HedgeCo.Net — The Canada Pension Plan Investment Board is planning to roughly double the money it invests in hedge funds, lifting its total allocation to about $160 billion over the next five to seven years, Bloomberg reported, citing people familiar with the matter. The C$866 billion ($608 billion) pension currently has about $80 billion invested in hedge funds.
The pension is particularly interested in gaining exposure to large managers it does not currently back, including Izzy Englander’s Millennium Management, according to the report. The expansion is planned as CPPIB expects its total assets to roughly double over the next seven years, which means the larger hedge fund book would keep the strategy’s weight in the overall portfolio broadly similar rather than sharply increasing it.
The plan follows a strong year for the pension’s external managers. External hedge fund investments were largely responsible for the $3.4 billion of net income generated by CPPIB’s Capital Markets and Factor Investing segment in the 12 months ended March, according to its annual report. Quantitative equities, global macro, multistrategy, fundamental equities and fixed income strategies were among the contributors.
CPPIB invests with more than 60 hedge fund managers, including Two Sigma Investments, Bridgewater Associates, ExodusPoint Capital Management, Rokos Capital Management and Magnetar Capital. Its roster also includes Samlyn Capital and Arini Capital Management, both of which have struggled recently.
For the industry, the signal matters as much as the dollars. A commitment of this scale from one of the world’s largest allocators comes after a volatile month for hedge fund performance and at a time when slower private equity distributions are constraining new commitments at other pensions, endowments and foundations. Capacity at the largest multistrategy platforms is already scarce, so a sustained bid from CPPIB is likely to sharpen competition among allocators for access.