The price of a pension: Inside CPPIB, the $3-billion-a-year operation that invests your money

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When the Canada Pension Plan Investment Board put together its first full-year report in the spring of 2000, it assembled its employees for a group photo – all five of them.

How different the picture is today for the entity that manages retirement savings of 20 million Canadians. From midtown Manhattan to central Hong Kong to a commercial district in Sao Paulo, Brazil, the CPPIB has spread itself far and wide. Its 1,661 employees work on five different continents in seven time zones.

And that’s only the staff. The board has also hired dozens of outside investment firms, almost all of which do their work in foreign countries. Beginning in 2006, just before the financial crisis, the CPPIB turned itself from a relatively small operation into a sprawling globe-straddling money manager – with costs to match.

As quickly as the CPPIB’s portfolio has grown, its expenses have grown even faster. While assets have nearly quadrupled over the past decade, to about $400-billion, the board’s operating expenses – employee compensation and office expenses – have risen more than sixfold.

In its most recent fiscal year ended March 31, the CPPIB spent more than $3-billion to invest its portfolio. That is nearly as much as Ottawa will spend this year on the Royal Canadian Mounted Police, according to federal budget estimates.

The CPPIB’s total expenses, which include transaction costs and the fees it pays to those outside managers, are nearly one full percentage point of the plan’s assets. By that relative measure, the CPPIB’s costs have more than doubled since 2008, when its spending equalled just 0.43 per cent of assets.

CPPIB’s costs

Total costs, in millions (left axis)

Total costs as percentage of assets* (right axis)

$3,500

1.1%

3,000

1.0

2,500

0.9

2,000

0.8

1,500

0.7

1,000

0.6

500

0.5

0

0.4

2009

’11

’13

’15

’17

Fiscal year

*Calculated using average asset value during fiscal years.

THE GLOBE AND MAIL, SOURCE: CPPIB

CPPIB’s costs

Total costs, in millions (left axis)

Total costs as percentage of assets* (right axis)

$3,500

1.1%

3,000

1.0

2,500

0.9

2,000

0.8

1,500

0.7

1,000

0.6

500

0.5

0

0.4

2009

2011

2013

2015

2017

’19

Fiscal year

*Calculated using average value of assets during fiscal year.

THE GLOBE AND MAIL, SOURCE: CPPIB

CPPIB’s costs

Total costs, in millions (left axis)

Total costs as percentage of assets* (right axis)

$3,500

1.1%

3,000

1.0

2,500

0.9

2,000

0.8

1,500

0.7

1,000

0.6

500

0.5

0

0.4

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Fiscal year

*Calculated using average value of assets during fiscal year.

THE GLOBE AND MAIL, SOURCE: CPPIB

To its executives, the explosion in expenses is simply the cost of doing business as one of the world’s biggest institutional investors. The higher costs are the result of a strategy that increasingly eschews public capital markets in favour of more exotic private investments, unavailable to the ordinary investor.

Those investments include infrastructure, such as toll roads and airports; giant pieces of real estate few investors have the scale to afford; private companies, from American department stores to French drug manufacturers; weather derivatives and stocks picked by “quantitative” funds run by managers with PhDs in math. All of them are meaningfully more expensive to find and own than a simpler portfolio of stocks and bonds.

Since the 2008 financial crisis, interest rates have stayed low for much longer than most analysts expected, and the investment strategy, despite some bumps, has paid off. The CPPIB has earned an average annual return of 11.1 per cent over the past decade. By the board’s calculations, even after including all the new costs, it has earned $29.2-billion more on its portfolio since 2006 than it would have by following a cheaper, passive investing approach, which would focus on investing in vehicles that mimic stock and bond indexes.

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Malcolm Hamilton, who chaired a Canadian Institute of Actuaries task force on the then-ailing Canada Pension Plan in the early 1990s, had wanted the CPPIB to keep its costs low. He lost that argument. “The controversial decision is to say, ‘We don’t want to limit ourselves to passive strategies,’" Mr. Hamilton said. The CPPIB chose to “go into these more exotic markets, where fewer investors can go, [and] to even get into these markets, you need huge scale.”

The hefty returns over the past decade have given the CPPIB the confidence to keep spending as it aims to grow to $1-trillion in assets within about a dozen years. It is unapologetic about the fact that costs may continue to go up. “There may be [economies of scale] over time, but I wouldn’t promise it,” chief executive officer Mark Machin said in an interview with The Globe and Mail. “We are a professional money manager with a singular purpose – a very clear purpose – which is maximizing returns without undue risk for the Canada Pension Plan.”

