Key Takeaways
- • CPP Investments is laying off dozens of employees from its Active Equities division and merging the unit with Capital Markets and Factor Investing into a new department called Active Public Markets, led by Senior Managing Director Heather Tobin, according to the Globe and Mail and Bloomberg.
- • The Active Equities strategy lost C$3.5 billion ($3.5 billion per the Globe and Mail) in the fiscal year ended March 31, and C$6 billion in total over five years, while earning only $1.9 billion over ten years.
- • Active Equities had $36.8 billion in assets under management as of June 30 and employed 120 people as of March 31, with most staff expected to move to the new department.
- • Frank Ieraci, who led Active Equities since 2020, is departing and will remain as a senior advisor through year-end; COO John Webster is also leaving after roughly five years.
- • The restructuring reflects a broader pension-sector shift away from higher-cost active strategies, with ABP ending active equities and Ontario Teachers' leaning into passive equities.
Summary
Canada Pension Plan Investment Board (CPPIB, operating as CPP Investments) is laying off dozens of employees from its struggling Active Equities division and merging the unit with its Capital Markets and Factor Investing group, according to the Globe and Mail, citing two sources with knowledge of the decision. The combined department will be called Active Public Markets (APM) and will be led by Heather Tobin, Senior Managing Director and Global Head of Active Public Markets. CPP Investments confirmed the new department in its fiscal second-quarter results released Tuesday, describing the move as a "logical evolution" that brings together two related investment activities, though the release did not mention job losses. Bloomberg reported that most of the 120 Active Equities employees as of March 31 will move to the new department, but the restructuring will still result in dozens of layoffs according to people familiar with the matter.
Frank Ieraci, Senior Managing Director and Global Head of Active Equities, who joined CPP Investments in 2007 and led the division since 2020, is stepping back after nearly 20 years at the organization. He will remain as a senior advisor through the end of the year to support the establishment of the new department. Separately, Chief Operating Officer John Webster, who joined in 2022 and was appointed to his role in 2023, is leaving the organization.
The Active Equities strategy has struggled for years. According to CPP Investments' annual report, the portfolio, which runs long-short positions and other strategies, lost C$3.5 billion in the fiscal year ended March 31 and C$6 billion over five years, and has earned only $1.9 billion over ten years. Assets under management stood at $36.8 billion as of June 30. The company attributed part of the underperformance to losses following regulatory changes in China, which prompted a reduced exposure to the country, and to long positions underperforming short positions in financials, industrials, media and telecommunications amid high market volatility.
The fund's broader results were weaker in the quarter. CPP Investments' overall fund lost 0.5 per cent, or $4.7 billion, in the three months ended Sept. 30 as rising bond yields weighed on fixed-income returns, while net assets rose to $866.2 billion on $7.3 billion in net transfers from the CPP. Over ten years, the fund's average annual return is 8.8 per cent. CEO John Graham said diversification helped offset some of the bond-related pressure.
The restructuring also reflects a wider pension-sector trend toward index-tracking and away from the higher costs of active management. Bloomberg noted that Stichting Pensioenfonds ABP is ending its active equities strategy and that Ontario Teachers' Pension Plan has shifted toward passive equities.
Frank Ieraci, Senior Managing Director and Global Head of Active Equities, who joined CPP Investments in 2007 and led the division since 2020, is stepping back after nearly 20 years at the organization. He will remain as a senior advisor through the end of the year to support the establishment of the new department. Separately, Chief Operating Officer John Webster, who joined in 2022 and was appointed to his role in 2023, is leaving the organization.
The Active Equities strategy has struggled for years. According to CPP Investments' annual report, the portfolio, which runs long-short positions and other strategies, lost C$3.5 billion in the fiscal year ended March 31 and C$6 billion over five years, and has earned only $1.9 billion over ten years. Assets under management stood at $36.8 billion as of June 30. The company attributed part of the underperformance to losses following regulatory changes in China, which prompted a reduced exposure to the country, and to long positions underperforming short positions in financials, industrials, media and telecommunications amid high market volatility.
The fund's broader results were weaker in the quarter. CPP Investments' overall fund lost 0.5 per cent, or $4.7 billion, in the three months ended Sept. 30 as rising bond yields weighed on fixed-income returns, while net assets rose to $866.2 billion on $7.3 billion in net transfers from the CPP. Over ten years, the fund's average annual return is 8.8 per cent. CEO John Graham said diversification helped offset some of the bond-related pressure.
The restructuring also reflects a wider pension-sector trend toward index-tracking and away from the higher costs of active management. Bloomberg noted that Stichting Pensioenfonds ABP is ending its active equities strategy and that Ontario Teachers' Pension Plan has shifted toward passive equities.
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