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With projections of steep growth of investible cash from the annual contributions of Canadian workers, plus investment income, continuing to find deals that will add value is a challenge.

We get shown a lot of deals and opportunities . . . I would say we turn down 95% of them

“We get shown a lot of deals and opportunities,” Ed Cass, who took over as the fund manager’s chief investment strategist in April, said in an interview. “I would say we turn down 95% of them.”

A single-profession pension such as the Ontario Teachers’ Pension Plan has to deal with the challenges of a large aging pool of pension beneficiaries against a shrinking pool of younger contributors, but the biggest challenge at CPPIB is arguably the pressure to find a constant stream of investments for its funds. While that sounds easy enough, trying to buy alongside a group of equally motivated competitors can drive up prices and eat into returns. The active investments, together with a passive portfolio, must produce sufficient returns to fulfill CPPIB’s mandate of providing a foundation for the retirement security of 18 million Canadians.

“There are much bigger funds, like some sovereign wealth funds, out there and this is a problem for all of them in employing active management,” said Robert Heinkel, a finance professor at the Sauder School of Business at the University of British Columbia. “The more money dumped into an active strategy, the harder it is to add value [in part because] asset decisions move asset prices.”

The CPPIB’s growing assets surpassed those of the powerhouse Caisse de dépôt et placement du Québec for the first time in the summer of 2012, at $165.8-billion, and the growth since then has been phenomenal. CPPIB now manages a fund with assets of nearly $220-billion as of March 31 — and Canada’s chief actuary expects them to balloon to more than $1-trillion by 2045. It is the only Canadian pension in the top 10 of the latest P&I/Towers Watson Ranking of 300 global pension funds.