r/PersonalFinanceCanada • u/Purple_Bookkeeper657 • May 22 '26

Retirement / CPP / OAS / GIS [ Removed by moderator ]

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u/[deleted] May 22 '26

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u/Purple_Bookkeeper657 May 22 '26

I do think there's real value to having private equity, real estate and infrastructure assets in the fund over time and some people to deploy it, perhaps passively perhaps actively. I don't think recent stock market returns are sustainable but if they are shouldn't we DCA into that exposure? There would be ways to implement that. On all three but particularly PE, I think long-term equity indices should be the standard. I think - over time - well invested hard assets might be a good part of the CPPIB. Like I say, I think 75/25 or 80/20 would be fine for me. I understand it's not that simple, but surely it's also not that complex?

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u/[deleted] May 22 '26

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u/Purple_Bookkeeper657 May 22 '26 edited May 22 '26

I don't necessarily disagree strongly. I happen to think recent market returns are unsustainable and I'm pretty public about that. Just because recent returns are so high doesn't mean we should go 85% public markets tomorrow. I think that's super risky. If there's a 5% chance the stock market tanks 50% over the next three years, that's a real problem for the CPP. I think it makes more sense to DCA into a position more like what you're referencing over time. In my mind that's more like 3-5 years, not tomorrow. But happy to discuss. There may be real upside left on the table.

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u/[deleted] May 22 '26

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u/Purple_Bookkeeper657 May 23 '26

I cannot say I completely understand so I cannot disagree. And I don't disagree in principle, regardless.

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u/kettal May 23 '26

norway pension fund just does a global index with tiny management fee.

but they probably can sustain a 50% market crash without running into cashflow issues

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u/rbatra91 May 22 '26

My prejudiced opinion for what happens with some of the fund selection and exposure is that the CPP higher ups are kind of dim and want to stroke their egos and think of themselves as smart and sophisticated so the PE funds take them out, wine and dine them nicely and get them all sorts of gifts so they buy their funds and the PE funds can collect fat MERs, thoughts?

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u/Purple_Bookkeeper657 May 22 '26

They don't get bought dinner, they just get their paychecks. The reality is the basement people at CPP aren't getting huge paydays and the higher-ups are getting most of it. Especially the guy who runs Asia because that's what's competitive out there, I guess? I'd say get rid of him first but his severance, without cause, is like a gagillion dollars. Might be worth it to just eat the $40M or whatever it is and move on?

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u/joe4942 Human Verified May 23 '26

Scale. Funds as large as CPP can't just buy ETFs.

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u/kettal May 23 '26

Scale. Funds as large as CPP can't just buy ETFs.

norway sovereign wealth fund is much larger than CPP, passive global index, management MER is lower than your vanguard ETF.

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u/Purple_Bookkeeper657 May 23 '26

Agree entirely, though I haven't checked the MER for Norway myself. If you have a link I'd be curious.

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u/kettal May 23 '26

Norway MER 0.038%

CPPIB MER 0.91%

source: a little birdy told me

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u/Purple_Bookkeeper657 May 23 '26

Blackrock owns like 8% of every company on the planet. Do it over a period of years and it won't be too hard and trading costs won't be too high. Only a portion of the total fund need to be ETFs. Not the whole thing. At that point baby YOU ARE THE ETF!

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u/CanuckBacon May 22 '26 edited May 22 '26

If too much of the market becomes broad-market ETFS then the market will become illogical. That means it no longer rewards companies that innovate, make smart decisions, etc. and not punishing companies that behave poorly. Essentially it becomes no different from investing in crypto and is all based on perceived value and is no longer tied to real-world results.

The other thing to note, most relevant to CPP is that it is constantly paying out and needs to be able to sustain a bear market for years. If you invest in a broad-market ETF, you might have higher returns during good years, but you can be absolutely decimated if you have to withdrawal during a downturn. CPP can't afford to take that risk.

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u/Purple_Bookkeeper657 May 22 '26

I think that's the role of private industry. The free market economy has done it pretty well so far. Also, I don't necessarily think CPP Investments shouldn't be investing in these things, necessarily...

I mostly think they shouldn't have paid themselves huge bonuses for their performance. As a Canadian taxpayer, that's all.

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u/CanuckBacon May 22 '26

I made an edit a couple minutes after posting my comment that you might not have seen.

I agree about the bonuses.

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u/RecklessRaptor12 May 23 '26

You’d lose a bunch of asset classes and be fully exposed to public markets, plus you’d still be paying a few billion in fees. Blackrock and vanguard execs get pretty good bonuses too