. Higher rates for longer, margin compression, much lower distributions, intense competition for assets throughout the industry, continuation funds to extend and pretend instead of taking a loss on an asset. It all makes me wonder whether the good old glory years are over for a very long time.

John replied:

Yes, it's a good question. I think you got to go back to first principles with PE, and ask why do you invest in PE? Do you believe it actually can add value? I think our kind of fundamental assumption is the governance model of PE allows the investor to get kind of right up close to the management team, and then drive some value creation through the organization.
Undoubtedly, the industry benefited from multiple expansion and kind of cheap leverage for a long time, and going forward, those are not two sources of return that you should really be baking into any projections. And it's going to come down to who really has the ability to drive value through the through the organization, and if there is multiple accretion, is because the fundamental quality of the business.
I think the asset class will come out in better shape from these challenges as they usually do, but there's going to have to be a bit of a shakeout. I think one of the questions that people have to ask themselves with private assets, like I think the institutional investor base also has to ask themselves, that when you have technology evolving at a quicker pace than your old period, what do you have to pay? Get paid for liquidity. What do you get paid to hold an asset for six to eight years with no liquidity on it? And I think we could have a debate as to whether or not liquidity has been properly priced in the market over the past few years or I should say, illiquidity.

Another excellent point. I asked him whether they are happy here with 22% exposure to private equity or whether they are looking to lower it going forward.

He replied:

One of the reasons PE got to that size is because it had good returns for a long time. From an allocation perspective, it's probably pretty close. It is higher than what we would have liked, because you don't want to do anything unnatural with these illiquid assets. At 22%, it's probably at the high end, but we would never do anything unnatural to bring it down.

I told him the reason why I ask him about PE exposure is that I see more opportunities in infrastructure right now, and from what I'm reading in their annual report, and in his message, particular data centers, energy, and so in the real asset classes.

John responded:

I think our appetite for PE and broader infrastructure are pretty similar, as long as we're getting paid for it in the real asset space. Energy is probably the one area that we've been pretty keen on for a while, and as you know, we have continued to invest across the entire energy spectrum.
Our oil and gas portfolio did great over the past year, our LNG portfolio did great, our renewables portfolio did great. Energy is something that the world needs more of. The world needs more electrons, and so we're keen on growing that portfolio, and we're seeing lots of opportunities there, but I still like PE, and I still think on the flow side, there continues to be good opportunities.
We have to take the long-term perspective here, looking at this market. I may have shared this with you before, it's been my experience in investing that this time is different, is over 10, and you have to continue to maintain that long-term perspective.

I asked if that is the same for real estate as well and he replied:

Look, we took some hits on real estate, and our real estate portfolio dealt a positive gain this year, but again, some of the data centers actually sit in our real estate portfolio and logistics has been good. We've got through the office and the retail pain. Our real estate portfolio, as you know, is smaller than some of the others, kind of six 7% and they're still active, looking for opportunities.

There's a new global head of real estate there, Sophie van Oosterom, and she seems to be doing a great job thus far but that portfolio is still in transition and fundamentals there are improving.

The other portfolio I asked John about was absolute returns, their massive external hedge fund portfolio made up of top global hedge funds and emerging managers. Heather Tobin, Senior Managing Director & Global Head of Capital Markets and Factor Investing, oversees that portfolio, and I wondered why they don't share a lot more public information on it.

John replied:

I think we do disclose every manager on our website now, so I think every manager is disclosed on the website (some are listed here). I don't have a great answer for you. I'd have to look exactly what we put, because it's part of our CMF department, so we have a small systematic strategies group, but the CMF department that you see there, is almost entirely our external portfolio management team, which is the external hedge funds, and they had a great year.
They've had a great few years. I think it's also fair to say that the hedge fund industry had its best year ever in the past year.
[...] You should talk with Heather and Caitlin. I mean, PE and CMF, or the hedge funds. If we've had this conversation five years ago, everybody would have been gung-ho on PE and negative on hedge funds.