But questions remain about the CPPIB’s active strategy and esoteric private investments. Beyond the higher costs, there’s the matter of transparency. Private-market assets are inherently harder to value; when it comes to judging the success of that part of its portfolio, the government and pensioners largely have to take the word of the CPPIB and its auditors.

Even some of CPPIB’s public-market investments are hard to assess. While the investment board provides figures on total expenses, it provides no breakdown of what it pays in fees to individual firms pursuing different strategies, making it harder for outsiders to determine where the CPPIB is getting value for money.

The CPP is one of several plans whose evolution have come to be known as “the Canadian pension model.”

Starting in the late 1980s, and continuing into the 1990s, several large government-backed plans adopted principles that included independent boards, professional management and a greater embrace of stocks, which are typically more volatile than the long-term government bonds that traditionally made up their portfolios. Those plans included the Caisse de dépôt et placement du Québec (CDPQ), Ontario Teachers’ Pension Plan and Ontario Municipal Employees Retirement System (OMERS).

Ottawa was late to this trend.

The federal government had established the CPP in 1965 to supplement Old Age Security, the basic pension every senior Canadian receives. (Quebec opted out of the CPP and established the Quebec Pension Plan.) Early on, the government set the early contribution rates very low as a matter of political compromise, not based on any sort of calculation of what was needed to pay benefits. The first CPP participants received far more in retirement than they ever paid in. And whatever money was in the plan wasn’t truly invested. Instead, it was lent to provincial governments at favourable interest rates.

From the beginning, however, actuaries were forecasting that the CPP would run out of money in just more than three decades. The numbers typically got worse each time government actuaries evaluated the plan.

In the late 1990s, Jean Chrétien’s Liberal government cut benefits and started increasing the payroll taxes that fund the plan. To avoid raising them even higher, it also decided to create an independent money manager that would invest the CPP’s assets beyond just government debt, in an effort to earn higher long-term returns. In 1997, the Liberals passed legislation creating the CPPIB.

“There was no alternative" to creating an asset manager that would one day be an international giant, former Prime Minister Paul Martin said in an interview with The Globe and Mail. "If it was going to grow to the size that it has, its horizon had to be global.”

The law set up a nominating committee, with representatives of federal and provincial governments, that recommends candidates for the CPPIB’s 12-member board of directors to the federal cabinet for appointment.

Ottawa and the provinces have made some crucial – and wise – choices. The directors are business leaders and academics, similar to public company boards, not politicians and benefit recipients, as is the case with many large pension plans for government employees in U.S. states. The result was an entity with a public purpose, but a strong private-sector feel.

Gradually, Ottawa and the board lifted restrictions that had governed the CPP’s investments, and the CPPIB moved boldly into new markets. It made its first private investments in 2001 and expanded into infrastructure and commercial real estate in 2003. Crucially, the 30-per-cent foreign content limit on its holdings was eliminated in 2004.

In 2006, the CPPIB launched its active-management strategy to diversify globally and by asset class. From about $100-billion in assets at the end of the financial crisis, its holdings have climbed to just more than $400-billion at June 30 of this year.

“This way we’re set up is the envy of the public pension fund world, an entirely professional board, which most public pension funds don’t have, and a highly professional management team, which are not public sector employees … to determine ‘What is the absolute best way of achieving this goal of maximizing returns without undue risk, with no interference, political or otherwise that impedes the ability to do that?” Mr. Machin said.

“That’s the challenge for most of the U.S. pension funds and in many other places in the world – that interference. It could be well-intended interference, but it’s interference in that ability for professional teams to achieve the objectives,” he added.

But what Mr. Machin views as interference could also be considered legitimate oversight of a publicly funded agency. And under the CPPIB’s governance structure, pay for executives and directors, as well as other costs, have risen sharply.

A decade ago, former life-insurance executive Robert Astley received $120,000 to serve as chair of the CPPIB board. Other directors made $25,000, with per-meeting and travel fees that lifted the typical director’s pay past $50,000.

That cost, too, has risen sharply. The current board chair, former McGill University principal and vice-chancellor Heather Munroe-Blum, made $295,000 in the year ended in March, several times the median household income. Directors make $70,000 each in base pay, But additional fees – for example, they’re paid $1,000 for a telephone meeting, and $25,000 to chair a committee – pushed directors’ pay to between $150,000 and $180,000 in the past year.

