Podcast Summary

Capital Allocators – Inside the Institutional Investment Industry

Episode: John Graham – Evolution of the Canadian Model at CPPIB (EP.465)
Date: October 13, 2025
Host: Ted Seides
Guest: John Graham, President and CEO of the Canada Pension Plan Investment Board (CPPIB)

Episode Overview

This episode features a deep-dive conversation with John Graham, CEO of CPPIB, which manages $730 billion CAD and stands as one of the largest pension funds globally. Host Ted Seides explores the evolution and present dynamics of the famed Canadian Model, CPPIB’s investment approach, leadership development, incentive alignment, governance, global expansion, and how CPPIB is adapting to major industry trends—especially climate investing and artificial intelligence (AI).

Major Themes and Discussion Points

1. John Graham’s Non-Traditional Path to Investing

• John began his career as a research scientist in physical chemistry, then transitioned into corporate strategy at Xerox, before making a leap to CPPIB via an unconventional route.
• He emphasizes the contrast between scientific certainty and the judgment-based nature of investing:

  “In science there's an answer ... Investing is about in some ways predicting the future because we don't have data on the future. So it's about inference, it's about judgment.”
  (09:12 – John Graham)

2. Leadership Philosophy and Development

• John values situational leadership: adapting management style depending on the needs of the team and situation.
• Delegation and alignment are core; delegation without alignment leads to chaos:

  “Delegation without alignment is chaos.”
  (13:17 – John Graham)

• Leading senior "leaders" vs. junior staff presents a fundamental difference: senior teams require more alignment and less direct management.

3. Evolution of the "Canadian Model" and Total Portfolio Approach

• The Canadian model (active management, internal teams, partnerships, net returns focus) has been widely emulated.
• CPPIB continually reassesses identity vs. purpose: making sure strategies serve the long-term objective of maximizing returns for Canadian retirees rather than preserving organizational habits.

Key quote:

"We have to challenge ourselves to make sure that the identity is always aligned to the ultimate purpose of the organization, and we aren't making decisions to preserve our identity as opposed to ... the purpose."
(15:26 – John Graham)

4. Active vs. Passive and Internal vs. External Management (The Two-by-Two Matrix)

• Decisions are made deliberately for each strategy, with no reflexive tilt toward any quadrant.
• Passive management is favored for broad, efficient exposures (e.g., equities, fixed income), while active is retained where CPPIB has an edge.
• Macro strategies are mostly outsourced due to lack of internal edge.

5. The Partnership and Co-Investment Model

• CPPIB favors partnerships with leading external managers, co-investing and co-underwriting alongside them—especially in private equity.
• Breadth of mandate allows flexible deployment of capital where opportunities are strongest:

  “Part of the value added is taking advantage of that breadth ... not being so dogmatic that you have to always be piling into one asset class.”
  (21:57 – John Graham)

6. Cross-Team Collaboration and Incentives

• CPPIB prioritizes rewarding enterprise thinking—spotting deals that cut across asset class silos.
• Internal teams must avoid “tunnel vision” and be encouraged to cross-share opportunities, particularly between credit and private equity, and within “real assets” like infrastructure, energy, and real estate.

7. Incentive, Compensation, and Talent Strategy

• No carry or promote is paid like in GPs/hedge funds; instead, professionals are offered fair compensation and broader career development.
• The partnership/co-investment model is a structural adaption to this, minimizing direct talent competition with firms able to pay more.

8. External Partnerships and Knowledge Transfer

• John stresses the importance of knowledge diffusion from external managers into internal teams:

  “We have an expectation of partnership that we will learn things just about macro, that we will learn things about geopolitics ... that's part of the reason we do it.”
  (31:28 – John Graham)

9. Portfolio Construction: Supertanker Analogies and Adaptive Allocation

• CPPIB’s vast size curtails nimbleness, so focus is on building resilient, diversified portfolios that withstand macro shocks.
• Movement of capital is slower and more incremental.
• Internal teams can re-allocate within their asset classes (e.g., between types of credit), but cross-class moves require strong culture and incentive alignment.

10. Global Expansion and Managing Offices

• Offices outside Toronto (e.g., India, Brazil, China) exist to generate alpha, not beta, through local insight and differentiated access.
• Entry is a committed, long-term endeavor:

  "We're getting married to the geography. We're committing to it."
  (37:19 – John Graham)

• Programs are measured by pre-defined "ranges of reasonableness" for performance and reviewed for scaling or contraction.