I will cover hedge funds tomorrow when I go over my quarterly activity but fair to say most of them jumped on the semiconductor trade in early April and are still riding it.

I circled back to benchmarks and said benchmarks matter a lot, especially for compensation. I said comp was based on five-year returns (maybe four-year), so you can underperform your benchmark in any given year but if you underperform over a 5-year period, compensation will be impacted.

And this AI investment cycle/ bubble can last for another three years, nobody really knows so I asked how they will handle this.

John responded:

So, as I look at this year, we've underperformed the benchmark three years running, and you know, and I think we got a good understanding why, and I think we have the conviction to maintain our current approach.
But as you know, markets can stay in their current state for a very, very long time, and if the markets continue to be concentrated like this, there's a good chance we'll underperform again if you get another 20% run by driven by a handful of companies. Institutional investors are not meant to keep up that way. It's a fact. I think that your math is correct, but you know that that's part of the part of how the industry works, right?

I said that's the only fear I have with this concentration risk. It can last, "markets can stay irrational longer than you could stay solvent", is an old famous expression, and the markets can stay irrational, especially in investment-led AI fuel bubbles.

That's one thing I realize, and we talk a lot about this throughout the industry, but you have to also remain disciplined. That's part of your focus. You can't just chase returns. It's going back to our initial conversation. You're going to get criticized by the Andrew Coynes of this world, but at the same time, you have to be very risk-conscious, a responsible fiduciary.

I told him you have a responsibility to be highly diversified.

John replied:

You mentioned something earlier, which I think is important to circle back to, when you brought up Norges. They run a very public strategy, so they're going to have a more kind of up and down portfolio by definition, but one of the things that gets forgotten in this, and you highlighted it, is pension plans have liabilities, and pension plans are created because of that liability, not because of the asset side.
You manage the assets to meet the liabilities, where sovereign wealth funds don't have liabilities, and that gets forgotten sometimes when people talk and mingle a sovereign wealth fund in a pension plan. To your point about comparing strategies, and even within the Maple 8, you have very different approaches to investing, because we have different liabilities and we have different kind of cash flow profiles. As we mature as an organization, now we're 27-28 years old, you see it, our approach is evolving based on what our liability stream looks.

I noted that additional CPP is much more diversified and much more risk-focused, because the liabilities are going to be changing, the profiles are going to be changing, and that additional CPP reminds me more, of what other Maple 8 pension funds are doing. I said base CPP is much more equity focused, private and public.

He replied:

That's because base CPP is a partially funded plan, and so as base CPP becomes more funded, when we started out as about 15% funded, and now it's 40% funded. As it becomes more funded, one would expect that it will kind of converge to look like other plans.
The additional CPP, for reasons of generational fairness, was set up as a fully funded plan with a really tight collar around it, so there's no real incentive to get it into a very overfunded status. That's why it has a very different risk profile, because it's 103% funded.

I interjected, saying "so you don't want to get to 125% funded" and he added:

It actually can't, the way they set it up, it can't, because, but they didn't want that. They really wanted it to have a tight collar around it, and so to say to us, like, just keep this around 100 don't try to get it to 120 you're not being incentivized to do that.

I switched the conversation to discuss Canada, stating I know everybody's patriotic this year but I personally don't care if investments in Canada are increased unless it's in the right area (like infrastructure).

I understand it makes a lot of people happy. What I care about is the CPP Fund is taking the appropriate risks globally, and focuses on global investments, and I want it to do well over the long run.

I asked John where they are in their discussions in terms of infrastructure opportunities opening up, and what he can share with my readers on this front.

