Canadian pension funds have maintained significant investments in the U.S. despite concerns over trade wars and threats to sovereignty. The Canada Pension Plan (CPP), the largest pension fund in the country, recently reported a record $780.7 billion in assets, with 47% invested in the U.S. and only 13% in Canada. This level of U.S. investment has remained stable since President Donald Trump’s inauguration in 2017.
Since 2005, when restrictions on foreign holdings were lifted, the CPP has steadily increased its U.S. investments to $366 billion, surpassing its $98 billion investments in Canada. A CBC analysis revealed that other major Canadian pension funds, collectively known as the “Maple Eight,” also have significant U.S. holdings, totaling around $1 trillion.
Despite growing concerns over geopolitical risks, CPP spokesperson Michel Leduc emphasized the fund’s long-term investment strategy. Leduc explained that the CPP’s U.S. holdings are below the average compared to global indices like the MSCI World Index and the Financial Times Stock Exchange 100.
Daniel Brosseau, president of Letko Brosseau Global Investment Management, highlighted the economic impact of pension funds, emphasizing their role in influencing wages and economic activity in Canada. Brosseau and other investment leaders have called on the government to incentivize domestic investments by pension funds.
Senator Clément Gignac noted a shift in Canadian pension funds’ outlook, citing uncertainty in the U.S. market and new investment opportunities in Canada. Finance Minister François-Philippe Champagne met with Maple Eight fund managers to explore avenues for more domestic investments.
While there have been discussions on increasing domestic investments, the government has not mandated Canadian investments for pension funds. Experts like Keith Ambachtsheer advocate for global diversification in pension fund investments. Despite the large U.S. holdings, CPP has delivered solid returns, averaging 8.4% annually over the past decade.
Looking ahead, pension funds are closely monitoring U.S. developments and seeking opportunities in Canada, especially with major projects on the horizon. Fund managers prioritize low-risk investments with predictable returns, focusing on infrastructure and other stable assets.
