Recently I read about our Canada Pension Plan (CPP) reaching $200-billion mark in assets for the first time. As one of the 10-largest retirement funds in the world, it’s a financial behemoth. Here’s how our money is invested by region:
Here it is by sector:
Here are my quick takeaways from how CPP invests and what we can easily copy in our portfolios:
- Canadian and North American assets make up more than half of the portfolio but this means other investments extend far beyond those borders. The lesson: diversify your investments from around the world.
- Real estate does not comprise a large percentage of the portfolio. The lesson: investments go beyond your primary home.
- About half of the holdings are in equities. The lesson: balance your portfolio with fixed income and other asset classes.
The boring and simple CPP investing approach has allowed this massive fund to reach record-highs and earn an annual rate of return of about 5% over the last ten years after inflation is factored in. Most investors would be more than pleased with these results over the same investment period.
Any lessons learned here for your portfolio?