In Good Company with Nicolai Tangen - HIGHLIGHTS: John Graham - CEO of CPP Investments

Episode Date: July 10, 2026

We've curated a special 10-minute version of the podcast for those in a hurry.   Here you can listen to the full episode: https://podcasts.apple.com/us/podcast/in-good-company-with-nicolai-tangen/id1614211565Canada's pension funds have become a blueprint for institutional investing worldwide, and John Graham runs the largest of them. Nicolai Tangen sits down with the CEO of CPP Investments, manager of $800 billion on behalf of 22 million Canadians, for a conversation spanning strategy and leadership. They explore the celebrated "Canadian model" and what imitators get wrong, why Graham calls diversification "an act of humility," and how CPP weighs private markets, the US, and China. A scientist before he was an investor, Graham reflects on leading through COVID, AI's uncertain role in investment decisions, and his belief that investing is "quantitative art" rather than science. Tune in!In Good Company is hosted by Nicolai Tangen, CEO of Norges Bank Investment Management. New full episodes every Wednesday, and don't miss our Highlight episodes every Friday.  The production team for this episode includes Isabelle Karlsson and PLAN-B's Niklas Figenschau Johansen and Jørgen Sviland. Background research was conducted by Isabelle Karlsson. Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi, everyone. I'm Nicola Tangen, the CEO of the Norwegian sovereign wealth fund. And today I'm joined by John Graham, the CEO of CPPIB, which is the Canadian pension fund, basically looking after the savings of 22 million Canadians. Now, CPPIB is one of the most respected pension funds in the world. and the Canadian model has become a blueprint globally. Now, what makes John stand out

is that he is a scientist first who found his way into one of the world's great financial institutions. And I'm really curious to dig in what your scientific mindset brings to investing, John. So, big thank you for joining us. Well, thank you for having me. A lot to cover. Absolutely. Now, first of all,

could you help us understand what the Canadian pension plan is? Just how is it different from a fund like ours? Sure. So, CPP investments were the third-party asset manager for the Canada pension plan. The Canada pension plan is the mandatory program that all working Canadians contribute to. So it be somewhat similar to people in the U.S. to social security. So it's meant to provide a inflation protected, you know,

defined benefit for working Canadians. How big is it? Today, the fund, the CPP fund, is around $800 billion, but it actually is a hybrid plan. So just one of the things, and I think is important to appreciate because it really has a big influence on how we manage the money, is about 30 years ago, the Canadian government realized that the CPP at its current contributions and benefit rates was on a path to be exhausted. And this was because it was a pay-as-you-go program, money comes in, immediately goes out, and demographics were changing. You know, you had a aging population, you had people having fewer kids, people living longer.

People living longer is obviously a good thing. But the plan was on a path to being exhausted. So they restructured the plan. They increased the contribution rate, modified benefits, and they created CPP investments as the money manager to invest the funds, the surplus funds that aren't immediately needed to pay out benefits. And I think when we started out, that plan was about 15% funded. So really it was still a pay-as-you-go plan. And over time, our very first check was $12 million.

So we got a check for $12 million, about 27 years ago. Today, the plan sits about $800 billion. And the plan is partially funded. So here you are, 800 billion. Just how do you decide where the money goes? How do you decide how to split the asset classes? So we are very linked to our mandate. Our mandate enshrined in federal legislation is to maximize return without undue risk of loss,

accounting for the factors that impact the funding of the plan. That's our mandate. And said, you've got to invest the money, maximize return, try to grow the funding ratio of the plan and make sure that we can meet these obligations or these promises that have been made. And you and you don't have like we have a mandate where which the ministry gives us, which tells us, you know, how much shares, how much bonds. You don't have that. We don't have that. Literally our mandate is is maximize return without undue risk of loss taking to account the factors that impact the plan.

So you know, here you are, John Graham, 800 billion. Go and see what you can do with it. Well, it started as $12 million, and now it's $800 billion. So, and of that $800 billion, $550 billion investment income, it does show the power of compounding, right? So 70% of the fund is investment income. And so we only, you know, quote unquote own the entirety of the investment process. So to be a little bit technical, we take that and think there's kind of three big decisions we make. and we take a total portfolio approach,

and fundamentally we try to maximize the total return of the total portfolio. So the first big decision, what level of risk are we going to take? What level of risk will maximize return without an undue risk of loss? How do we thread that needle of taking our time horizon?

So recognizing, and I think this is really important, we're a pension plan, we're not a wealth maximizing vehicle. One asset class where you are, where we are not, is private assets. So private equity, private credit. Now, you have one of the largest private market portfolios or anybody in the world. And so what is your view on that asset class just now? Yeah. So I think we'll take a long-term view.

And private equity undoubtedly has had a more challenging couple of years. We can get into that. But if I look over the past 10, 15 years, it's been one of the biggest drivers of return for the portfolio. I personally continue to be a believer in the private government model. I think for certain companies at certain times in their life cycle, private ownership makes a lot of sense, getting out of the scrutiny of the public markets, having the investors be very actively engaged from a governance perspective on the board of directors. I think there's at certain points in time, private ownership makes a lot of sense.

So we continue to be constructive on private equity, recognizing though that right now, you know, the returns has been well documented over the past couple of years, have not been, you know, at expectations. But if I look over 10 to 15 years, it's been a big driver of value for CPP investment. How does AI change the way that you run your organization? That's a good question.

That's a good question. I mean, I think we're figuring it out like lots of people and probably go through lots of, peaks and troughs in thinking about the impact of AI. As an organization, we certainly have prioritized literacy and fluency, certainly prioritized trying to have a employee base that is very fluent in the tools and the technologies. So we have rolled out multiple LOMs to every single employee in the organization.

and we have provided training, we've provided courses, and in fact, we have these kind of boot camps that employees can sign up for. So we've seen pretty good adoption, pretty good, I think actually very good adoption at the grassroots level from AI. More senior level, there's probably half a dozen processes we're thinking through on where can we really embed AI to do it more efficiently, more effectively, but a little bit more from the operations side. Has AI made us a better investor? Have we made better investment decisions because of AI? At this point, TBD, at this point unclear. but we are dedicating a lot of time and effort to figuring that out. Now, our listeners are when we kind of poll them and asked them how they want to, what do they want to have more of in the podcast? They say they want to hear more about failures, you know?

You only talk about successes and everything is so great and, you know, tell me about some of your biggest mistakes in life. So my big failures? Okay. Well, I think as you know, in investing, you do have the opportunity to have failures. And you have the opportunity to be humbled. And any investor who says they haven't been humbled is probably not either taking a lot of risk or is not being overly truthful. So certainly some of the investments I've been actively engaged on have not turned out as. as planned. So what have I learned from that? One of the things and one of the things I try to tell are our younger colleagues too, which I do believe is you can't diligence a bad investment

into a good investment. Spending another week is not going to turn a fundamentally bad investment into a good investment. And in fact, you may just convince yourself that it is. And And sometimes you have to know when to quit. And you have to know when to back away from an investment. If I think about where mistakes I made and failures I had, just this belief that if you just did more work, if you just structured it, or you could take a bad investment, if you could just structure it a little bit more,

you could turn it into a good investment. What's the worst one you had? I'm not going to make the name of it.