11. Approach to Risk and Diversification

• CPPIB targets risk and uses leverage to calibrate portfolio risk but remains disciplined with diversification—across geographies and asset classes.
• Graham rejects chasing recent winners or over-concentrating in hot themes (e.g., U.S. equities, AI megacaps), prioritizing long-term resilience.

12. Governance and Stakeholder Management

• Delegated independence from government is key, but stakeholder engagement (board, government stewards, 22 million Canadians) remains central.
• Avoiding “influence” on investments but maintaining transparency and accountability.

13. Climate and AI: Current Hot Topics

• Climate: No change in approach despite wavering market focus—CPPIB integrates climate risk and continues investing in both renewables and oil & gas, always for value, not values.
• AI: Focused on organization-wide fluency and literacy, with active internal experimentation but measured approach to direct investment. Cautious about concentration risk in AI “winners.”

Memorable moment:

"We're about value, not values. ... If [renewable energy] can only exist because of some type of subsidy, then we shouldn't invest in it."
(45:02 – John Graham)

14. Managing Contrarian Risks

• Attention to historical correlations (e.g., equities/fixed income, USD/CAD) potentially breaking down.
• Avoids dramatic, sudden shifts—instead, gradual, measured portfolio adjustments.

15. Institutionalization and Legacy

• John aims to build an enduring institution, not a “cult of personality.”
• Decisions aren’t about the current team but for those leading the fund decades from now:

  "We're not a founder culture. We're almost the exact opposite of a founder culture."
  (53:38 – John Graham)

Notable Quotes & Memorable Moments

• On the Total Portfolio Approach:

  "We're not just giving out an asset allocation and a bunch of benchmarks and managing active risk against it and trying to maximize the information. We are actually trying to maximize a total return at a given level of risk over the long run."
  (33:20, 00:00 – John Graham)

• On Delegation and Alignment:

  "If one delegates decision making and people aren't aligned to what the organization is trying to achieve. It ends up in a really a quagmire."
  (13:17 – John Graham)

• On Risk-Taking:

  "Diversification is an act of humility."
  (41:31 – John Graham)

• On Knowledge Transfer:

  "...part of the reason we do it [external partnerships] ... is the expectation that these teams ... are diffusing the knowledge and the information through the rest of the organization."
  (31:23 – John Graham)

• On Leadership:

  “The softer skills that I've learned is to be situational. And your leadership approach has to evolve as you evolve and grow through your career.”
  (12:09 – John Graham)

• On Saying No:

  "One of those balls is going to fall and you're going to see it as a failure and they're going to see it as a failure. But the failure was putting that ball in the air the first time. So you will need to learn to say no in your career."
  (55:13 – John Graham)

Key Timestamps

• John Graham’s background and path: 05:09 – 07:24
• Leadership development and role of soft skills: 09:12 – 12:25
• Delegation and alignment: 12:25 – 13:43
• Canadian Model evolution: 14:01 – 17:53
• Active vs. passive and internal vs. external matrix: 17:53 – 20:23
• Partnership/co-investment model: 20:23 – 21:57
• Total portfolio approach explained: 33:20 – 34:30
• Decision-making and capital movement: 34:41 – 36:22
• Global expansion rationale: 36:30 – 38:14
• Measuring office/strategy success: 38:36 – 39:44
• Emerging markets allocation: 39:44 – 40:56
• Risk management, diversification: 41:10 – 41:51
• Governance and stakeholder relations: 42:22 – 44:32
• Climate investing and AI: 44:35 – 49:02
• Contrarian risks and correlations: 50:04 – 51:30
• Institutional legacy and founder culture: 52:46 – 54:44
• Closing lightning/quick-fire questions: 54:47 – 57:51

Conclusion

John Graham provides a comprehensive look at modern institutional investing, rooted in both tradition and pragmatic evolution. The Canadian model, with its emphasis on total portfolio alignment, partnerships, and disciplined governance, has proven resilient. Under Graham’s leadership, CPPIB focuses on measured risk, cross-team collaboration, deliberate strategy selection, global expansion for alpha, and preparing the institution to serve generations of Canadians well beyond those currently at the helm.