He replied:

Sure. I think you got to remember that Canada is still our second biggest investment destination after the US. We have on a growth basis C$120 billion invested domestically. It's a big portfolio. I would share that our pipeline in Canada is probably the deepest it's been in my memory.
We'll see what comes to fruition, and we'll see what really kind of plays out. Some of that is due to the ambition from the provinces and the federal government to actually do big things, and when you want to do big things, it attracts big money.
So, whereas we're seeing opportunities in de novo development, recycling of assets that we haven't seen before, but I would say it's very formative at this time, and I think you know various governments across the country need to figure out what they're solving for. Are they solving for privatization, are they solving for recycling capital, are they solving for improvement in operations, are they solving for someone taking over a capex program?
Some of these details have to be worked out, and that'll be, but I think we're hopeful, Leo, that we're going to see some good opportunities. My view on it, for what it's worth, I'm a big believer that you need to have competitive capital, and if there are opportunities in Canada or any country in the world, you should have global and domestic capital looking at those opportunities, and competition is what drives better outcomes.
Trapping capital doesn't lead to better outcomes. Having a competitive market leads to a more competitive economy

I noted CPP and PSP are hosting this conference on investing in Canada with global peers in September, and that is positive.. Yeah, so I think that's part of what you're getting at as well. It should be global and open to all the funds. It should be global, and it should be the biggest investor in the world.

John added:

I'll just say one last thing on it. We obviously have an opportunity to meet with investors all over the world, and one of the questions I always ask is, how much do you have invested in Canada, and the answer is typically less than 1%, which you could argue maybe is underweight based on the market cap basis, because Canada just hasn't been on the investment community's radar for a long time,
But people are curious about Canada right now. I mean, people are more curious about Canada than they've ever been, and how do we turn that curiosity into interest? And that's a big job, right? I think it's better for us because it'll unlock opportunities. I think it's better for CPP investments.
So, this summit is essentially one way for the country to showcase what it has to offer to the world, and I think in the longer term it'll increase the opportunity set for CPP Investments.

I agree, we need global capital to enter Canada and this summit will be an opportunity for global investors to take a real hard look at what our country has to offer.

I ended our discussion on Credit investments, noting David Colla took over the helm of that important portfolio in February and asked him if he has any insights to share.

I said that despite all the negative press all year long about private debt funds being illiquid, and there being a liquidity mismatch going with retail investors, it remains an important asset class.

He replied:

Credit is always close to my heart, and it's done great. I mean, we could talk probably a while, but you touched on the exact issue. You have to unpack it and say, if you take software out, yields basic or spreads, basically ended the year where they started. You definitely have some of the software challenges, which is coming from private equity, but with the retail and high net worth participation, you have a mismatch in the duration of the capital with the duration of the asset, and this is the growing pains of bringing high net worth and retail into illiquid asset classes. I think people got the reminder that semi-liquid means that you have liquidity when you don't want it, and no liquidity when you want it.

We ended it there, I could have easily gone for another half hour but John and Frank had a very busy day.

Once again, I thank John for another insightful discussion, really enjoy talking to him because he explains things very clearly and carefully and doesn't avoid hard topics.

The key thing I got out of this discussion is the Fund is in great shape, it has more than enough assets to meet its future liabilities, they aren't chasing tech shares that are going parabolic, they prefer playing the AI theme in private markets via energy, data centres and other investments.

Most importantly, despite underperforming its benchmark for a third straight year, the Fund remains globally diversified across public and private markets, sectors and geographies and will remain this way to make it resilient for decades to come.

Below, the CPP Fund increased by $78.9 billion, ending the year at $793.3 billion in net assets. CEO John Graham and other members of the team discuss results and \john even speaks French in this clip.

Also, Manroop Jhooty, Senior Managing Director & Head of Total Fund Management at CPP Investments, discusses fiscal 2026 year-end results, recent market activity and the year ahead.

Lastly, Scott Sperling, THL Partners co-CEO, joins 'Squawk Box' to discuss the latest market trends, state of the private equity landscape, dealmaking activity outlook, and more. I recommended this clip to John and think you should all watch it.

