CPPIB: Where a "single" really isn't a single

4 responses

  1. Jim Jensen says:

    Mark, I agree with the vast majority of your previous comments with regards to the CPPIB, as well as that returns should be reported net of costs. However, we diverge a little on the topic of last quarter’s return; I think your dislike for their polices may be clouding the issue a wee bit. As a portfolio manager, I can say 90-day returns can’t be used to suggest that a manager isn’t doing a fine job just because the quarter isn’t tracking their annual “target” (6% let’s call it in this case). Portfolios with market-traded risk assets don’t move in a linear manner; they move in fits and starts. We both know that the only value that can be derived from short term numbers (if there is any value at all) is a relative comparison with a legitimate benchmark; I blame this confusion on the CPPIB, as well as the industry as a whole. The CPPIB should release the numbers, net of costs, along with how the “benchmark” did to give its members a realistic comparison on how it did in any given time period. This provides the absolute number as well as a comparison to a passive approach; informing clients (us) how the managers are doing compared to what happened in the quarter in the markets in general (as it’s not fair to suggest, for example, that a 1.1% isn’t a good quarter if the benchmark was down 4%!). Just my two-cents…keep up the good work.

  2. Jim Jensen says:

    Just to clarify Mark, I wasn’t suggesting that it was a good quarter, only that without a benchmark comparison we can’t say if it were good or not. I took a quick look at Russell Asset Management’s global balanced mandate and it looks like it had a slight negative return during the quarter (they would have had a tailwind from the currency change as well, so it’s a pretty good benchmark). It that’s the case, perhaps CPPIB did have a single for the quarter. The only way to know for sure is to look at a reasonable “peer” group and see where CPPIB ranks; a small group of global balanced “wrap” funds would suffice to see how they did relative to the markets, and therefore be able to objectively determine if they did indeed have a single, or an in-field fly…IMHO.

    • Mark McQueen says:

      Hi Jim

      What’s the Russell peer group’s 5 year gross and net return figure?

      According to CPPIB’s own financial report, even they think the team has produced $1.8 billion of negative value-add over a four year period as compared to their own benchmark.


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