Compared with large publicly-traded companies, that pay is in the ballpark. Brookfield Asset Management Inc. is a TSX-listed company that invests in many similar areas as the CPPIB, and it has total assets on its balance sheet approaching $400-billion. It pays its board chair $500,000 and its other directors $200,000 to $215,000 apiece.

Pay for CPPIB executives, while high, also seems to be in line with the norms on Bay Street.

Mr. Machin, the CEO, a medical doctor by training and former Goldman Sachs banker who joined the CPPIB in 2012, has a salary of $625,000. His total compensation in the past year, however, was $5.76-million, thanks to a $2.1-million cash bonus plus long-term compensation, including “fund return unit” awards tied to the CPPIB’s investment performance.

Brookfield CEO Bruce Flatt, whose shares in his company are worth nearly $3-billion, earned just less than $5-million in 2018.

In its annual report, the CPPIB lists compensation details for five other top executives, who made between $2.8-million and $5.5-million in a combination of salary, bonus, long-term awards and growth in pensions.

The CPPIB said its “key management personnel” – the 14-member senior management team and 11-member board of directors – made $52-million in the past year, including $6-million in one-time payments, up from $41-million in the prior year. With the directors making about $2-million of that, the bulk of that pay went to the senior managers.

Over the past decade, the CPPIB has expanded dramatically. In March, 2009, when it had $106-billion in assets, it had 490 employees, nearly all in Toronto. Overseas, it had new offices in Hong Kong and London, opened the year before, but each only had a handful of employees.

Since then, the CPPIB has opened six more international offices: New York and Sao Paulo in 2014; Luxembourg and Mumbai in 2015; Sydney in 2017; and a small San Francisco office this past June.

Total headcount at the end of this past March was 1,661 employees. The lion’s share are still in Toronto – 1,310 – but there are now more than 100 apiece in Hong Kong and London, and nearly 100 combined in the five other offices.

Global growth has also driven a steady increase in operating costs. In the year ended in March, 2009, the CPPIB recorded $189-million in operating expenses. For the just-completed 2019 fiscal year, operating costs were slightly more than $1.2-billion, a 537-per-cent increase. Over the same period, assets grew by 271 per cent.

The CPPIB could rein in spending and improve its numbers, Mr. Machin concedes, but it would only be temporary. “I would argue that if you did that, you may look brilliant for one or two years, [but] then all your competitive advantage [will] erode away," he says.

Mr. Machin also says he can’t make a blanket statement about whether the CPPIB pays its people less, or more, than private-sector investment firms. Many people work at the CPPIB, he says, for a “sense of purpose – looking after the retirement security of Canadians,” as well as the Plan’s “fantastic pool of money to invest.” But he’s also vying against leading firms on Bay Street and Wall Street. “We are competing for our people versus the Carlyles and BlackRocks and Blackstones and everybody else in the world,” he says.

Keith Ambachtsheer is a long-time pension consultant who helped develop the Canadian model, and he was Mr. Hamilton’s foil in the 1990s, winning the debate over active versus passive management of the CPP. Today, he runs the Toronto-based pension consulting firm KPA Advisory Services. The CPPIB is one of more than 100 pension funds globally that are clients.

“To have really good people who know how to do private equity deals or infrastructure deals or real estate deals, like it or not, they’re expensive people,” Mr. Ambachtsheer said. “It’s just that market. There is some evidence that they’ll work for half of what they could make on the dark side. But even one-half is still $1-million-plus.”

And for that pricey talent to zero in on the best locales and the best deals, they often have to work with some very high-priced outsiders.

Over time, the CPPIB says it has increased the proportion of money that is managed by its own employees, shifting the job away from outside firms. But its network of allied outside investors is still extensive.

It uses more than 50 firms around the world to manage portions of its portfolio, some of them with esoteric specialties: sovereign bond arbitrage, weather derivatives and catastrophe bonds.

The CPPIB also invests with more than 140 private-equity firms – sometimes in their funds and sometimes alongside them – supplementing its own in-house private-equity program. A private equity firm typically buys most or all of an entire company, often using large amounts of debt to help finance the transaction.