Class of 2026: What occupation data show about AI and the young college graduate workforce

EPI - May 21, 2026 - 1:58pm

Key takeaways:

The vast majority (85%) of young college graduates work in occupations that have seen strong employment growth in recent years.

Young college graduates, like college graduates in general, are more likely to work in AI-exposed occupations than the overall workforce—and considerably more likely than young noncollege workers.
But both young college graduates and young noncollege workers have experienced rising unemployment over the last three years, suggesting AI is not likely to be driving labor market weakness.

In the first blog post of our Class of 2026 series, we showed that the strong labor market for young college graduates of the early 2020s had begun softening in recent years. A growing share of young college graduates are seeking employment, but because their employment rates have not kept up with this job search, their unemployment rate has risen faster than the overall rate. The second blog post in the series discussed the industries where young college graduates worked. We found that recent graduates work in growing industries, but are forced to enter a weakened labor market with less job turnover, deteriorating their ability to break in. Young college graduates work in the tech sector at a similar rate to college graduates, and there is no clear evidence that tech sector employment is significantly decreased despite warnings about the advancement of AI.

In this blog post, we delve deeper into the occupations where young college graduates are likely to work.1 We examine whether it has been relatively more difficult to secure employment in these fields as the labor market has weakened. We also scour the data for signs that exposure to AI-related occupations may disproportionately affect the prospects for young college graduates as they enter the labor market.

Most young college graduates work in occupations with strong growth

Over 60% of young college graduates work in professional and related occupations or management, business, and financial occupations. Figure A displays the share of employment in each occupation or occupation grouping for young college graduates ages 22 to 27, all college graduates, and young workers without a four-year college degree. Occupations in the figure appear in order of the share of young college graduates employed in each, from largest to smallest. Over half (62.8%) of young college graduates work in professional, management, business, and financial occupations. Workers of any age with a college degree are slightly more likely to work in those two occupations (64.5%), though more likely in management occupations than professional occupations. On the other hand, nearly half (48.3%) of young noncollege workers are in service occupations or farming, construction, installation, and production occupations.

Figure A

Figure B shows the change in employment in each occupation between 2019 and 2026 and between 2023 and 2026, arranged in the same order as Figure A for comparison. Since 2019, management, business, and financial occupations and transportation and material moving occupations experienced the most growth, followed by professional and related occupations.

The top four occupations for job growth since 2023 account for 85% of young college graduate employment. The occupations with employment losses over the last three years were more likely to employ young noncollege workers than college graduates. It doesn’t appear that the occupations where young college graduates tend to work have been hit particularly hard in the last couple of years.

Figure B

While there has been job growth among occupations that tend to be filled by young college graduates, some worry about an increase in labor market underutilization, i.e., when workers with a college degree wind up working in jobs that typically don’t require one. Using O*NET data2, the New York Federal Reserve tracks this type of labor market underutilization. While the share of recent college graduates working at a job that doesn’t require a college degree has ticked up slightly over the last three years, it remains lower than it was for workers who graduated in the aftermath of the Great Recession. Even as late as 2017, young college graduates were working at these noncollege jobs at higher rates than they are today.

While college-educated workers are in more AI-exposed occupations, this does not appear to be driving labor market weakness

Much has been written in the last few years about AI exposure and its impact on the labor market. Using data from ADP, a large payroll processing company, Brynjolfsson, Chandar, and Chen find that entry-level workers in AI-exposed occupations—particularly AI uses that automate, not augment their work—have experienced an employment decline larger than that of older workers in the same occupations and all workers in less exposed occupations, explaining some of their stagnant overall employment growth. Atkinson and Yamco also find that declines in AI-exposed occupations are tied to lack of hiring rather than layoffs, hitting harder for young people attempting to enter the labor market. The second blog post in our series noted an across-the-board slowdown in hiring—which hurts the job prospects of all young workers, not only those in the industries most affected by AI.

