The Canada Pension Plan Investment Board plans to more than double the proportion of assets it allocates to China in the next seven years as one of the world’s biggest pension schemes looks to tap fast-growing emerging markets for greater returns.

The C$367bn (US$280bn) CPPIB plans to allocate up to 20 per cent of its assets to China by 2025, up from the 7.6 per cent of its portfolio it currently has invested in the world’s second-biggest economy, it said.

Overall, it plans to allocate up to 30 per cent of assets to emerging markets over the same period, compared to 15 per cent currently.

The Toronto-based board chose Hong Kong as the location of its first international office in 2008 and currently has C$28bn invested in mainland China.

In common with other Canadian pension funds, CPPIB is known for being a proponent of “direct” investment, where it bypasses intermediaries to make deals or buyouts. Last month it announced a deal to partner with Longfor Group, a Hong Kong-listed Chinese property developer, to develop rental housing programmes in the country. Other investments include a stake in Raffles City, a commercial real estate development in Shanghai.

It also has about US$3bn invested in Chinese equities due to its participation in China’s Qualified Foreign Institutional Investor programme, which allows foreign institutional investors to buy securities listed on stock exchanges in Shanghai and Shenzhen.

Mark Machin, CPPIB’s chief executive, spent more than 20 years in Asia, primarily working for Goldman Sachs. He was vice-chairman of Asia ex-Japan for the US bank before joining CPPIB in 2012 as the group’s first president for Asia. He took over the top job in 2016.

The Canadian retirement system is regarded as one of the best in the world because of a high rate of contributions from both employees and companies, the independent governance of the funds themselves and their willingness to experiment.

CPPIB was formed more than 20 years ago to build a reserve fund to support the Canada Pension Plan, the country’s largest retirement fund to which every person working in Canada must contribute. It has 20m contributors and beneficiaries.

Emerging equities were the top performer in the group’s most recent set of full-year results for the 12 months to March. However, even the CPPIB is not immune from economic pressures, warning of potentially lower future returns as it reported a net annual return of 11.6 per cent.

The CPPIB recently announced plans to become the first pension fund in the world to issue a green bond, saying the move would give it additional funding “as it increases its holdings in renewables and energy efficient buildings as world demand gradually transitions in favour of such investible assets.”

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