The board’s private-equity portfolio totalled $88-billion as of March 31, including $33-billion it invested directly. (More than 150 CPPIB employees allocate private equity, with 60 working in the Direct Private Equity group.) The pension fund owns all or a large percentage of a diverse array of businesses, including “99 Cent Only Stores,” a Dollarama-like retailer; fashion chain Neiman Marcus; Sportradar, a Swiss provider of sports data; and Spanish-language broadcaster Univision.

CPPIB’s asset mix

Since deciding in 2006 to actively manage its

investments, CPPIB has shaken up its assets in

pursuit of stronger returns. (Asset classes as a

percentage of total asset value.)

Fiscal

2005

Fiscal

2019

Public

equities

56.2%

Bonds

35.3%

33.2%

24%

23.7%

22%

Private

equities

3.6%

Real assets

(eg. real estate)

1.2%

Notes: Fiscal 2005 does not add to 100% as it doesn’t include

cash and money market securities; Fiscal 2019 exceeds 100%

as it excludes debt issuances and credit investments.

THE GLOBE AND MAIL, SOURCE: CPPIB

CPPIB’s asset mix

Since deciding in 2006 to actively manage its investments,

CPPIB has shaken up its assets in pursuit of stronger returns.

(Asset classes as a percentage of total asset value.)

Fiscal

2005

Fiscal

2019

Public equities

56.2%

Bonds

35.3%

33.2%

24%

23.7%

22%

Private equities

3.6%

Real assets

(eg. real estate)

1.2%

Notes: Fiscal 2005 does not add to 100% as it doesn’t include cash and

money market securities; Fiscal 2019 exceeds 100% as it excludes debt

issuances and credit investments.

THE GLOBE AND MAIL, SOURCE: CPPIB

CPPIB’s asset mix

Since deciding in 2006 to actively manage its investments, CPPIB has shaken up its assets in

pursuit of stronger returns. (Asset classes as a percentage of total asset value.)

Fiscal

2005

Fiscal

2019

Public equities

56.2%

Bonds

35.3%

33.2%

24%

23.7%

22%

Private equities

3.6%

Real assets

(eg. real estate)

1.2%

Notes: Fiscal 2005 does not add to 100% as it doesn’t include cash and money market securities; Fiscal 2019 exceeds

100% as it excludes debt issuances and credit investments.

THE GLOBE AND MAIL, SOURCE: CPPIB

The CPPIB will not disclose how much money it has invested with individual firms or the fees they charge. It does, however, disclose the aggregate costs of external investment fees, a total that has grown ever larger. In fiscal 2009, the CPPIB recorded $383-million in external investment fees. They peaked in fiscal 2018 at $1.74-billion, then declined to $1.59-billion in the year ended this past March.

In recent years, those fees have exceeded the CPPIB’s internal operating costs about 50 per cent. For example, in the fiscal year ended in March, 2017, the CPPIB spent $923-million on employee compensation, its offices and other operating expenses. It paid $1.46-billion to external money managers.

“We think we’re very disciplined on those asset-management costs and all the fees were paying for those external funds,” Mr. Machin said. “Obviously, if we’re doing more of those funds, then the gross amount will go up.”

The 50-plus firms in the CPPIB’s external manager program include some of the world’s biggest. The CPPIB has money with Bridgewater Associates, AQR Capital Management and Two Sigma Investments, all U.S.-based “quantitative” hedge funds that use mathematical modelling to plot strategies and select investments.

The CPPIB also lists as partners Britain-based Man Group, and several prominent activist investing firms, such as New York-based Elliott Management.

Activist firms typically buy stakes in public companies, often quietly building market positions. Once they acquire a significant amount of stock, they then contact management and suggest ways the company can be run differently to improve shareholder value. Sometimes, however, disputes burst into the open, and the activist firm will try to change leadership.

The CPPIB invested in Starboard Value in 2014, the year it gained renown for ousting the entire 12-member board of Darden Restaurants, the owner of Red Lobster and Olive Garden. Since 2011, the CPPIB has also been an investor in Corvex Management LP, a firm bankrolled in part by George Soros and run by a former colleague of Carl Icahn named Keith Meister. In a 2014 profile, The Wall Street Journal called Mr. Meister “burly and at times combustible … a high-energy presence unafraid to yell at employees and target management teams.”

Michel Leduc, the CPPIB’s global head of public affairs and communication, said “we tend to not do business with the more aggressive activists.” But he says activism, in general, is “part and parcel of what’s expected of them in creating value beyond the short term … we hire these managers because they create value for us with their style.”