On the other hand, researchers at the Yale Budget Lab argue that there has only been a slight increase in the shift in the occupation mix of employment, which would be evidence of AI automating jobs. They find that high AI-exposed occupations—determined by the top quintile of AI exposure—have yet to show declining employment, so no “dissimilarity” between young and older college graduates in terms of occupation mix has materialized. Raderman also finds that there isn’t strong evidence that AI is responsible for weaker labor market outcomes for recent college graduates, using evidence from Tillerman on college majors paired with change in unemployment.

Given the variation in assessments, we wanted to take a look at the data ourselves. Gimbel, Kendall, and Kulsakdinun have done an admirable job of summarizing the literature that attempts to classify AI exposure and propose a weighted aggregate measure of AI exposure.3 We employ this measure to investigate whether young college graduates may be more likely to be at risk in AI-exposed occupations than other workers.

In Figure C, we display the AI exposure of occupations weighted by the share of the entire workforce in each occupation. Moving from the left to the right on the figure increases AI intensity. For instance, professional and office & administrative support occupations are more AI exposed (to the right), while production, transportation, and service occupations are less AI exposed (to the left). Overall, the mean AI exposure score is 0.23.4

Figure C

In Figure D, we show the distribution of select demographic groups by occupation and AI exposure. As with earlier analysis, we compare young college graduates with all college graduates and young noncollege workers, in separate panels in the figure.

According to the aggregate measure, college graduates do have higher AI exposure in the labor market than the overall workforce. It is clear there is more mass in the direction of higher exposure (to the right) and their mean exposure is 1.07, higher than that of workers writ large. But the AI exposure of young college graduates isn’t any higher than that of college graduates in general. Mean AI exposure among young college graduates is 1.00.

Figure D

What is striking is that the AI exposure among young college graduates (1.00) is considerably higher than that of young noncollege workers (-0.61). If AI was driving labor market outcomes, we’d expect young college graduates to fare worse in today’s economy, e.g., see larger declines in employment or faster increases in unemployment. But, when we compare unemployment rates as we did in the first blog post of this series, both groups experienced similar increases in unemployment over the last two to three years. Trends in employment rates were also consistent across these groups.

Since the weakening labor market is hitting both young college and noncollege workers alike, it’s hard to argue that AI is uniquely causing job losses for new labor market entrants graduating from college now or in recent years. These findings are consistent with the literature, as there is currently no consensus about the effects of working in AI-exposed occupations on employment thus far.

1. Throughout this brief, we define young college graduates as people between the ages of 22 and 27 with only a four-year college degree. Unlike similar analyses of young workers, we do not exclude young college graduates who are currently enrolled in school, but the results here are robust either way. Unless otherwise noted, data for 2026 represent a 12-month average from April 2025 through March 2026 for the most up to date and reliable estimates, which removes seasonality and increases sample sizes.

2. O*NET or the Occupational Information Network provides the largest up-to-date database of information about workers sorted into detailed occupations. Information provided is about skills, abilities, education, training, and more.

3. We use an updated summary AI exposure PCA score (principal component analysis weighted standardized z-score) provided by the authors, May 13, 2026.

4. The PCA score scale is centered at 0, the unweighted mean across occupations.

PSP Investments Exits FirstLight's US Assets, Retains Canadian Ones

Pension Pulse - May 20, 2026 - 6:35pm

The Canadian Press reports PSP Investments selling FirstLight's US portfolio, will keep Canadian operations:

The Public Sector Pension Investment Board has signed a deal to sell the U.S. operations of FirstLight to private equity firm Hull Street Energy.

Financial terms of the agreement announced Tuesday were not immediately available.

FirstLight's U.S. portfolio includes about 1.4 gigawatts of installed capacity across hydroelectric generation, energy storage and renewable assets in Massachusetts, Connecticut and Pennsylvania.

PSP Investments acquired FirstLight in 2016 and will keep the company's Canadian business under the transaction.

