Pensions & Investments reports that CPPIB selects first-ever CIO:
Edwin Cass was named the first dedicated chief investment officer of the Canada Pension Plan Investment Board, Toronto, the C$434.4 billion ($317.8 billion) pension fund said Wednesday.
The newly created role of CIO will, in part, address the “anticipated size and scale of CPP Investments by 2025 and beyond,” the news release said.
As CIO, Mr. Cass is responsible for responsible for “total fund management, including capital allocation between investment programs, long-term investment department signals, and medium- and near-term portfolio guidance and balance sheet management.”
Senior managing directors in CPPIB’s investment department “will continue to be responsible for department-level portfolio construction, security selection and asset management, and they will continue to report directly to the CEO,” the spokesman added.
Mr. Cass, who was previously global head of real assets, will work closely with President and CEO Mark Machin, Chief Financial and Risk Officer Neil Beaumont and investment department leaders to “strengthen the organization’s investment governance even further with the aim of generating greater performance gains,” the news release said.
Mr. Cass will continue to report to Mr. Machin in his new role.
Mr. Cass joined CPPIB in 2008 and went on to hold various roles within public markets. He was also the pension fund’s chief investment strategist from 2014 to 2017, according to the news release.
“Our investment governance structure has served CPP Investments well for many years,” Mr. Machin said in a statement in the news release. “However, the fund is on a trajectory to grow to $1 trillion by 2033. The time is right in CPP Investments’ evolution to create a dedicated, fit-for-purpose, chief investment officer role.”
Deborah Orida, who was senior managing director and global head of active equities, was appointed global head of real assets, assuming Mr. Cass’ former role, the pension fund also said Wednesday.
Following an internal selection process, a new senior managing director and global head of active equities are to be announced at CPPIB.
Today, Mark Machin, President & Chief Executive Officer of Canada Pension Plan Investment Board (CPP Investments), announced the following senior executive changes and appointments, effective immediately:
- Edwin Cass is appointed as CPP Investments’ first dedicated Chief Investment Officer (CIO). In this newly created role, Ed will work closely with the CEO, the Chief Financial and Risk Officer and investment department leaders to strengthen the organization’s investment governance even further with the aim of generating greater performance gains. He will continue to report to the CEO. Ed joined CPP Investments in 2008 and held various positions within Public Markets. He was also the organization’s Chief Investment Strategist from 2014-2017 and was most recently Global Head of Real Assets. With more than 25 years of investment experience, Ed previously held senior positions at Fortress Management Group, Deutsche Bank Canada and TD Securities. Ed holds a BS (Hons) in Theoretical Physics from Queen’s University and a Bachelor of Laws (LLB) degree from York University’s Osgoode Hall Law School.
- Deborah Orida is appointed Senior Managing Director & Global Head of Real Assets, where she will be responsible for the Global Real Assets program, which encompasses Energy & Resources, Infrastructure, Power & Renewables, Real Estate and Portfolio Value Creation. Deborah was most recently Senior Managing Director & Global Head of Active Equities. She joined CPP Investments in 2009 and has held senior leadership roles including Managing Director, Head of Private Equity Asia, which she led after establishing the Relationship Investments Asia portfolio from Hong Kong. With more than 25 years of investment experience, Deborah spent nine years at Goldman Sachs in New York and Toronto. Deborah holds an LLB and BA from Queen’s University, Canada and an MBA from The Wharton School, at the University of Pennsylvania.
“Our investment governance structure has served CPP Investments well for many years. However, the Fund is on a trajectory to grow to $1 trillion by 2033. The time is right in CPP Investments’ evolution to create a dedicated, fit-for-purpose, Chief Investment Officer role,” said Mark Machin, President & CEO, CPP Investments. “Ed is very well positioned for this role, with his considerable investment expertise, enterprise-wide knowledge and global experience. The appointment of Deborah as Global Head of Real Assets continues to demonstrate CPP Investments’ deep bench strength of proven investment leaders.”
The CIO role was created to effectively address the anticipated size and scale of CPP Investments by 2025 and beyond. As CIO, Ed is responsible for total Fund management, including capital allocation between investment programs, long-term investment department signals, medium- and near-term portfolio guidance and balance sheet management. Investment department leaders will continue to be responsible for the execution of portfolio strategy for their respective investment departments.
The new Senior Managing Director & Global Head of Active Equities will be announced in due course after an internal selection process.
Earlier this afternoon, I had a nice chat with Mark Machin, CPP Investments' President and CEO.
I want to begin by thanking him for taking time to talk to me about these important appointments and also thank Michel Leduc, Senior Managing Director, Global Head of Public Affairs & Communications at CPP investments, for reaching out to me this morning and setting this call up.
