All of that will help us to achieve our ultimate goal the maximization of investment returns. John A. MacNaughton is President and C.E.O. of the Canada Pension Plan Investment Board. Previous to his current appointment, Mr. MacNaughton had a distinguished career in the investment business with Nesbitt Burns and its predecessor companies. The following is a brief overview of some of those issues. 1 Risk and Return A fundamental principle guiding investment is the relationship between risk and return.
Investors accept higher levels of risk only if they expect to receive higher returns in exchange.
The investment policy prior to 1997 required surplus funds to be invested in low-yield, secure provincial bonds. The 1997 reforms allowed for investment in stocks through index funds such as those based on the TSE 300. These changes increase the level of risk in the CPP reserve fund. Individual contributors do not, however, benefit from the increased risk since their benefit level defined as a percentage up to 25 percent of the average industrial wage has not changed. Current and future contributors to the CPP have, therefore, been compelled to accept a higher level of risk without any individual compensation.