The Canadian operations include wind, solar, hydro, and battery storage projects in Quebec and Ontario.
The deal is subject to customary regulatory approvals.

Freschia Gonzales of Benefits and Pension Monitor also reports pension fund sells 1.4 GW of US clean power assets:

PSP Investments is exiting its US clean power holdings while keeping its Canadian infrastructure intact.

After nearly a decade of ownership, PSP Investments has agreed to sell the US operations of FirstLight to Hull Street Energy, a private equity firm focused on power infrastructure and energy transition investments.

The portfolio comprises roughly 1.4 GW of hydroelectric, energy storage, and renewable assets across Massachusetts, Connecticut, and Pennsylvania.

H2O Power and Hydromega, which make up FirstLight's Canadian platform, will remain under PSP Investments' ownership, alongside a development pipeline of wind, solar, hydro and battery storage projects in Quebec and Ontario.
That includes the 57.2 MW Fort Frances solar project in Ontario, developed in partnership with the Lac Des Mille Lacs First Nation and recently awarded a 20-year power purchase agreement through Ontario's long-term energy procurement process.

Andrew Alley, managing director and global head of infrastructure investments at PSP Investments, said the sale reflects the fund's approach to portfolio management while preserving exposure to Canadian projects with long-term, inflation-linked cashflows.

FirstLight president and CEO Justin Trudell and the US-based team will transition with the assets to Hull Street Energy.

The transaction remains subject to regulatory approvals. Evercore acted as sole financial advisor to PSP Investments, with Latham & Watkins and Foley Hoag as legal counsel.

Martina Markosyan of Renewables Now also reports Hull Street to buy FirstLight’s 1.4-GW clean power, storage ops in US:

US power sector-focused private equity firm Hull Street Energy has agreed to buy clean power producer FirstLight’s US-based operations that include nearly 1.4 GW of installed capacity across hydroelectric generation, energy storage and renewable energy plants in three states.
The assets are being sold by the Public Sector Pension Investment Board (PSP Investments), which acquired FirstLight in 2016. Financial terms were not disclosed.
The portfolio to be offloaded covers assets spread across Massachusetts, Connecticut and Pennsylvania. FirstLight’s US-based employees, led by president and CEO Justin Trudell, will transition to Hull Street Energy as part of the deal.
In particular, Hull Street is acquiring the 1,168-MW Northfield Mountain pumped storage hydro facility in Massachusetts, which is described as the largest energy storage facility in New England. The package also includes 14 hydroelectric stations located in Connecticut, Massachusetts and Pennsylvania, plus three operational solar and battery storage facilities in the Northeast.
FirstLight’s Canadian operations -- H2O Power and Hydromega, are not included in the transaction and will remain under PSP Investments’ ownership. The Canadian platform includes the 57.2-MW Fort Frances solar project in Ontario.
The transaction inked with Hull Street is subject to customary regulatory approvals. The parties expect to wrap it up later in 2026.
The deal with PSP Investments comes after Hull Street's agreement last year with Consumers Energy to acquire 13 hydroelectric dams across Michigan. Following completion of the FirstLight and Michigan investments, the private equity firm will become one of the major hydropower investors in the country with a fleet of about 1,200 MW of flexible pumped storage hydro capacity and nearly 400 MW of hydroelectric capacity.

Yesterday, PSP Investments announced the sale of FirstLight’s US portfolio to Hull Street Energy:

Montréal, Canada (May 19, 2026) – The Public Sector Pension Investment Board (PSP Investments) today announced that it has entered into an agreement to sell the U.S. operations of FirstLight to Hull Street Energy, a private equity firm specializing in power infrastructure and energy transition investments (the “Transaction”). The U.S. portfolio comprises approximately 1.4 GW of installed capacity across hydroelectric generation, energy storage and renewable assets in Massachusetts, Connecticut and Pennsylvania.