The partners also include much smaller funds, some with just US$1-billion to US$2-billion in assets, according to published estimates, and little marketing on websites or in other public forums.

Clients of private-equity firms and hedge funds can pay dearly. Traditionally, the hedge-fund industry has charged “two and 20” – that is, an annual fee of 2 per cent of your assets in the fund, plus a 20-per-cent cut of the annual investment gains.

“I used to say to our board [the fees are] more like 6 and 7 per cent of the assets being managed, because two and 20, it adds up very quickly,” said Claude Lamoureux, who served as CEO of the Ontario Teachers’ plan from 1990 to 2007. "Today, all these funds have found ways to charge fees for getting up in the morning. Two per cent made sense when funds were a hundred million. But when they’re $10-billion, it doesn’t make any sense.”

Some hot managers have charged even more. AQR, in a document filed with the U.S. Securities and Exchange Commission in March of this year, says it charges fixed or tiered annual fees up to 2.55 per cent of assets under management, plus a performance fee of up to 30 per cent for “certain clients.”

The CPPIB says, however, that its size and reputation have allowed it to negotiate more favourable fees in many cases. “Those fees are stable or even slightly down, because we’ve been grinding away at them and we’ve got some competitive edge,” Mr. Machin said.

Poul Winslow, the CPPIB senior managing director who oversees the external investing program, says it tries to negotiate arrangements in which the fees are tilted toward performance, rather than paying a percentage of assets. It considers longer commitment periods in order to get lower fees. And when it has multiple investments with one manager, it nets out losses in one fund against gains in another.

“Our management fees are actually quite lower than the industry – we’re far away from that hedge fund two-and-20-per-cent model,” Mr. Winslow said. Still, “the lowest cost is not driving this. It’s actually quality of the managers that’s driving this, and we’ve been quite successful with that approach. We would rather pay for performance than just secure some low-cost exposure.”

The Globe interviewed executives at some of the CPPIB’s external managers. Some spoke generally about the hedge-fund industry. Others talked broadly about their CPPIB relationship. The executives said that many firms indeed give certain large pension funds reduced fees because the pensions can agree to long “lockup” periods for their investments.

One of the CPPIB’s external managers is Cevian Capital, a leading European “constructive activist” firm and manager of around US$14-billion. Founded in 2003, Cevian typically owns 5 per cent to 20 per cent of European public companies such as in current holdings ABB, Ericsson and Thyssenkrupp.

Harlan Zimmerman, a senior partner with Cevian, said his firm first accepted the CPPIB’s money in 2008. “We both recognized that CPPIB, as a true long-term investor, had the ability to help us create a longer-term fund capital base,” he said.

Cevian created a brand-new share class that had lower fees, but a longer-term lockup than the rest of its capital. Cevian also created a new structure that would allow the CPPIB to co-invest in companies outside the traditional Cevian fund structure.

“This further lowered their average fee rates while providing additional capital for us to invest,” Mr. Zimmerman said. "Subsequently, we also opened up this longer-term share class and co-investment vehicle to a handful of other large and blue-chip investors.“

Other major Canadian plans – the Caisse, Teachers and OMERS – have all adopted and grown with the Canadian model. Each have large staffs and assets ranging from nearly $100-billion to more than $300-billion.

None of the three, however, report costs that can directly be compared to the CPPIB’s, because of several choices allowed by the accounting rules they follow. For example, none include the full costs of their wholly owned real-estate management companies in their financial statements.

What is true of Teachers and OMERS, though, is that they, too, have reported costs that have risen more quickly than assets. Over the decade from 2009 to 2018, their assets have doubled, with tens of billions of dollars added to their portfolios, but their costs have roughly tripled, with hundreds of millions of dollars of new expenses.

In responses to The Globe, both funds cited their long-term returns as evidence that their expenses are worth it. Chief financial officer Jonathan Simmons said OMERS made a decision to invest in alternative assets and invest more internationally. “We knew that these decisions would result in higher costs and have demonstrated the value of this approach in the strong net-of-expenses performance we have delivered in recent years.”

Mr. Ambachtsheer, the veteran consultant, says “the answer is to insource, but to insource and be competitive, you need expensive people. And if you go global and you’re big enough, you need to be onsite. If you want to know what’s going on in South America, you’ve got to be there. You want to know what’s going on in India, you’ve got to be there. You want to know what’s going on in China, at least you should be in Hong Kong.”