Let me begin by stating the most critical part of my conversation with Mark. These appointments weren't done in response to the pandemic, they weren't done because CPP Investments is in big trouble, they have been in the works for years, they will bolster the organization and "it's business as usual at CPP Investments."
If anything, the pandemic delayed this announcement because they had other more pressing short-term issues to address.
What else? Mark Machin's health is just fine, he's not stepping down, he continues to love his job and is more excited and more engaged than ever and feels very "blessed and humbled" to be leading this organization and make sure over 20 million Canadians keep getting their CPP pensions.
I had to get this out of the way because the minute this announcement hit the wire, the rumor mills started swirling, most of it is pure rubbish.
So why was Ed Cass appointed to this new "fit-for-purpose" CIO role?
Mark Machin reiterated what was stated in the press release:
“Our investment governance structure has served CPP Investments well for many years. However, the Fund is on a trajectory to grow to $1 trillion by 2033. The time is right in CPP Investments’ evolution to create a dedicated, fit-for-purpose, Chief Investment Officer role,” said Mark Machin, President & CEO, CPP Investments. “Ed is very well positioned for this role, with his considerable investment expertise, enterprise-wide knowledge and global experience. The appointment of Deborah as Global Head of Real Assets continues to demonstrate CPP Investments’ deep bench strength of proven investment leaders.”
He told me the Chief Actuary of Canada projects CPP's assets will grow to more than $1 CAD trillion sometime between 2033 and 2044.
He has been thinking hard about this over the last four years and realized the current investment governance structure has served the organization well over the last 21 years but change was needed as assets mushroom.As the press release states: "The CIO role was created to effectively address the anticipated size and scale of CPP Investments by 2025 and beyond."
He came up with this "fit-for-purpose" CIO role which isn't exactly like what other CIOs do.
"We have great investment leaders at the Fund. For example, Shane Feeney knows private equity, he can invest in top funds, do direct deals (co-investments). John Graham is in charge of credit, he and his team know what they're doing, etc. We don't need a CIO who reaches down for security selection."
Moreover, Mark told me each investment leader will continue reporting to him and he will still steer investment committees and has the right to veto decisions but "it defeats the purpose when you ave a dedicated CIO."
So what exactly will Ed Cass be doing? As the press release states, he will work closely with the CEO, the Chief Financial and Risk Officer and investment department leaders to strengthen the organization’s investment governance even further with the aim of generating greater performance gains. He will continue to report to the CEO.
More specifically, he is responsible for total Fund management, including capital allocation between investment programs, long-term investment department signals, medium- and near-term portfolio guidance and balance sheet management. Investment department leaders will continue to be responsible for the execution of portfolio strategy for their respective investment departments.
Basically, from what I understand of the role, he will be recommending capital allocation to various asset classes based on short-tern and medium-term trends.
Each investment leader will continue reporting to Mark Machin as will Ed Cass but it's Cass's job to make sure they are allocating to the right strategies/ asset classes across public and private markets.
That's a huge responsibility at a fund the size of CPP Investments but Mark told me he has "huge confidence in Ed" and has worked closely with him since joining back in 2012.
I mentioned that there are other excellent candidates at CPP Investments who could have been CIO and specifically mentioned Geoff Rubin, Senior Managing Director & Chief Investment Strategist of Total Fund Management.
Mark agreed, told me "Geoff is incredible and highly qualified " as are others in the organization but in the end, Ed Cass was selected for this new role because he had experience in public and private markets (was most recently Global Head of Real Assets) as well as international experience having worked in the London office.
It's this combination of public market experience, private markets experience and running a global business which landed Cass this coveted job.
Interestingly, in 2018, Ed Cass came in number 5 in Institutional Investor's Most Wanted Allocators: First team and here is what they wrote about him:
Cass “could be the CEO of any fund in the world, let alone the CIO,” one industry insider says. “Not that it looks like he’s having any fun. He’s a bit like Eeyore, a contrarian.” Cass took over the real assets arm to fill a need for solid leadership, adding yet another CPPIB division to the list of groups he’s run. The question about Cass is not whether he’s wanted as a CIO — he is — but rather if he wants to be one.
How prophetic! And let me make another prediction, if all goes smoothly, Ed Cass will succeed Mark Machin when the time comes and Geoff Rubin will be the next CIO.
Deborah Orida will be replacing Ed Cass as the next Global Head of Real Assets.
Mark Machin spoke very highly of her too. And he filled me in, stating she has the requisite experience in private markets to take on this new role.