PSP Investments acquired FirstLight in 2016 and, over the course of its ownership, supported its growth into a leading clean power platform spanning hydroelectric generation, energy storage and renewable assets across the U.S. and Canada.
The Transaction covers FirstLight’s U.S. operations, including the Allegheny Hydro portfolio. H2O Power and Hydromega, which together comprise FirstLight’s Canadian platform, will remain under PSP Investments’ ownership. FirstLight’s U.S.-based employees, under the leadership of President and CEO Justin Trudell, will transition with the assets under Hull Street Energy’s ownership, while the Canadian platform will continue to operate under its current leadership team in Canada.
“We value what the team has built at FirstLight and are grateful for the support of PSP Investments during their ownership,” said Justin Trudell, President and CEO of FirstLight. “We are excited to continue leading the U.S. business and to be partnering with Hull Street Energy in this next chapter in the FirstLight story.”
FirstLight’s Canadian platform will continue to be a best-in-class operator of clean power projects and will continue to develop and execute on its pipeline of wind, solar, hydro, and battery storage projects in Quebec and Ontario. This includes the 57.2 MW Fort Frances solar project in Ontario, which is being developed in partnership with the Lac Des Mille Lacs First Nation and was recently awarded a 20-year PPA through Ontario's most recent long-term energy procurement process.
"We would like to thank the FirstLight team for their leadership, stewardship and collaboration throughout the development of the platform,” said Andrew Alley, Managing Director and Global Head of Infrastructure Investments at PSP Investments. “This transaction reflects our disciplined approach to portfolio management and return optimization while preserving exposure to projects in Canada with long-term, inflation-linked cashflows. We will continue to leverage our global expertise here at home to seek out new opportunities in the Canadian power sector."
The Transaction is subject to customary regulatory approvals. Evercore acted as sole financial advisor and Latham & Watkins and Foley Hoag acted as legal counsel to PSP Investments.

About PSP Investments 

The Public Sector Pension Investment Board (PSP Investments) is one of Canada’s largest pension investors with $299.7 billion of net assets under management as of March 31, 2025. It manages a diversified global portfolio composed of investments in capital markets, private equity, real estate, infrastructure, natural resources, and credit investments. Established in 1999, PSP Investments manages and invests amounts transferred to it by the Government of Canada for the pension plans of the federal public service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montréal and offices in New York, London and Hong Kong. For more information, visit investpsp.com or follow us on LinkedIn

Related to this, earlier this month, FirstLight executed a power purchase agreement for Fort Frances Solar Project:

PPA signing marks a key milestone in advancing new solar generation in Ontario, with enough clean electricity to power approximately 8,000 homes

Oshawa, ON — May 8, 2026 — FirstLight, a leading clean power producer, developer, and energy storage company wholly owned by the Public Sector Pension Investment Board (PSP Investments), today announced the execution of a Power Purchase Agreement (PPA) with Ontario’s Independent Electricity System Operator for the 57.2 MW Fort Frances Solar Project, in partnership with Lac Des Mille Lacs First Nation.

The agreement follows the Project’s contract award through Ontario’s Long-Term 2 (LT2) procurement process and represents a significant step toward delivering new, reliable and affordable clean electricity to the province.
“The signing of this Power Purchase Agreement represents a major milestone for the Fort Frances Solar Project and formalizes its role in bringing new solar generation online in Ontario,” said Justin Trudell, President and CEO of FirstLight. “In partnership with Lac Des Mille Lacs First Nation, we’re proud to advance a project that will deliver reliable, cost-effective clean energy to the grid while creating lasting value for the community.”
“We are proud to continue to leverage our global expertise here, in Canada. The Fort Frances Solar Project is a strong example of what we can achieve as a committed investor in the Canadian power sector,” said Andrew Alley, Managing Director and Global Head of Infrastructure Investments at PSP Investments. "We're thrilled to see FirstLight and Lac Des Mille Lacs First Nation recognized for their contribution to Ontario's electricity supply objectives — these are exactly the success stories that reflect the quality of our teams and the strength of our partnerships.”
The Fort Frances Solar Project was one of 14 projects awarded contracts by the IESO, together representing more than 1,300 MW of new clean electricity supply for the province as it works to support forecasted increased electricity demand, while maintaining affordability and advancing carbon reduction goals. The Project builds on FirstLight and its predecessors’ more than 100-year legacy in the community through its 13.1MW hydroelectric project, Fort Frances Generating Station, which was built in 1909 and is located on the Rainy River.

