Key Takeaways
- • Canada Pension Plan Investment Board (CPPIB) is preparing to roughly double its hedge fund allocation, targeting around $160 billion over time, according to people familiar with internal deliberations.
- • The push includes seeking stakes with heavyweight managers CPPIB does not yet back, with Millennium Management led by Izzy Englander specifically on the list.
- • CPPIB expects its total assets to about double over the next seven years, and hedge funds helped it beat its own yardsticks in the latest fiscal year.
- • External hedge fund stakes accounted for much of the $3.4 billion in net income generated by the Capital Markets and Factor Investing segment in the 12 months ended March.
- • The expansion comes as some pensions, endowments and foundations have pulled back on new hedge fund commitments, while Abu Dhabi Investment Authority has stepped up its own hedge fund investments.
Summary
Canada's largest pension is preparing to roughly double its hedge fund allocation, targeting around $160 billion over time, according to people who asked not to be named because they were discussing internal deliberations. The plan includes seeking stakes with managers it does not yet back, with Millennium Management on the list. A CPPIB representative declined to comment. CPPIB is already one of the world's largest sources of hedge fund capital, so a larger allocation would make it an even more consequential partner for managers globally.
The move follows strong results. CPPIB expects its total assets to about double over the next seven years. The article indicates that external hedge fund stakes accounted for much of the $3.4 billion in net income generated by the Capital Markets and Factor Investing segment during the 12 months ended in March. Returns came from areas including quantitative equities, global macro, multi-strategy, fundamental stock-picking and fixed income. Heather Tobin, who leads CPPIB's hedge fund investing unit, said on a recent podcast that access to both large multistrategy platforms and specialist managers is crucial, and that conditions for skilled managers are "very favorable" when markets are volatile and interest rates are higher.
The expansion contrasts with broader trends. Some pensions, endowments and foundations have pulled back on new hedge fund commitments as slower private equity distributions leave them with less cash to recycle. Abu Dhabi Investment Authority, with more than $1 trillion in assets, has also been increasing its hedge fund investments. The industry has had a difficult stretch, with choppy markets causing losses even at well-regarded firms. Some funds have trimmed staff and returned capital, and October brought record monthly drawdowns for a number of managers.
CPPIB invests with more than 60 managers, according to its website, including Two Sigma Investments, Bridgewater Associates, ExodusPoint Capital Management, Rokos Capital Management and Magnetar Capital. Its roster also includes managers that have faced recent turbulence, such as Samlyn Capital, led by Rob Pohly, and Arini Capital Management, led by Hamza Lemssouguer.
The move follows strong results. CPPIB expects its total assets to about double over the next seven years. The article indicates that external hedge fund stakes accounted for much of the $3.4 billion in net income generated by the Capital Markets and Factor Investing segment during the 12 months ended in March. Returns came from areas including quantitative equities, global macro, multi-strategy, fundamental stock-picking and fixed income. Heather Tobin, who leads CPPIB's hedge fund investing unit, said on a recent podcast that access to both large multistrategy platforms and specialist managers is crucial, and that conditions for skilled managers are "very favorable" when markets are volatile and interest rates are higher.
The expansion contrasts with broader trends. Some pensions, endowments and foundations have pulled back on new hedge fund commitments as slower private equity distributions leave them with less cash to recycle. Abu Dhabi Investment Authority, with more than $1 trillion in assets, has also been increasing its hedge fund investments. The industry has had a difficult stretch, with choppy markets causing losses even at well-regarded firms. Some funds have trimmed staff and returned capital, and October brought record monthly drawdowns for a number of managers.
CPPIB invests with more than 60 managers, according to its website, including Two Sigma Investments, Bridgewater Associates, ExodusPoint Capital Management, Rokos Capital Management and Magnetar Capital. Its roster also includes managers that have faced recent turbulence, such as Samlyn Capital, led by Rob Pohly, and Arini Capital Management, led by Hamza Lemssouguer.
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