In fact, he specifically mentioned she's a lawyer by training who did M&A work at Goldman and ran Relationship Investing for CPP Investments in Asia.
She's obviously more than qualified to take on this new role and when I look at her experience and qualifications, I wonder if she might be the next CEO or CIO:
Clearly, CPP Investments has incredible bench strength, it's what you'd expect for the biggest and best pension fund in Canada.
One thing I did mention to Mark Machin was how the pandemic has hit certain segments of private markets very hard, like retail real estate and transportation infrastructure assets (toll roads, ports and airports).
I told him with all due respect to Brookfield's CEO, Bruce Flatt, I'm convinced there's a paradigm shift going on in real estate which is why sovereign wealth funds are rethinking once reliable real estate.
I'm convinced there is something profound going on and I'm seeing evidence of this every week:
#CommercialRealEstatehttps://t.co/oV6WR0eTKy
— Callum Thomas (@Callum_Thomas) September 9, 2020
Google cancels plan to lease large office space in Dublin https://t.co/2Gj2tYOKjA
— Leo Kolivakis (@PensionPulse) September 7, 2020
Google has a master plan to build a massive corporate town for its employees https://t.co/q8ajtpZhN8pic.twitter.com/pC45EpkqXr
— Forbes (@Forbes) September 6, 2020
Mark told me CPP Investments' Thematic group did a deep dive into these trends and found "some things will stick" and that I should talk to Deborah one day to gain more insights (I will).
What else did we talk about? In a world of zero or negative rates, where should pensions invest?
Mark mentioned Bridgewater's studies on a zero bound world and how they allocated 5% to gold.
"We aren't there yet and not sure we will ever do that but it's the type of things we need to think carefully about."
I told him I have tremendous respect for Bridgewater and its founder, I was one of the first to invest in their Pure Alpha fund back in 2000 when I was investing in directional hedge funds at CDPQ and even met Ray Dalio subsequently when I worked at PSP.
Told him flat out: "I like Ray and some (not all) of his principles, think they're running a great shop but I don't agree with everything they recommend or do there."
I also have strong opinions of my own on deflation and there's nothing Ray or Stan Druckenmiller will say to change my mind.
Druckenmiller Says Inflation Could Reach as High as 10% https://t.co/3lWxb60w3g
— Leo Kolivakis (@PensionPulse) September 9, 2020
We ended our discussion by talking about diversity and inclusion at the workplace.
I told Mark I posted this article on LinkedIn going over how the pandemic has affected people with progressive multiple sclerosis (MS):
How Has the COVID-19 Pandemic Affected People With Progressive Multiple Sclerosis? | Technology Networks https://t.co/BUNS0TLAmI
— Leo Kolivakis (@PensionPulse) September 5, 2020
"Minimal effects were not what we expected to see," said Dr. Chiaravalloti, noting that the findings were consistent across different continents. "People with progressive MS appeared to have adapted more effectively to the lockdown conditions. Knowing their increased risk, they may have been early adopters of safety precautions, which may have provided a sense of control that countered negative emotional reactions," she speculated. "They are also accustomed to living with medical uncertainly and social isolation, two major factors that fueled high levels of psychological discomfort in the general population."
I shared my thoughts on this study on LinkedIn:
Of course, the findings of this study don’t surprise me. MS and all chronic diseases teach you the values of resistance, persistence, kindness, empathy and a lot more. What is sad is these people living in social isolation while companies talk up diversity and inclusion. In reality, public and private organizations are doing nothing to reach out to people with disabilities or chronic diseases to help them become gainfully employed and combat the scourge of unacceptably high unemployment among these groups. That’s why I’m very cynical when I see companies talk up how they value diversity and inclusion. It’s easy to talk it up while you systematically discriminate against the most vulnerable and disadvantaged groups. What this study shows is these people are a lot stronger than you think and are a source of inspiration, strength and true diversity at any workplace.
As you can read, I don't mince my words, especially on issues I feel very strongly about.
I asked Mark Machin to do what he has always done, be a great leader and start doing something to incorporate more Canadians with disabilities at CPP Investments.
Mark told me hiring more people with disabilities is something he has discussed with his senior managers and he takes diversity and inclusion very seriously and is always trying to improve it.
On that note, I'm running late, I thank Mark Machin once again for taking the time to chat with me, he's a superb leader and I truly love talking with him, super nice and smart guy.
Below, former MetricStream CEO Shellye Archambeau discusses how boardrooms are talking about improving diversity with CNBC's Scott Wapner.
Scott Wapner also talks about how companies are committing to building a diverse boardroom with Merck CEO Ken Frazier and Les Brun of the Sarr Group. Great discussion, take the time to watch these clips.