The CPP Investment Board (CPPIB) announced today that it has appointed the first two external portfolio managers under its Active Overlay Program. The goal of this program is to further diversify the CPPIB’s public equity portfolio in pursuit of incremental investment returns through active management.

CPPIB expects to add another two managers to the programin the future.

The companies selected are Connor, Clark & Lunn Investment Management Ltd. and UBS Global Asset Management. Both have world-class credentials and were selected following a rigorous year-long search that was open to all Canadian and foreign investment management firms.

“The Active Overlay Program is an innovative way of engaging world-class investment managers in a cost-effective and risk-controlled fashion,” said Don Raymond, VP, Public Markets, in a release.. “We have high regard for both of these firms and believe they will be outstanding partners as we diversify a small portion of the CPP portfolio into actively managed strategies.”

Under the program, each firm will manage the equivalent of a $500 million equity portfolio within the total CPP portfolio of $66.3 billion. Unlike traditional programs where external investment firms are given cash to invest, each manager in the Active Overlay Program will have the right to identify securities in the CPPIB’s public equity portfolio that it believes are overvalued. These securities will be sold and the proceeds used to purchase other securities the manager believes have greater investment potential. The managers are not permitted to sell stocks short.

Compensation for each firm will be heavily-weighted towards performance with managers receiving a small base fee, plus a portion of the value they create.

http://www.newswire.ca/en/releases/archive/April2004/01/c6874.html