Clive Lipshitz, a managing partner at Tradewind Interstate Advisors, a former head of research at Brookfield Asset Management, and a co-author of Bridging the Gaps: Public Pension Funds and Infrastructure Finance, says economies of scale should be expected from a pension fund, particularly one that’s increasing its reliance on its own employees.

“If you think about direct investing in particular, if you are doing a $1-billion deal or a $5-billion deal, you don’t need five times many people to do that $5-billion deal,” he said.

The CPPIB’s best defence for its growing expenses is its investment returns.

As of the end of the fund’s fiscal year on March 31, its 10-year net return was an annual average of 11.1 per cent. These net investment returns deduct all costs.

That 10-year period coincides almost perfectly with markets’ rebound from the depths of the financial crisis. Equities bottomed out in March 2009.

The S&P Global LargeMidCap Index, which the CPPIB measures its own performance against, returned an annualized 9.8 per cent over the period from the end of March, 2009, to the end of March, 2019.

Recognizing the need to show how it’s performing versus a passive strategy, the CPPIB also promotes a figure that takes the net returns and expresses them in raw dollars, above and beyond a benchmark. That “cumulative dollar value-added” figure, calculated from the adoption of an active investment strategy in 2006 to the present, is $29.2-billion that has been added to the the CPP thanks to the board’s investment choices, after all costs are deducted, the CPPIB says.

Much of that outperformance has been racked up in the past two years, and much of that has been provided by the CPPIB’s “real assets” – real estate, infrastructure, renewable energy and natural resources – and its private equity-portfolio. In the year ended March, 2018, the two asset classes provided roughly half of the CPPIB’s $5.7-billion in value-added dollars. In the most recent year, real assets and private equity contributed about 85 per cent of the $6.2-billion in value-added dollars.

A decade ago, more than half of the CPPIB’s portfolio was held in publicly traded stocks. Private equity, real estate and infrastructure were less than a quarter. At the end of 2019, just one-third of the portfolio was in stocks, with nearly half in private equity and real assets.

The CPPIB has also tweaked its benchmark, which it refers to as its “reference portfolio,” to reflect that shift. Just four years ago, that portfolio was 65-per-cent equities and 35-per-cent bonds. In its 2019 fiscal year, the benchmark comprised 85 per cent the S&P Global LargeMidCap Index and 15 per cent index of Canadian government bonds.

But putting a value on private assets, then calculating returns based on those values, poses challenges that stocks that trade frequently and publicly do not. Until and unless it’s sold, the value of a private asset must be estimated, based on available information.

“The valuations are always inaccurate, but it might be inaccurate on the downside, or on the upside,” said Bernard Sabrier, chairman of Unigestion, a Swiss-based global asset manager of US$23-billion. “You have a home and I ask how much it’s worth, and you say it’s $1-million. As long as you haven’t found a buyer at $1-million, maybe it’s worth $1.1 [million], or might be $900 [thousand]. Every single private-equity [investment] might have a 20-per-cent honest gap between what they report and what it might be sold at … the valuation is as honest as possible, but is it the true valuation? No.” (Mr. Sabrier was not speaking specifically about the CPPIB.)

The CPPIB uses external valuation experts to help it arrive at the values for its private assets and also relies on its internal audits, which operates independently from the investment departments, Mr. Machin said.

Mr. Hamilton says the valuation of private assets is “artificially stable … They make your investments look less risky than they really are … when the stock market crashes, the appraisals make these investments look better than they really are, because they don’t mark down the appraisals nearly as fast as the market marks down the securities. When it goes the other way, it’s equally true: The market will probably go up a lot faster than the appraisals, because they’re sticky.”

While Mr. Machin cautions that the CPPIB’s past performance should not cause Canadians to expect similar future performance, that track record “is the key validation for us. We measure ourselves against what we could have done if we had not decided in 2006 to go to an active investment organization. We measure ourselves against a passive approach, just a simple bond and equity portfolio. So that’s $30-billion extra money in the fund that we’ve created net of costs and expenses and everything else.”

Editor’s note: (Sept. 7, 2019) An earlier version of this story incorrectly stated Heather Munroe-Blum was the former board chair at McGill University. In fact, she served as principal and vice-chancellor. This version has been updated.