A $3B check creates local friction despite negligible total fund impact
Geoffrey Rubin · Geoffrey Rubin – The Modern Canadian Model at CPPIB (Capital Allocators, EP.280) · Nov 14, 2022 · at 46:40
Geoffrey Rubin, Chief Investment Strategist at CPPIB, explains the structural friction between total fund macro risk modeling and local portfolio manager risk tolerance.
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“What makes for an outsized concentration risk at the total fund level is going to look very different than outsized concentration risk At the level of a portfolio owned by one particular portfolio manager within our organization. And oftentimes we have these conversations with portfolio managers who say, look, a two billion dollar ticket here is a big, big weight in my local portfolio. And it could induce a degree of volatility or underperformance that would be really difficult for my team to absorb and digest. Even though a two billion or three billion dollar ticket at the total fund level will have very little impact on our concentration risk.”
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