About FirstLight

FirstLight is a leading clean power producer, developer, and energy storage company serving North America. With a diversified portfolio that includes over 1.6 GW of operating renewable energy and energy storage technologies and a development pipeline with 4+ GW of solar, battery, hydro, and onshore and offshore wind projects, FirstLight specializes in hybrid solutions that pair hydroelectric, pumped-hydro storage, utility-scale solar, large-scale battery, and wind assets. The company’s mission is to accelerate the decarbonization of the electric grid by supporting the development, operation, and integration of renewable energy and storage to meet the world’s growing clean energy needs and deliver an electric system that is clean, reliable, affordable, and equitable. Based in Burlington, MA, with operating offices in Northfield, MA, New Milford, CT, Adrian, PA, Oshawa, ON, and Montréal, QC, FirstLight is a steward of more than 14,000 acres and hundreds of miles of shoreline along some of the most beautiful rivers and lakes in North America. FirstLight has been wholly owned by PSP Investments since 2016. To learn more, visit www.firstlight.energy or follow us on LinkedIn or X.

PSP Investments has decided to exit from FirstLight's US clean energy assets while retaining the Canadian ones.

Financial details of the transaction were not disclosed but these are high-quality US assets that will enable Hull Street Energy to become one of the major hydropower investors in the US with a fleet of about 1,200 MW of flexible pumped storage hydro capacity and nearly 400 MW of hydroelectric capacity.

PSP will retain FirstLight's Canadian operations -- H2O Power and Hydromega -- a platform that includes the 57.2-MW Fort Frances solar project in Ontario (see the PPA agreement above).

Why sell the US operations but retain the Canadian ones? Is this about Trump and renewables being out of favour?

No, from my reading of it, the new global head of Infrastructure at PSP, Andrew Alley, wanted to realize on those US assets to invest elsewhere (more of a portfolio management decision and nothing to do with politics).

This deal represents a win for all parties involved because everyone got what they wanted.

PSP will exit and invest elsewhere, Hull Street Energy becomes a dominant power player in US renewable energy and FirstLight will continue expanding its operations in the US and Canada under two distinct owners.

Not much more I can add here but it's clear to me Andrew Alley has his vision for the portfolio and wants to execute on it.

By the way, the photo at the top of this post was taken when FirstLight was honored as the Alliance for Climate Transition’s Clean Energy Company of the Year at the Green Future Gala.

Below, FirstLight is a leading clean power producer, developer and energy storage company that also serves as a steward of more than 14,000 acres of land and hundreds of miles of shoreline.

In this company overview, hear from our leaders and learn more about our mission to accelerate the decarbonization of the electric grid by supporting the development, operation, and integration of renewable energy and storage to meet the world’s growing clean energy needs and deliver an electric system that is clean, reliable, affordable, and equitable (2024).

Also, Firstlight is advancing the energy transition and working towards the goal of reaching net zero emissions targets. In this video, learn more about how we do this by owning, operating, and developing hydroelectric, pumped-hydro storage, utility-scale solar, large-scale battery, and offshore wind assets(2024).

Lastly, Bloomberg QuickTake explores FirstLight's Northfield Mountain Pumped Hydro Energy Storage facility in supporting the transition to a clean energy economy (2022).

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PSP Investments Exits FirstLight's US Assets, Retains Canadian Ones

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