We’re a pension plan, not a wealth-maximising vehicle, says CPP Investments CEO amid AI frenzy

John Graham, President & CEO, CPP Investments

Canada Pension Plan Investment Board, one of the world’s largest pension funds, is treading cautiously on the artificial intelligence boom, even as it holds positions in some of the biggest AI names driving the market.

While the fund has invested in leading AI companies such as OpenAI, xAI and Anthropic as well as in the “Magnificent Seven”, its exposure remains lower than market weight, CPP Investments president and CEO John Graham said during a media roundtable in Mumbai on October 29.

It is a deliberate move shaped by CPP’s long-term, diversified investing approach, he said.

“A technology can change the world and still be overvalued,” Graham said. “We’re talking about investments, not necessarily the impact of the technology.”

“You’ll see from our disclosures that we’ve invested in OpenAI, xAI, Anthropic, and we do have exposure to the Magnificent Seven through our public equity holdings. But our portfolio is not at the market-cap weight of the Mag Seven, it’s below it. And part of the reason is, we’re a pension plan, not a wealth-maximising vehicle,” he said.

Graham was referring to Google parent Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla, seven high-performing, mega-cap technology stocks.

CPP Investments is wary of introducing “too much concentration risk” and prefers to balance its technology exposure with long-duration, real-asset holdings.

“Our time horizon as a long-term investor is not the next year or the next two years, it’s the next 75 years,” Graham said. “We want to build a portfolio that is resilient and delivers consistent returns over a long time horizon.”

Investing in AI’s ‘picks and shovels’

Graham said CPP Investments is pursuing opportunities in the energy and infrastructure segments that underpin AI adoption such as data centres and power transmission.

“We have been very constructive on energy… That’s one of the ways we’ve been investing in this buildup of AI. Data centres are another area where you have the picks and shovels. Every time I turn around, someone is talking about data centres.”

India portfolio triples in five years

Graham, who is in Mumbai to mark 10 years of CPP Investments’ India office, said the fund’s local portfolio has grown rapidly and now represents one of its most important regional exposures.

“Just over the past five years, our portfolio has tripled in size in India. And just over the past three years, it’s up 50 percent, and today it sits at 1.8 lakh crores rupees, about $20 billion US,” he said. “We continue to consistently grow the portfolio and, most importantly, deliver strong investment returns.”

India is now CPP Investments’ third-largest market in the Asia-Pacific region behind Japan and China.

“It’s been a tremendous success,” Graham said of the Mumbai office.

CPP Investments managed C$732 billion in assets globally as of June 30, and operates independently of the Canadian government. Graham said the fund’s growth in India has outpaced that of its overall portfolio because of the country’s deep and expanding investment opportunity set.

“India is a fast-growing, dynamic economy, and we expect to continue to see lots of interesting opportunities,” he said.

“We don’t have hard allocations into countries; we let the portfolio move based on the opportunity set that’s available. One of the reasons India has grown at a much faster rate than the fund as a whole is because of that opportunity set.”

He added that the relative weight of Asian markets such as India could shift, depending on growth and market capitalisation trends. “As GDP and market capitalisation grow, we’d expect to see changes in the portfolio,” he said.

Diversified bets 

Graham said CPP’s India investments span multiple sectors, reflecting the country’s market maturity and depth.

“Within our India portfolio, we have real estate, infrastructure, energy credit, public equity, fixed income, private equity, technology; lots of different sectors, and that speaks to the depth of investment opportunities in the country,” he said.

The fund prefers “real assets” such as energy, infrastructure and real estate “where there’s opportunity to invest at scale and with long duration”.

CPP’s partnerships include IndoSpace, the National Investment and Infrastructure Fund, and InvITs such as PowerGrid and NHAI InvIT. It also has a renewable-energy platform with ReNew Power, and financial and consumption-driven investments in Phoenix Mills and Flipkart.

India’s appeal for global investors

To what makes India attractive to global institutional investors, Graham said capital flows to markets that are stable, predictable and efficient.

“Capital looks for opportunities in markets that are stable, predictable, transparent and reliable,” he said. “It also looks for markets that move at speed, where there’s an opportunity to deploy capital. As development cycles shorten, that is going to attract capital.”